1 HB140
2 208428-2
3 By Representative Lipscomb
4 RFD: Ways and Means General Fund
5 First Read: 02-FEB-21
6 PFD: 01/26/2021
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 HB140
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2 ENROLLED, An Act,
3 Relating to financial institution excise tax; to
4 update existing law to provide clarification on the
5 calculation of taxable income for credit unions; and to
6 further provide for assessments and refunds.
7 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
8 Section 1. Section 40-16-1.3, Code of Alabama 1975
9 as enacted by Act 2019-284 of the 2019 Regular Session is
10 amended to read as follows:
11 "40-16-1.3.
12 "(a) With respect to credit unions only, net income
13 means financial statement income which is the final net income
14 amount, total revenue less total expenses, calculated for
15 financial statement purposes and reported to the Internal
16 Revenue Service as a tax exempt organization and to the
17 Alabama Credit Union Administration (ACUA) or other government
18 regulatory authority as appropriate, less the subtractions
19 specified in subsection (b) and as allocated and apportioned
20 to Alabama according to rules adopted by the Department of
21 Revenue pursuant to Section 40-16-4.
22 "(b) Subtractions. The following items shall be
23 subtracted from financial statement income for purposes of
24 computing the net income of a credit union under this chapter:
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 HB140
1 "(1) Dividends received from other credit unions and
2 credit union service organizations as defined by federal law
3 and the regulations of the National Credit Union
4 Administration.
5 "(2) In lieu of deductions for losses or bad debts,
6 reasonable additions to reserves for losses, bad debts, and
7 extraordinary expenses. Reasonable additions to regular
8 reserves as defined by the Capital Preservation Plan approved
9 by each credit unions Board of Directors annually and
10 accepted by the ACUA pursuant to ACUA regulations pertaining
11 to Capital Preservation Plans. Upon withdrawal or reduction of
12 such reserves the amount withdrawn or reduced shall be
13 included in the calculation of taxable income for the tax year
14 in which the withdrawal occurs. Provided that, direct
15 transfers between reserve accounts, including the allowance
16 for loan losses, that are not included in the calculation of
17 net income shall not be includible in the calculation of
18 taxable income.
19 "(c) Nothing in this section shall be construed to
20 allow:
21 "(1) Any item to be deducted more than once.
22 "(2) A deduction for any item that is excluded from
23 income.
24 "(3) Any item to be included in the Alabama net
25 income of more than one taxpayer.
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1 "(d) No assessments of Financial Institution Excise
2 Tax shall be entered or issued and no refunds shall be granted
3 or paid for tax years ending on or before January 1, 2021 to
4 adjust the amounts subtracted from net income of credit unions
5 for additions to reserves, as previously provided in this
6 section. Further, such amount included in any assessment
7 entered prior to the effective date of this act shall be void
8 and unenforceable and shall be withdrawn or dismissed with
9 prejudice by the department, and any such refund petitions
10 filed prior to the effective date of this act shall be denied
11 by the department."
12 Section 2. This act shall become operative for tax
13 years beginning after December 31, 2020.
14 Section 3. This act shall become effective January
15 1, 2021, following its passage and approval by the Governor,
16 or upon its otherwise becoming law.
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 HB140
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2
3
4 Speaker of the House of Representatives
5
6 President and Presiding Officer of the Senate
7 House of Representatives
8 I hereby certify that the within Act originated in
9 and was passed by the House 09-FEB-21.
10
11 Jeff Woodard
12 Clerk
13
14
15
16 Senate 16-MAR-21 Passed
17
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Statutes affected:
Introduced: 40-16-1
Enrolled: 40-16-1