Alabama 2022 Regular Session

Alabama Senate Bill SB290 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 SB290
2	2	2 217897-2
3	3	3 By Senators Butler, Waggoner, Scofield, Roberts, Reed, Allen,
4	4	4 Orr, Jones, Chesteen, Weaver, Shelnutt, Whatley, Livingston,
5	5	5 Barfoot, Albritton, Price and Melson
6	6	6 RFD: Finance and Taxation Education
7	7	7 First Read: 02-MAR-22
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9	9	Page 0 1 217897-2:n:02/18/2022:KF/cmg LSA2022-099F
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15	15	7
16	16	8 SYNOPSIS: Under existing law, the minimum business
17	17	9 privilege tax due for certain corporations,
18	18	10 business trusts, limited liability entities, and
19	19	11 disregarded entities is not less than $100.
20	20	12 This bill reduces the minimum business
21	21	13 privilege tax of $100 to $50 for the taxable year
22	22	14 beginning after December 31, 2022.
23	23	15 This bill also provides for a full exemption
24	24	16 from the minimum business privilege tax due for
25	25	17 taxable years beginning after December 31, 2023.
26	26	18
27	27	19 A BILL
28	28	20 TO BE ENTITLED
29	29	21 AN ACT
30	30	22
31	31	23 Relating to the levy and amount of business
32	32	24 privilege tax; to amend Section 40-14A-22, Code of Alabama
33	33	25 1975, to provide for a reduced minimum business privilege tax
34	34	26 of $50 for taxable years beginning after December 31, 2022; to
35	35	27 provide a full exemption from the business privilege tax on
36	36	Page 1 1 amounts due of $100 or less for taxable years beginning after
37	37	2 December 31, 2023.
38	38	3 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
39	39	4 Section 1. Section 40-14A-22, Code of Alabama 1975,
40	40	5 is amended to read as follows:
41	41	6 "§40-14A-22.
42	42	7 "(a) Levy of tax. There is hereby levied an annual
43	43	8 privilege tax on every corporation, limited liability entity,
44	44	9 and disregarded entity doing business in Alabama, or
45	45	10 organized, incorporated, qualified, or registered under the
46	46	11 laws of Alabama. The tax shall accrue as of January 1 of every
47	47	12 taxable year, or in the case of a taxpayer organized,
48	48	13 incorporated, qualified, or registered during the year, or
49	49	14 doing business in Alabama for the first time, as of the date
50	50	15 the taxpayer is organized, incorporated, registered, or
51	51	16 qualifies to do business, or begins to do business in Alabama,
52	52	17 as the case may be. The taxpayer shall be liable for the tax
53	53	18 levied by this article for each year beginning before the
54	54	19 taxpayer has been dissolved or otherwise ceased to exist or
55	55	20 has withdrawn or forfeited its qualification to do business in
56	56	21 Alabama. The amount of the tax due shall be determined by
57	57	22 multiplying the taxpayer's net worth in Alabama by the rate
58	58	23 determined in subsection (b).
59	59	24 "(b) Rate of tax. For all taxable years of taxpayers
60	60	25 that begin after December 31, 1999, the rate of tax shall be
61	61	26 as set forth below.
62	62	Page 2 If taxable1
63	63	2 income of the
64	64	3 taxpayer is:
65	65
66	66	at least4 but less
67	67	than
68	68	The tax rate
69	69	shall be
70	70	5 $1 $0.25 per
71	71	$1,000
72	72	$16 $200,000 $1.00 per
73	73	$1,000
74	74	$200,0007 $500,000 $1.25 per
75	75	$1,000
76	76	$500,0008 $2,500,000 $1.50 per
77	77	$1,000
78	78	$2,500,0009 $1.75 per
79	79	$1,000
80	80	"(c) Minimum tax. (1) Except as provided in10
81	81	11 subsection (f), and subdivisions (c)(2) and (c)(3), the
82	82	12 privilege tax levied by this article on certain corporations,
83	83	13 business trusts, limited liability entities, and disregarded
84	84	14 entities shall not be less than $100.
85	85	15 "(2) For the taxable year beginning after December
86	86	16 31, 2022, taxpayers who would otherwise be subject to the
87	87	17 minimum tax due of $100 provided for in subdivision (c)(1)
88	88	18 shall pay $50 in lieu thereof. This subdivision shall not
89	89	Page 3 1 apply to those subject to the tax levy provided under Section
90	90	2 2 of Act 2021-450 of the 2021 Regular Session now appearing as
91	91	3 Section 20-2A-80.
92	92	4 "(3) For taxable years beginning after December 31,
93	93	5 2023, taxpayers who would otherwise be subject to the minimum
94	94	6 tax due provided for in subdivisions (c)(1) or (c)(2) shall be
95	95	7 exempt from the privilege tax levied by this article and the
96	96	8 associated filing requirement. This subdivision shall not
97	97	9 apply to those subject to the tax levy provided under Section
98	98	10 2 of Act 2021-450 of the 2021 Regular Session now appearing as
99	99	11 Section 20-2A-80.
