Text: SF00241 Text: SF00243 Text: SF00200 - SF00299 Text: SF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.60, subsection 1, Code 2003, is 1 2 amended to read as follows: 1 3 1. a. A franchise tax according to and measured by net 1 4 income is imposed on financial institutions, except 1 5 nonqualified credit unions, for the privilege of doing 1 6 business in this state as financial institutions. 1 7 b. A revenue nondistribution tax measured by the increase 1 8 in equity is imposed on nonqualified credit unions for the 1 9 privilege of doing business in this state as financial 1 10 institutions. 1 11 Sec. 2. Section 422.60, subsection 2, Code 2003, is 1 12 amended by adding the following new unnumbered paragraph after 1 13 unnumbered paragraph 1: 1 14 NEW UNNUMBERED PARAGRAPH. A nonqualified credit union 1 15 incorporated or authorized to do business under chapter 533 is 1 16 not subject to the state alternative minimum tax. 1 17 Sec. 3. Section 422.61, Code 2003, is amended by adding 1 18 the following new subsection: 1 19 NEW SUBSECTION. 0A. "Equity" means, in the case of a 1 20 nonqualified credit union, the sum of the regular reserves, 1 21 undivided earnings, and net income of the credit union as 1 22 reflected in its annual report under section 533.6. In the 1 23 case of a credit union designated as serving predominantly 1 24 low-income members, "equity" also includes uninsured secondary 1 25 capital. 1 26 Sec. 4. Section 422.61, subsection 1, Code 2003, is 1 27 amended to read as follows: 1 28 1. "Financial institution" means a state bank as defined 1 29 in section 524.103, subsection 33, a state bank chartered 1 30 under the laws of any other state, a national banking 1 31 association, a trust company, a federally chartered savings 1 32 and loan association, an out-of-state state chartered savings 1 33 bank, a financial institution chartered by the federal home 1 34 loan bank board, a non-Iowa chartered savings and loan 1 35 association, a nonqualified credit union incorporated or 2 1 authorized to do business under chapter 533, a nonqualified 2 2 credit union incorporated or authorized to do business under 2 3 the laws of another state, an association incorporated or 2 4 authorized to do business under chapter 534, or a production 2 5 credit association. 2 6 Sec. 5. Section 422.61, Code 2003, is amended by adding 2 7 the following new subsections: 2 8 NEW SUBSECTION. 1A. "Increase in equity", in the case of 2 9 a nonqualified credit union, means the increase in the amount 2 10 of equity of the credit union at the end of the taxable year 2 11 as reflected in its annual report under section 533.6 over the 2 12 amount of equity of the credit union at the end of the 2 13 previous taxable year as reflected in the previous year's 2 14 annual report under section 533.6. 2 15 NEW SUBSECTION. 3A. "Nonqualified credit union" means a 2 16 credit union that does not meet the requirements to be a 2 17 qualified credit union, as specified in section 533.24, 2 18 subsection 3. 2 19 Sec. 6. Section 422.61, subsection 3, unnumbered paragraph 2 20 1, Code 2003, is amended to read as follows: 2 21 "Net income", for a financial institution other than a 2 22 nonqualified credit union, means the net income of the 2 23 financial institution computed in accordance with section 2 24 422.35, with the following adjustments: 2 25 Sec. 7. Section 422.62, Code 2003, is amended to read as 2 26 follows: 2 27 422.62 DUE AND DELINQUENT DATES. 2 28 The franchise tax or revenue nondistribution tax, as 2 29 applicable, is due and payable on the first day following the 2 30 end of the taxable year of each financial institution, and. 2 31 In the case of a financial institution other than a 2 32 nonqualified credit union, the tax is delinquent after the 2 33 last day of the fourth month following the due date or forty- 2 34 five days after the due date of the federal tax return, 2 35 excluding extensions of time to file, whichever is the later. 3 1 In the case of a nonqualified credit union, the tax is 3 2 delinquent after the last day of the fourth month following 3 3 the due date. Every financial institution shall file a return 3 4 as prescribed by the director on or before the delinquency 3 5 date. 3 6 Sec. 8. Section 422.63, Code 2003, is amended to read as 3 7 follows: 3 8 422.63 AMOUNT OF TAX. 3 9 The franchise tax is imposed annually in an amount equal to 3 10 five percent of the net income received or accrued during the 3 11 taxable year. The revenue nondistribution tax is imposed 3 12 annually in an amount equal to five percent of the increase in 3 13 equity for the taxable year. If the net income or increase in 3 14 equity, as applicable, of the financial institution is derived 3 15 from its business carried on entirely within the state, the 3 16 tax shall be imposed on the entire net income or increase in 3 17 equity, as applicable, but if the business is carried on 3 18 partly within and partly without the state, the portion of net 3 19 income or increase in equity, as applicable, reasonably 3 20 attributable to the business within the state shall be 3 21 specifically allocated or equitably apportioned within and 3 22 without the state under rules of the director. 3 23 Sec. 9. Section 422.66, Code 2003, is amended to read as 3 24 follows: 3 25 422.66 DEPARTMENT TO ENFORCE. 3 26 The department shall administer and enforce the provisions 3 27 of this division, and all applicable provisions of sections 3 28 422.24, 422.25, 422.26, 422.28, 422.29, and 422.30, and 3 29 division VI of this chapter, apply to financial institutions 3 30 and to the franchise tax and revenue nondistribution tax 3 31 imposed by this division. 