By Patterson H.B. No. 1184
74R1763 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the imposition of a tax on financial institutions
1-3 engaging in the business of accepting deposits in this state.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 2, Tax Code, is amended by adding Subtitle
1-6 K to read as follows:
1-7 SUBTITLE K. OCCUPATION TAXES
1-8 CHAPTER 231. FINANCIAL INSTITUTIONS OCCUPATION TAX
1-9 SUBCHAPTER A. DEFINITIONS
1-10 Sec. 231.001. DEFINITIONS. In this chapter:
1-11 (1) "Bank" means a state or national bank, domestic or
1-12 foreign bank, or a bank organized under Section 25(a) of the
1-13 Federal Reserve Act (12 U.S.C. Sections 611-631) (edge
1-14 corporations), but does not include a bank holding company as
1-15 defined by Section 2 of the Bank Holding Company Act of 1956 (12
1-16 U.S.C. Section 1841).
1-17 (2) "Branch" means a facility operated by a financial
1-18 institution at which the financial institution receives deposits,
1-19 pays checks, or lends money, but does not include:
1-20 (A) the principal office of the financial
1-21 institution;
1-22 (B) an automatic teller machine; or
1-23 (C) a drive-in facility.
1-24 (3) "Charitable organization" means any organization
2-1 exempt from federal income tax under Section 501(a) of the Internal
2-2 Revenue Code of 1986 by being listed as an exempt organization in
2-3 Sections 501(c)(3) through 501(c)(10) of the code.
2-4 (4) "Deposits" means the balance of money or its
2-5 equivalent held by a financial institution in the usual course of
2-6 business for which the financial institution has given or is
2-7 obligated to give credit, conditionally or unconditionally, to a
2-8 commercial, checking, savings, time, or thrift account or that is
2-9 evidenced by a certificate of deposit.
2-10 (5) "Financial institution" means a bank or a savings
2-11 and loan association.
2-12 (6) "Local area" means a financial institution's local
2-13 community, as delineated under federal regulations adopted under
2-14 the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et
2-15 seq.).
2-16 (7) "Local area borrower" means a borrower that is an
2-17 individual residing in a financial institution's local area, a
2-18 business having its principal place of business in the
2-19 institution's local area, or an entity conducting the majority of
2-20 its affairs in the institution's local area.
2-21 (8) "Savings and loan association" means a savings and
2-22 loan association or a savings bank organized under the laws of this
2-23 state, another state, or the United States.
2-24 (9) "Tax" means the occupation tax imposed by this
2-25 chapter.
2-26 (Sections 231.002-231.020 reserved for expansion
2-27 SUBCHAPTER B. TAX IMPOSED; PAYMENT AND REPORTS
3-1 Sec. 231.021. TAX IMPOSED; RATE. (a) A tax is imposed on a
3-2 financial institution that engages in the business of accepting
3-3 deposits in this state.
3-4 (b) The tax rate is two percent of the average annual net
3-5 taxable deposits of the financial institution.
3-6 Sec. 231.022. REGULAR ANNUAL PERIOD COVERED BY TAX. The tax
3-7 is for a regular annual period beginning each year on May 1 and
3-8 ending the following April 30.
3-9 Sec. 231.023. DATE ON WHICH PAYMENT IS DUE. Payment of the
3-10 tax is due March 15 of each year before the beginning of the
3-11 regular annual period.
3-12 Sec. 231.024. PAYMENT TO COMPTROLLER. A financial
3-13 institution shall pay the tax to the comptroller.
3-14 Sec. 231.025. REPORTS. (a) Each financial institution in
3-15 this state shall report to the comptroller on or before March 15 of
3-16 the year after the year in which the fiscal year ends.
3-17 (b) The report must include for the computation period
3-18 covered by the report:
3-19 (1) the total deposits of the institution;
3-20 (2) the allocations of deposits among the principal
3-21 office and branches as required by Section 231.045 if the
3-22 institution's annual gross deposits are $300 million or more;
3-23 (3) the value of loans made to local area borrowers
3-24 that qualify for deductions under this chapter if the institution's
3-25 annual gross deposits are $300 million or more; and
3-26 (4) any other information required by the
3-27 comptroller's rules.
4-1 Sec. 231.026. PAYMENT AND REPORTING; NEW INSTITUTIONS. (a)
4-2 The comptroller by rule shall provide for the reporting,
4-3 computation, and payment of the tax for financial institutions that
4-4 begin accepting deposits in this state after May 1, 1994.
4-5 (b) The rules shall provide for an initial period and a
4-6 second period for the payment of the tax in the same manner as the
4-7 franchise taxes imposed under Chapter 171 are paid and reported for
4-8 corporations that begin doing business in this state.
4-9 (Sections 231.027-231.040 reserved for expansion
4-10 SUBCHAPTER C. COMPUTATION OF TAX
4-11 Sec. 231.041. COMPUTATION PERIOD. The tax covering the
4-12 regular annual period for a financial institution is determined on
4-13 a computation period consisting of the institution's fiscal year
4-14 that ends in the year before the year in which the tax is due.
4-15 Sec. 231.042. AVERAGE ANNUAL GROSS DEPOSITS. A financial
4-16 institution shall determine its average annual gross deposits for a
4-17 computation period by dividing the sum of the daily deposits for
4-18 the computation period by 365.