100	100	12 "(d) Maximum tax.
101	101	13 "(1) Except as provided in subdivision (2), the
102	102	14 privilege tax levied by this article shall not exceed $15,250
103	103	15 for any taxpayer for the taxable year beginning January 1,
104	104	16 2000. For each taxable year thereafter, the maximum tax shall
105	105	17 not exceed $15,000 for any taxpayer, except as provided in
106	106	18 subdivision (2).
107	107	19 "(2) With respect to any (i) financial institution
108	108	20 groups as defined in subsection (f)(1); (ii) insurance company
109	109	21 that is subject to the premium taxes levied by Chapter 4A of
110	110	22 Title 27; and (iii) corporation, company, limited liability
111	111	23 entity, or association whose property is assessed for taxation
112	112	24 pursuant to the provisions of Chapter 21 and is obligated to
113	113	25 serve the general public, but is not subject to the Alabama
114	114	26 Corporate Income tax, the privilege tax levied by this article
115	115	27 shall not exceed $3,000,000, for any taxpayer or, for a
116	116	Page 4 1 financial institution group, for the financial institution
117	117	2 group as a whole each year except as provided in subsection
118	118	3 (e). The privilege tax levied by this article on any electing
119	119	4 family limited liability entity shall not exceed $500.
120	120	5 "The privilege tax levied by this article on any
121	121	6 corporation organized as a not-for-profit corporation that
122	122	7 does not engage in any business other than holding title to
123	123	8 property and paying the expenses thereof, including, without
124	124	9 limitation, a property owners' association or a corporation
125	125	10 organized solely to hold title to property on a temporary
126	126	11 basis, shall not exceed $100.
127	127	12 "(e) Short taxable years. If any taxpayer's taxable
128	128	13 year is less than 12 months because the taxpayer is
129	129	14 incorporated or organized within the taxable year, or if any
130	130	15 foreign corporation or foreign limited liability entity
131	131	16 qualifies, registers, or begins to do business in this state
132	132	17 within the taxable year or converts to a taxable year other
133	133	18 than the calendar year, the amount of the tax levied by this
134	134	19 article shall be determined in the manner specified in this
135	135	20 article but apportioned to the short taxable year in same
136	136	21 proportion as the number of days in the short taxable year
137	137	22 bears to 365, but in no event less than $100 the amounts as
138	138	23 specified in subsection (c) as applicable nor more than the
139	139	24 applicable amount specified in subsection (d).
140	140	25 "(f) Minimum taxes for financial institution groups.
141	141	26 "(1) For purposes of this subsection, the following
142	142	27 terms shall mean:
143	143	Page 5 1 "a. Affiliated Group. (i) One or more chains of
144	144	2 corporations or limited liability entities connected through
145	145	3 the ownership of stock or ownership interests with a common
146	146	4 parent which is a corporation or limited liability entity, but
147	147	5 only if the common parent owns directly stock or ownership
148	148	6 interests meeting the requirements of item (ii) in at least
149	149	7 one of the other corporations or limited liability entities,
150	150	8 and only if stock or ownership interests meeting the
151	151	9 requirements of item (ii) in each of the corporations or
152	152	10 limited liability entities (except the common parent) is owned
153	153	11 directly by one or more of the other corporations or limited
154	154	12 liability entities. (ii) The ownership of stock or ownership
155	155	13 interests of any corporation or limited liability entity meets
156	156	14 the requirements of this paragraph if it possesses at least 80
157	157	15 percent of the total voting power or capital and profits
158	158	16 interest of the corporation or limited liability entity.
159	159	17 "b. Financial Institution. The meaning given in
160	160	18 Section 40-16-1.
161	161	19 "c. Financial Institution Group. All taxpayers in an
162	162	20 affiliated group where at least one member of the group is a
163	163	21 financial institution that is subject to the provisions of
164	164	22 Chapter 16. In the event a financial institution taxpayer is
165	165	23 not a member of an affiliated group, that financial
166	166	24 institution shall be treated as a financial institution group.
167	167	25 "(2) To the extent that the members of a financial
168	168	26 institution group have different taxable years, the group
169	169	Page 6 1 shall be deemed, for purposes of the business privilege tax
170	170	2 levied by Article 2, to have a calendar taxable year.
171	171	3 "(3) Taxpayers who are members of a financial
172	172	4 institution group shall complete their business privilege tax
173	173	5 returns without regard to this subsection. Those taxpayers
174	174	6 shall submit their returns together, and the minimum tax
175	175	7 amount provided in subdivision (5) shall apply to the
176	176	8 aggregate business privilege tax liability of the group. To
177	177	9 the extent that the minimum amount provided in subdivision (5)
178	178	10 applies to determine the liability of the group, each taxpayer
179	179	11 which is a member of the group shall be liable for that
180	180	12 portion of the group liability which is equal to the amount
181	181	13 multiplied by the ratio of the taxpayer's liability without
182	182	14 regard to this subsection over the liability of the group
183	183	15 without regard to this subsection. Upon the annual election of
184	184	16 the common parent, a financial institution group may file a
185	185	17 single return, executed by the common parent of that financial
186	186	18 institution group. The return shall be completed as if the
187	187	19 financial institution group were a single taxpayer. Each
188	188	20 member of the financial institution group shall be jointly and
189	189	21 severally liable for the group's business privilege tax and
190	190	22 corporate shares tax liabilities.
