AL
Alabama Senate Bill SB105

Alabama 2025 Regular Session

Alabama Senate Bill SB105 Compare Versions

Only one version of the bill is available at this time.
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33 SB105
44 N9UETJT-1
55 By Senator Weaver
66 RFD: Finance and Taxation Education
77 First Read: 05-Feb-25
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1212 5 N9UETJT-1 02/04/2025 RA (F)RA 2025-568
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1414 First Read: 05-Feb-25
1515 SYNOPSIS:
1616 This bill would establish a Rural Hospital
1717 Investment Program to provide financial support for
1818 rural hospitals in the State of Alabama.
1919 This bill would incentivize donations to rural
2020 hospitals by creating a tax credit for individuals and
2121 entities to offset their state income, excise, premium,
2222 and utility tax liability. Qualifying hospitals would
2323 use these donations to pay for their provision of acute
2424 care services to rural populations served by the
2525 hospitals. These funds may be used for direct care and
2626 operational expenses, including expenditures to
2727 maintain or upgrade facilities.
2828 This bill would also establish a board within
2929 the Office of the State Treasurer to determine the
3030 eligibility of qualifying rural hospitals to receive
3131 donations that qualify for the tax credit and to
3232 operate the program with the support of the Department
3333 of Revenue.
3434 A BILL
3535 TO BE ENTITLED
3636 AN ACT
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6666 Relating to rural health care; to provide for funding
6767 of rural general acute care, critical access, and rural
6868 emergency hospitals by creating the Rural Hospital Investment
6969 Program; to establish the Rural Hospital Investment Program
7070 Board to administer the program ; to provide for state income,
7171 excise, premium, and utility tax credits in exchange for
7272 donations to rural general acute care, critical access, and
7373 rural emergency hospitals; and to provide for coordination
7474 with the Department of Revenue.
7575 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
7676 Section 1.This act, the purpose of which is to
7777 generate additional funds for eligible rural general acute
7878 care, critical access, and rural emergency hospitals to
7979 strengthen their financial viability, shall be known and may
8080 be cited as the "Rural Hospital Investment Act of 2025."
8181 Section 2. For the purposes of this act, the following
8282 terms have the following meanings:
8383 (1) BOARD. The Rural Hospital Investment Program Board.
8484 (2) DEPARTMENT. The Alabama Department of Revenue.
8585 (3) ELIGIBLE RURAL HOSPITAL. A hospital that meets the
8686 requirements provided in Section 4.
8787 (4) ELIGIBLE TAXES. Financial Institution Excise Tax,
8888 Income Tax, Insurance Premium Tax, and Utility Tax.
8989 (5) FINANCIAL INSTITUTION EXCISE TAX. The taxes levied
9090 and collected pursuant to Chapter 16 of Title 40, Code of
9191 Alabama 1975.
9292 (6) INCOME TAX. The taxes levied and collected pursuant
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122122 (6) INCOME TAX. The taxes levied and collected pursuant
123123 to Chapter 18 of Title 40, Code of Alabama 1975.
124124 (7) INSURANCE PREMIUM TAX. The taxes levied and
125125 collected pursuant to Chapter 4A of Title 27, Code of Alabama
126126 1975.
127127 (8) PROGRAM. The Rural Hospital Investment Program.
128128 (9) QUALIFIED DONATION. An unrestricted transfer of
129129 funds from a qualified donor to an eligible rural hospital.
130130 (10) QUALIFIED DONOR. Any person that makes a qualified
131131 donation to an eligible rural hospital.
132132 (11) RURAL HOSPITAL. A rural general acute care, rural
133133 emergency, or critical access hospital determined to be
134134 located in a rural area as provided in Section 4(2).
135135 (12) TAX YEAR. The calendar year for which annual
136136 income is reported to the State of Alabama by a person that
137137 makes a qualified donation.
138138 (13) UTILITY TAX. The taxes levied and collected
139139 pursuant to Sections 40-21-82 through 40-21-107, Code of
140140 Alabama 1975.
141141 Section 3. (a) The Rural Hospital Investment Program
142142 Board is established within the Office of the State Treasurer
143143 to oversee the development and operation of the Rural Hospital
144144 Investment Program. The board shall consist of the following
145145 members:
146146 (1) The Governor, or his or her designee.
147147 (2) The State Treasurer, or his or her designee.
148148 (3) The Commissioner of Revenue, or his or her
149149 designee.
150150 (4) The President Pro Tempore of the Senate, or his or
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180180 (4) The President Pro Tempore of the Senate, or his or
181181 her designee.
182182 (5) The Speaker of the House of Representatives, or his
183183 or her designee.
