Alabama 2024 Regular Session

Alabama Senate Bill SB107 Compare Versions

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

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1	1	SB107INTRODUCED
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3	3	SB107
4	4	LDJFYAY-1
5	5	By Senator Hovey
6	6	RFD: Finance and Taxation Education
7	7	First Read: 15-Feb-24
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12	12	5 LDJFYAY-1 02/07/2024 KHF (F)KHF 2024-570
13	13	Page 1
14	14	First Read: 15-Feb-24
15	15	SYNOPSIS:
16	16	Under current law, an Alabama pass-through
17	17	entity may elect to be taxed as an Alabama electing
18	18	pass-through entity by submitting the appropriate form
19	19	to the Department of Revenue anytime during the year or
20	20	on or before the fifteenth day of the third month
21	21	following the close of that tax year for which the
22	22	entity elects to be taxed as an electing pass-through
23	23	entity.
24	24	This bill will extend the due date for an
25	25	Alabama electing pass-through entity to make the
26	26	election for tax years beginning January 1, 2024. The
27	27	due date for the election shall be the due date of the
28	28	corresponding Alabama annual return, including
29	29	extensions.
30	30	A BILL
31	31	TO BE ENTITLED
32	32	AN ACT
33	33	Relating to income taxes; to amend Section 40-18-24.4,
34	34	Code of Alabama 1975, to extend the due date for an Alabama
35	35	electing pass-through entity to make the election to be taxed
36	36	as an electing pass-through entity.
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64	64	28 SB107 INTRODUCED
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66	66	as an electing pass-through entity.
67	67	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
68	68	Section 1. Section 40-18-24.4, Code of Alabama 1975, is
69	69	amended to read as follows:
70	70	"§40-18-24.4
71	71	(a) This section shall be known and may be cited as
72	72	the, "Alabama Electing Pass-Through Entity Tax Act."
73	73	(b) For the purposes of this section, "electing
74	74	pass-through entity" means any Alabama S corporation, as is
75	75	defined by Section 40-18-160, and any subchapter K entity, as
76	76	is defined by Section 40-18-1, that has made an election
77	77	pursuant to subsection (d) to pay Alabama income tax at the
78	78	rate prescribed in subsection (e).
79	79	(c) For tax years beginning on or after January 1,
80	80	2021, any Alabama S corporation, as defined in Section
81	81	40-18-160, and any subchapter K entity, as defined in Section
82	82	40-18-1, may elect to be taxed as an electing pass-through
83	83	entity.
84	84	(d)(1) For tax years beginning on or after January 1,
85	85	2021, through December 31, 2023, an An electing pass-through
86	86	entity shall submit the appropriate form to the Department of
87	87	Revenue at any time during the tax year or on or before the
88	88	fifteenth day of the third month following the close of that
89	89	tax year for which the entity elects to be taxed as an
90	90	electing pass-through entity. For tax years beginning on or
91	91	after January 1, 2024, an electing pass-through entity shall
92	92	submit the appropriate form to the Department of Revenue on or
93	93	before the due date for filing the applicable income tax
94	94	return, including any extensions which have been granted
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124	124	return, including any extensions which have been granted
125	125	following the close of that tax year for which the entity
126	126	elects to be taxed as an electing pass-through entity.
127	127	(2) This election shall be binding for that year and
128	128	all subsequent tax years and shall not be revoked unless the
129	129	electing pass-through entity submits the appropriate form to
130	130	the Department of Revenue at any time during a subsequent tax
131	131	year or on or before the fifteenth day of the third month the
132	132	due dates provided in this subsection following the close of
133	133	that tax year for which the entity elects to no longer be
134	134	taxed as an electing pass-through entity. Both the election to
135	135	become an electing pass-through entity and the revocation of
136	136	that election shall be accomplished by a vote by or written
137	137	consent of the members of the governing body of the entity as
138	138	well as a vote by or written consent of the owners, members,
139	139	partners, or shareholders holding greater than 50 percent of
140	140	the voting control of the entity, within the time prescribed
141	141	above.
142	142	(3) For tax years beginning on or after January 1,
143	143	2025, the election or revocation shall be made on the timely
144	144	filed return, including any extensions which have been
145	145	granted.
146	146	(e) An electing pass-through entity shall pay a tax at
147	147	the highest marginal rate provided in Section 40-18-5,
148	148	calculated in accordance with Section 40-18-24 or Section
149	149	40-18-161 and Section 40-18-162, as appropriate, and
150	150	apportioned in accordance with Chapter 27 of this title. An
151	151	electing pass-through entity shall be subject to Section
152	152	40-18-80.1 (estimated tax for corporations). In calculating
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182	182	40-18-80.1 (estimated tax for corporations). In calculating
183	183	taxable income for the purposes of this subsection, Alabama
184	184	tax paid under this subsection shall not be deducted in
185	185	calculating Alabama taxable income.
186	186	(f) The owners, members, partners, or shareholders
187	187	shall not be liable for the tax otherwise imposed by Chapter
188	188	16 and this chapter of this title on their pro rata or
189	189	distributive shares of the electing pass-through entity's
190	190	income.
191	191	(g) The adjusted basis of the owners, members,
192	192	partners, or shareholders of an electing pass-through entity
193	193	in their stock or other ownership interests in the entity
194	194	shall be calculated without regard to the election under this
195	195	section.
196	196	(h) Notwithstanding anything in this chapter to the
197	197	contrary, neither the election by an electing pass-through
198	198	entity under this section nor its revocation of the election
199	199	shall be considered a liquidation or termination of the entity
200	200	or an otherwise taxable event.
201	201	(i) No refunds shall be granted or paid for tax years
202	202	ending before January 1, 2020, related to Act 2021-1.
203	203	(j) The Department of Revenue may adopt rules for the
204	204	implementation and administration of Act 2021-1this section."
205	205	Section 2. This act shall become effective immediately
206	206	upon its passage and approval by the Governor, or its
207	207	otherwise becoming law.
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