191	191	23 "(4) The tax returns for all members of a financial
192	192	24 institution group shall be due no later than the corresponding
193	193	25 Alabama financial institution excise tax return due date.
194	194	26 Extensions for filing these returns shall not be granted for
195	195	27 more than six months.
196	196	Page 7 1 "(5) For taxable years beginning on or after January
197	197	2 1, 2000, the minimum aggregate business privilege tax levied
198	198	3 by Article 2 on all members of a financial institution group
199	199	4 shall be:
200	200	5 "a. For financial institutions with total deposits
201	201	6 inside Alabama of less than one billion dollars
202	202	7 ($1,000,000,000) within that financial institution group, as
203	203	8 reported to the FDIC, OTS, or the NCUSIF as of June 30 of the
204	204	9 immediately preceding taxable year, the tax rate shall be
205	205	10 $.125 per one thousand dollars ($1,000) of such deposits. For
206	206	11 deposit rate purposes for all future periods, the deposits
207	207	12 shall in no event be less than the deposits listed as of June
208	208	13 30, 1999.
209	209	14 "b. For financial institutions with total deposits
210	210	15 inside Alabama of one billion dollars ($1,000,000,000) or
211	211	16 greater up to and including six billion dollars
212	212	17 ($6,000,000,000) within that financial institution group, as
213	213	18 reported to the FDIC, OTS, or the NCUSIF as of June 30 of the
214	214	19 immediately preceding taxable year, the tax rate shall be $.17
215	215	20 per one thousand dollars ($1,000) of such deposits. For
216	216	21 deposit rate purposes for all future periods, the deposits
217	217	22 shall in no event be less than the deposits listed as of June
218	218	23 30, 1999.
219	219	24 "c. For financial institutions with total deposits
220	220	25 inside Alabama greater than six billion dollars
221	221	26 ($6,000,000,000) within that financial institution group, as
222	222	27 reported to the FDIC, OTS, or the NCUSIF as of June 30 of the
223	223	Page 8 1 immediately preceding taxable year, the tax rate shall be
224	224	2 $.225 per one thousand dollars ($1,000) of such deposits. For
225	225	3 deposit rate purposes for all future periods, the deposits
226	226	4 shall in no event be less than the deposits listed as of June
227	227	5 30, 1999.
228	228	6 "d. Provided, however, that in the case of a
229	229	7 financial institution group that, as of June 30, 1999, (i) had
230	230	8 total deposits of less than one billion dollars
231	231	9 ($1,000,000,000) and (ii) derived at least a majority of its
232	232	10 deposits, as reported to FDIC, OTS, or NCUSIF, that were
233	233	11 booked to one or more branches or offices located within
234	234	12 Alabama from account holders whose addresses of record on the
235	235	13 books of the financial institution group were outside the
236	236	14 State of Alabama, the phrase "total deposits in Alabama," for
237	237	15 purposes of calculating the minimum aggregate business
238	238	16 privilege tax levied by Article 2 for all taxable years
239	239	17 beginning on and after January 1, 2000, shall only include
240	240	18 deposits of account holders whose addresses of record on the
241	241	19 books of the financial institution group are inside the State
242	242	20 of Alabama.
243	243	21 "e. In the event a financial institution group sells
244	244	22 Alabama deposits to another financial institution group that
245	245	23 reports those deposits in Alabama for purposes of Act
246	246	24 2000-705, those deposits shall not be taxed more than once
247	247	25 pursuant to the provisions of Act 2000-705 in the same taxable
248	248	26 year. The liability for such taxes shall be the responsibility
249	249	Page 9 1 of the purchaser, and the tax base for the selling group shall
250	250	2 be adjusted accordingly.
251	251	3 "f. In the event an existing financial institution
252	252	4 group reports deposits in any year less than 96.5 percent of
253	253	5 the deposits reported as of June 30, 1999, the alternative
254	254	6 minimum tax shall be based on the deposits reported as of June
255	255	7 30, 1999. In the event an existing financial institution group
256	256	8 reports deposits in any year more than 96.5 percent of the
257	257	9 deposits reported as of June 30, 1999, the alternative minimum
258	258	10 tax shall be based on the deposits reported for that taxable
259	259	11 year. For financial institutions coming into existence after
260	260	12 June 30, 1999, the deposits upon which the alternative minimum
261	261	13 tax is based shall not be less than the deposits reported the
262	262	14 first full year that financial institution reported deposits
263	263	15 to the FDIC, OTS, or NCUSIF."
264	264	16 Section 2. The Department of Revenue may adopt rules
265	265	17 for the implementation and administration of this act.
266	266	18 Section 3. This act shall become effective on the
267	267	19 first day of the third month following its passage and
268	268	20 approval by the Governor, or its otherwise becoming law.
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