184184 (6) Two representatives of the Alabama Hospital
185185 Association, appointed by the association.
186186 (b) Members shall be appointed within 30 days of the
187187 effective date of this act.
188188 (c)(1) The Alabama Hospital Association shal1 appoint
189189 one initial member to the board for a term of two years and
190190 one initial member to the board for a term of four years.
191191 (2) A member subsequently appointed to the board by
192192 the Alabama Hospital Association s hall serve for a term of
193193 four years.
194194 (3) A vacancy on the board of a representative of the
195195 Alabama Hospital Association shall be filled by the Alabama
196196 Hospital Association before the next scheduled meeting of the
197197 board and the appointee shall serve for the remainder of the
198198 unexpired term.
199199 (d) Designees or appointees to the board shall be
200200 inclusive and reflect the racial, gender, geographic, rural,
201201 urban, and economic diversity of the state.
202202 (e)(1) No later than three months after the effective
203203 date of this act, the Governor, or his or her designee, shall
204204 call the first meeting of the board, at which the members
205205 shall elect a chair.
206206 (2) The board shall meet at least once a year in
207207 Montgomery, Alabama, but thereafter sha11 meet as necessary to
208208 conduct its business.
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238238 conduct its business.
239239 (3) A quorum for a meeting of the board shall be four
240240 members.
241241 (4) The board may meet by electronic means, so long as
242242 there is a quorum of participating members.
243243 (5) The legislative members of the board shall be
244244 entitled to their legislative compensation, per diem, and
245245 travel expenses for each day they attend a meeting of the
246246 board pursuant to Section 49 of the Constitution of Alabama of
247247 2022.
248248 (6) The nonlegislative members of the board shall serve
249249 without compensation but may be reimbursed for necessary
250250 expenses in attending meetings of the board pursuant to the
251251 policies of his or her respective appointing authority.
252252 Section 4. To receive qualified donations as an
253253 eligible rural hospital under the program, a health care
254254 institution shall meet all of the following requirements:
255255 (1) Be a rural general acute care hospital, a rural
256256 emergency hospital, or a critical access hospital licensed by
257257 the Alabama Department of Public Health pursuant to Section
258258 22-21-22, Code of Alabama 1975.
259259 (2) Be in a location considered to be a rural area
260260 under the federal Centers for Medicare and Medicaid Services
261261 eligibility definition of "rural" as verified through the
262262 Rural Health Information website supported by the federal
263263 Health Resources and Services Administration.
264264 (3) Provide hospital services to both Medicare and
265265 Medicaid participants without discrimination.
266266 (4) Provide hospital services to indigent patients,
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296296 (4) Provide hospital services to indigent patients,
297297 regardless of ability to pay.
298298 (5) Be in compliance with all reports and audits
299299 required by law.
300300 (6) Submit to the board a written five-year plan that
301301 describes the financial viability and stability of the
302302 hospital, with a plan detailing how it would use qualified
303303 donations under the program and update the written plan five
304304 years after the initial plan is submitted and every five years
305305 thereafter.
306306 Section 5. The board shall do all of the following:
307307 (1) By November 1 of each year, determine if a hospital
308308 is an eligible rural hospital pursuant to Section 4.
309309 (2) By December 1 of each year, submit the list of
310310 eligible rural hospitals to the Alabama Department of Revenue.
311311 (3) By December 31 of each year, publish a list of
312312 rural hospitals eligible to receive qualified donations during
313313 the next tax year on its website or on the department's
314314 website.
315315 Section 6. (a) An eligible rural hospital shall only
316316 use qualified donations for the purpose of providing health
317317 care to the residents of the area which it serves, which may
318318 include operational expenditures and expenditures for
319319 maintenance, capital upgrades, and improvements.
320320 (b) An eligible rural hospital may retain a person to
321321 solicit or manage the qualified donations it receives for a
322322 percentage fee of the qualified donations solicited or
323323 managed, but total fees may not exceed five percent of the
324324 total amount of qualified donations received during a calendar
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354354 total amount of qualified donations received during a calendar
355355 year.
356356 (c) By March 1 of each year, an eligible rural hospital
357357 shall file a report with the board, on a form to be developed
358358 by the board that shall include all of the following
359359 information:
360360 (1) A schedule of each qualifying donation received
361361 during the preceding tax year, which includes the amount,
362362 identifies the qualified donor, and describes how the
363363 qualified donation was or is planned to be spent.
364364 (2) A schedule of payments made to any person during
365365 the preceding tax year for the purpose of soliciting or
366366 managing the qualified donations received.
367367 (d) An eligible rural hospital shall report all
368368 donations received from a taxpayer to the department within 30
369369 days of the receipt of that donation.