3 32 Sec. 10. Section 533.24, Code 2003, is amended to read as 3 33 follows: 3 34 533.24 TAXATION. 3 35 1. A credit union shall be deemed an institution for 4 1 savings and is subject to taxation only as to its real estate 4 2 and moneys and credits. However, those nonqualified credit 4 3 unions subject to the state revenue nondistribution tax 4 4 imposed in chapter 422, division V shall not be taxed on their 4 5 moneys and credits. The shares shall not be taxed. 4 6 2. a. The moneys and credits tax on credit unions, except 4 7 those nonqualified credit unions subject to the state revenue 4 8 nondistribution tax, is imposed at a rate of five mills on 4 9 each dollar of the legal and special reserves which are 4 10 required to be maintained by the credit union under section 4 11 533.17, and shall be levied by the board of supervisors, and 4 12 placed upon the tax list and collected by the county 4 13 treasurer, except that an exemption shall be given to each 4 14 credit union in the amount of forty thousand dollars. The 4 15 amount collected in each taxing district within a city shall 4 16 be apportioned twenty percent to the county, thirty percent to 4 17 the city general fund, and fifty percent to the general fund 4 18 of the state, and the amount collected in each taxing district 4 19 outside of cities shall be apportioned fifty percent to the 4 20 county and fifty percent to the general fund of the state. 4 21 The moneys and credits tax shall be collected at the location 4 22 of the credit union as shown in its articles of incorporation. 4 23 b. The moneys and credits tax imposed under thissection4 24 subsection shall be reduced by an investment tax credit 4 25 authorized pursuant to section 15E.43. 4 26 c. The moneys and credits tax imposed under thissection4 27 subsection shall be reduced by an investment tax credit 4 28 authorized pursuant to section 15E.51. 4 29 3. a. A credit union that does not meet the requirements 4 30 of a qualified credit union as specified in paragraph "b" is 4 31 subject to the state revenue nondistribution tax imposed in 4 32 chapter 422, division V. 4 33 b. A credit union is a qualified credit union if the 4 34 credit union meets all of the following requirements: 4 35 (1) The credit union has less than one hundred fifty 5 1 million dollars in assets as shown in its latest annual report 5 2 under section 533.6, provided that this requirement shall not 5 3 apply to a credit union with a field of membership limited 5 4 exclusively to an occupational, industry, or employer common 5 5 bond based upon common business, employer, or corporate 5 6 parent. 5 7 (2) The credit union does not make or participate in 5 8 commercial loans or business purpose loans that together at 5 9 any time exceed an aggregate amount equal to the lesser of one 5 10 and three-fourths times the credit union's net worth or twelve 5 11 and one-fourth percent of the credit union's total assets. 5 12 c. For purposes of this subsection: 5 13 (1) "Agricultural purpose" means the same as defined in 5 14 section 535.13. 5 15 (2) "Business purpose" means a for-profit activity by an 5 16 individual or a for-profit entity including, but not limited 5 17 to, a commercial, service, or industrial enterprise carried on 5 18 for profit, or an investment activity. 5 19 (3) "Commercial loan" means a loan to an individual or 5 20 entity for a business purpose or an agricultural purpose. 5 21 "Commercial loan" does not include a loan the proceeds of 5 22 which will be used primarily for the purchase, construction, 5 23 or improvement of real property, including a single-family or 5 24 a two-family dwelling occupied or to be occupied by the 5 25 borrower. 5 26 (4) "Loan" includes the refinancing of a contract of sale, 5 27 and the refinancing of a prior loan, whether or not the 5 28 borrower was also the borrower under the prior loan, and the 5 29 assumption of a prior loan. 5 30 (5) "Net worth" means the credit union's retained earnings 5 31 including undivided earnings, regular reserves, and any other 5 32 appropriations designated by management or regulatory 5 33 authority. 5 34 Sec. 11. APPLICABILITY DATE. This Act applies to taxable 5 35 years beginning on or after the effective date of this Act. 6 1 EXPLANATION 6 2 This bill imposes a revenue nondistribution tax as part of 6 3 the tax on financial institutions doing business in Iowa and 6 4 subject to taxation by the state on chartered credit unions of 6 5 this or another state that do not meet certain requirements. 6 6 A credit union will not be subject to the revenue 6 7 nondistribution tax if it has assets of less than $150 million 6 8 or its members share a common bond such as single employer or 6 9 occupation, and it does not make or participate in commercial 6 10 or business purpose loans of a certain quantity. 6 11 For the purpose of computing the tax, the increase in the 6 12 equity of the credit union determined at the end of the 6 13 taxable year is the taxable event. 6 14 Various credits applicable to the franchise tax apply to 6 15 the revenue nondistribution tax and the tax is subjected to 6 16 prepayment requirements. 6 17 The moneys and credits tax currently imposed on all credit 6 18 unions is made inapplicable for those credit unions that are 6 19 subject to the revenue nondistribution tax. 6 20 The bill applies to taxable years beginning on or after the 6 21 effective date of the bill. 6 22 LSB 2405XS 80 6 23 mg/cf/24.1
Text: SF00241 Text: SF00243 Text: SF00200 - SF00299 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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