4-19 Sec. 231.043. GROSS TAXABLE DEPOSITS. A financial
4-20 institution shall determine its gross taxable deposits for a
4-21 computation period by subtracting from the institution's average
4-22 annual gross deposits for the computation period:
4-23 (1) $300 million;
4-24 (2) the average annual deposits made at the
4-25 institution by other financial institutions;
4-26 (3) the average annual deposits made at the
4-27 institution by the federal or state government or any political
5-1 subdivision of the state government, or any board, commission,
5-2 department, institution, agency, or office within the federal or
5-3 state government or within a political subdivision of the state
5-4 government;
5-5 (4) the average annual deposits made at the
5-6 institution by foreign countries; and
5-7 (5) the average annual deposits made at the
5-8 institution by an individual who is not a citizen of the United
5-9 States and who is not a resident of this state or by a legal entity
5-10 that is created under a charter or other authorization issued by a
5-11 foreign country and that is not engaged in business in this state.
5-12 Sec. 231.044. AVERAGE ANNUAL NET TAXABLE DEPOSITS. A
5-13 financial institution shall determine its average annual net
5-14 taxable deposits for a computation period by subtracting from its
5-15 gross taxable deposits for the computation period:
5-16 (1) the product of 1.75 and the average annual balance
5-17 of the institution's loans made to local area borrowers; and
5-18 (2) the amount of cash contributed by the institution
5-19 to charitable organizations in the institution's local area.
5-20 Sec. 231.045. ALLOCATIONS AMONG BRANCHES. (a) A financial
5-21 institution that has a principal office and one or more branches in
5-22 this state shall report its average annual gross deposits, gross
5-23 taxable deposits, and average annual net taxable deposits
5-24 separately for the office and each branch, using the amounts of
5-25 deposits and loans assigned to each facility. The $300 million
5-26 deduction provided by Section 231.043(1) is allocated among an
5-27 institution's office and branches according to each facility's
6-1 proportionate share of the average annual gross deposits of the
6-2 financial institution.
6-3 (b) If the allocations and assignments under Subsection (a)
6-4 result in an office or branch having average annual net taxable
6-5 deposits of less than zero, the financial institution may transfer
6-6 the negative amount to the principal office or another branch and
6-7 treat the amount as a deduction to that facility's average annual
6-8 net taxable deposits.
6-9 (c) A financial institution may not carry an unused
6-10 deduction from one computation period to a different computation
6-11 period.
6-12 (Sections 231.046-231.060 reserved for expansion
6-13 SUBCHAPTER D. ENFORCEMENT; PENALTIES
6-14 Sec. 231.061. EXAMINATION OF FINANCIAL INSTITUTIONS. To
6-15 determine the tax liability of a financial institution, the
6-16 comptroller may investigate or examine the records of the financial
6-17 institution.
6-18 Sec. 231.062. INTEREST. (a) The yearly interest rate on
6-19 the delinquent payment of the tax is 10 percent.
6-20 (b) A delinquent tax draws interest beginning on the 60th
6-21 day after the date that the tax is due.
6-22 Sec. 231.063. PENALTY. A penalty of 10 percent of the tax
6-23 due is imposed on a financial institution that does not pay the tax
6-24 when due.
6-25 Sec. 231.064. STATE DEPOSITORY. The comptroller shall
6-26 notify the state treasurer if a financial institution designated as
6-27 a state depository under Chapter 404, Government Code, fails to
7-1 report or pay the tax.
7-2 Sec. 231.065. PENALTY FOR FAILURE TO FILE REPORT. (a) A
7-3 person commits an offense if the person fails to file a report as
7-4 required by this chapter.
7-5 (b) An offense under this section is a Class A misdemeanor.
7-6 (Sections 231.066-231.080 reserved for expansion
7-7 SUBCHAPTER E. ALLOCATION OF REVENUE; CREATION OF FUND
7-8 Sec. 231.081. ALLOCATION. The comptroller shall allocate
7-9 the revenue from the tax as follows:
7-10 (1) one-quarter to the foundation school fund; and
7-11 (2) three-quarters to general revenue.
7-12 SECTION 2. Section 404.021, Government Code, is amended by
7-13 adding Subsection (d) to read as follows:
7-14 (d) An institution is not eligible to be a state depository
7-15 if the institution fails to report or pay the tax due under Chapter
7-16 231, Tax Code.
7-17 SECTION 3. Section 404.022, Government Code, is amended by
7-18 amending Subsection (c) and adding Subsection (j) to read as
7-19 follows:
7-20 (c) The application for designation as a state depository
7-21 must include a statement:
7-22 (1) of the amount of the applicant's paid capital
7-23 stock and permanent surplus, if any, or if the applicant is a
7-24 private bank, the amount of net proprietorship;
7-25 (2) of the maximum amount of state funds the applicant
7-26 will accept;
7-27 (3) of the applicant's condition on the date the
8-1 application is submitted; <and>
8-2 (4) that the books and accounts of the institution, if
8-3 it is designated as a state depository, will be open at all times
8-4 for inspection by the board or a member or accredited
8-5 representative of the board; and
8-6 (5) that the institution reported and paid any tax due
8-7 under Chapter 231, Tax Code, on or before the application date.
8-8 (j) If an institution previously designated as a state
8-9 depository fails to report or pay the tax imposed by Chapter 231,
8-10 Tax Code, the treasurer shall withdraw state funds from the
8-11 institution, except that the treasurer is not required to withdraw
8-12 funds at a time or in a manner that will result in loss to the
8-13 state.
8-14 SECTION 4. (a) This Act takes effect September 1, 1995.
8-15 (b) The first report and the first tax payable under Chapter
8-16 231, Tax Code, as added by this Act, are due on or before March 15,
8-17 1996, for the regular annual period beginning May 1, 1996.
8-18 SECTION 5. The importance of this legislation and the
8-19 crowded condition of the calendars in both houses create an
8-20 emergency and an imperative public necessity that the
8-21 constitutional rule requiring bills to be read on three several
8-22 days in each house be suspended, and this rule is hereby suspended.