370370 Section 7. Annually, the board and the department shall
371371 jointly prepare a report that, at a minimum, includes all
372372 qualified donations reported by eligible rural hospitals and
373373 all tax credits claimed and approved pursuant to this act for
374374 the preceding tax year. This report shall be provided to the
375375 Legislature by the fifth day of the next regular session.
376376 Section 8. (a) A taxpayer may claim a tax credit to
377377 offset eligible taxes for each qualified donation as provided
378378 in this section. The tax credit shall be provided as follows:
379379 (1) For a qualified donor who is a single individual, a
380380 head of household, or married, filing a separate return: an
381381 amount equal to 100 percent of the qualified donations to the
382382 taxpayer made during the tax year for which the credit is
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412412 taxpayer made during the tax year for which the credit is
413413 claimed, not to exceed fifteen thousand dollars ($15,000).
414414 (2) For a qualified donor who is married, filing a
415415 joint return: 100 percent of the qualified donations to the
416416 taxpayer made during the tax year for which the credit is
417417 claimed, not to exceed thirty thousand dollars ($30,000).
418418 (3)a. For a qualified donor that is taxed as a
419419 pass-through entity under subchapters S or K of the Internal
420420 Revenue Code, a limited liability company, or a professional
421421 corporation: 100 percent of the qualified donations to the
422422 taxpayer made during the tax year for which the credit is
423423 claimed, not to exceed four hundred fifty thousand dollars
424424 ($450,000).
425425 b. The tax credit shall be taken by the taxpayer on a
426426 pro rata basis according to an individual's percentage of
427427 ownership in the entity or fifteen thousand dollars ($15,000),
428428 whichever is less. In the case of a qualified donor that is
429429 taxed as a corporation under the Internal Revenue Code, an
430430 amount equal to 100 percent or 75 percent of the corporation's
431431 income, excise, utility, or insurance premium tax, not to
432432 exceed the amount of the corporation's income, excise,
433433 utility, or insurance premium tax liability, whichever is
434434 less, with a contribution limit each tax year of five hundred
435435 thousand dollars ($500,000).
436436 (b)(1) The total amount of the tax credit for a tax
437437 year may not exceed the taxpayer's tax liability or, for
438438 financial institutions, the state portion of the taxpayer's
439439 financial institution excise tax liability.
440440 (2) Any unused tax credit may be carried forward for up
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470470 (2) Any unused tax credit may be carried forward for up
471471 to three years following the qualified donations but shall not
472472 be transferable.
473473 (c)(1) The tax credits may be claimed beginning January
474474 1, 2026, for the 2026 tax year.
475475 (2) Except as provided in subdivision (b)(2), no tax
476476 credit may be claimed after tax year 2030.
477477 Section 9. (a) The statewide annual aggregate of the
478478 tax credit allowed for qualified d onations shall not exceed
479479 the following amounts:
480480 (1) Twenty million dollars ($20,000,000) for the tax
481481 year ending December 31, 2026.
482482 (2) Twenty-five million dollars ($25,000,000) for the
483483 tax year ending December 31, 2027.
484484 (3) Thirty million dollars ($30,000,000) for all
485485 subsequent tax years.
486486 (b) No more than seven hundred fifty thousand dollars
487487 ($750,000) may be contributed to any eligible rural hospital
488488 in the tax year ending December 31, 2026; one million dollars
489489 ($1,000,000) for the tax year ending December 31, 2027; and
490490 one million two hundred fifty thousand dollars ($1,250,000)
491491 each year thereafter, to be limited by the annual aggregate
492492 amount applicable in subsection (a).
493493 (c) The department shall preapprove each qualified
494494 donation for compliance with each applicable limit in
495495 subsections (a) and (b).
496496 Section 10. (a) The department shall adopt rules by
497497 January 1, 2026, as necessary to implement this act. The rules
498498 shall provide for all of the following:
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528528 shall provide for all of the following:
529529 (1) That the tax credits will not reduce the
530530 distribution to the Alabama Special Mental Health Trust Fund.
531531 (2) That the tax credits shall be awarded based on the
532532 order in which the credits are requested.
533533 (b) The Department shall prescribe the method by which
534534 the tax credits are to be issued to eligible taxpayers.
535535 Section 11. (a) The State Treasurer shall adopt rules
536536 to implement the responsibilities of the board and this act.
537537 (b) The board may retain an Alabama company to
538538 publicize the program, including the development of
539539 promotional and informational literature and a program website
540540 for use by eligible rural hospitals and qualified donors.
541541 Section 12. The tax credits created by this act may
542542 also qualify for federal income tax credits or deductions, but
543543 it is not intended for any qualified donation under this act
544544 to automatically qualify for any federal income tax credit or
545545 deduction.
546546 Section 13. This act shall become effective on October
547547 1, 2025.
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