Section 40-16-4

Levy; reporting of tax; promulgation of rules.

THIS SECTION WAS AMENDED BY ACT 2017-165 IN THE 2017 REGULAR SESSION, EFFECTIVE APRIL 20, 2017. THIS IS NOT IN THE CURRENT CODE SUPPLEMENT.

(a)(1) Every such financial institution engaging in any of the following businesses:

(i) Banking;
(ii) Conducting the business of a financial institution as defined in this chapter;
(iii) Conducting a credit card business through the issuance of credit cards to Alabama residents or businesses; or
(iv) Conducting a business employing moneyed capital coming into competition with the business of national banks shall pay to the state annually for each taxable year an excise tax measured by its net income allocated and apportioned for the taxable year at the rate of six and one-half percent of the net income.

(2) For purposes of the excise tax imposed by this chapter, any financial institution which has income from business activity that is taxable both within and without this state shall allocate and apportion its net income as provided in rules which shall be prescribed by the Department of Revenue, provided that such rules shall not conflict with any provision of this chapter and provided further that if such rules allocate and apportion the net income of the financial institution based, at least in part, on its property in the state, loans and credit card receivables shall be considered part of the financial institution's property in the state and shall be sourced to the state using the same sourcing methods as the department uses to allocate and apportion a financial institution's interest receipts from related loans and credit card receivables.

(3) The amount of the excise tax shall not be in excess of any limit fixed thereon by any present or future federal statute relating to the taxation of national banks by this state. Under no circumstances will any dividends paid from a financial institution to the common parent corporation of a controlled group of corporations, as defined in Section 40-16-3, be subject to excise tax.

(b) The excise tax provided in this chapter shall be reported in the form to be prescribed by the Department of Revenue. The amount shown to be due by the taxpayer's return shall constitute and create a prima facie liability for the amount on which taxes shall be paid. Where the Department of Revenue determines that the amount due is different from that shown by the taxpayer's return or where no return is filed, the department may determine the correct amount due pursuant to the procedures set forth in Chapter 2A of this title.

(c)(1) The Department of Revenue shall have 120 days from April 20, 2017 to promulgate rules consistent with this section. Such rules shall be promulgated in accordance with the Alabama Administrative Procedure Act and shall be effective for all tax years beginning on or after January 1, 2017.

(2) If, on or before December 31, 2030, the Alabama Department of Revenue certifies to the Legislature (1) that the applicable law in a majority of the states, including two states contiguous to Alabama, requires a financial institution to allocate and apportion its net income based at least in part on the institution's property in that state, and (2) that the related definition of property in each of those states excludes a financial institution's loans and credit card receivables, then the Alabama Department of Revenue shall promulgate a rule consistent with the applicable law in those states. Any rule promulgated in accordance with the foregoing sentence shall be promulgated in accordance with the Alabama Administrative Procedure Act and shall be effective for all tax years beginning on or after 120 days from the effective date of the rule.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, §427; Acts 1978, No. 840, p. 1247, §3; Acts 1992, No. 92-186, p. 349, §45; Act 99-665, 2nd Sp. Sess., p. 131, §6; Act 99-664, 2nd Sp. Sess., p. 124, §1; Act 2016-283, §1; Act 2017-165, §§1,2,.)