Current through Register Vol. 43, No. 02, November 27, 2024
(1) Every financial institution, as defined
in Chapter 16, Title 40, Code of Ala. 1975, must make
and file a return with the department by the taxpayer's corresponding federal
income tax or federal information return due date. The return must be made on
the form prescribed by the department, complete as to information and in
accordance with the instructions provided. Corporation returns must be signed
under penalty of perjury by the cashier, treasurer or other authorized officer
or employee. The returns of other financial institutions must be signed under
penalty of perjury by the owner, managing partner or other authorized
employee.
(2) A Financial
Institution will be granted an automatic extension to file its Alabama
financial institution excise tax return consistent with the extension allowed
for the taxpayer's corresponding federal income tax return plus one month. The
corresponding federal extension form must be submitted with the return. An
extension of time granted pursuant to this section is not an extension of time
for payment of the tax. The amount of tax due must be paid on or before the due
date of the return without regard to the extension to file the return. Any tax
due, not paid on or before the unextended due date, will be subject to interest
until paid at the rate provided in Section
40-1-44, Code of Ala.
1975, and all applicable penalties.
(3)
Allocation and Apportionment
of Income. For purposes of calculating that tax imposed on
financial institutions under §
40-16-4, Code of Ala.
1975:
(a) Financial institutions
operating only in Alabama must apportion 100% of their total income to
Alabama.
(b) Financial institutions
that have income from business activity that is taxable both within and without
this state must allocate and apportion its income to this state in accordance
with §
40-16-4,
Code of Ala.
1975 and Rule
810-9-1-.05.
(c) Financial institutions required to
apportion their income in accordance with Rule
810-9-1-.05 must maintain records
of property, payroll, and receipts factors by state in entirety and make
records available to the department upon request in order to verify the
numerators and denominators of the apportionment factors.
(4)
Credits. The
credits provided by §
40-16-8, Code of Ala.
1975:
(a) May not be allowable
as credits to the parent.
(b) May
not be transferred from one related member to another.
(c) May not be carried forward to future tax
years.
(5)
Returns by entity type and supporting documentation.
(a)
C Corporations.
1. Form ET-1 must be filed for all
corporations that meet the definition of a financial institution.
2. The return must be accompanied by a copy
of the federal Form 1120, including a federal consolidated return, with "spread
sheet" information for subsidiaries included in the federal return. "Spread
sheet" information includes income and balance sheet statements for each
company included in the consolidated federal return presented in columns using
the federal Form 1120 format.
3.
Consolidated Filings by Bank Holding Companies.
Bank holding companies and their subsidiaries that meet the
tests described in §
40-16-3, Code of Ala.
1975, may file a Consolidated Alabama Financial Institution Excise
Tax return (Form ET-1C) in accordance with the following:
(i) Form ET-C ("Election To File Consolidated
Financial Institution Excise Tax Return") must be properly completed and filed
by the designated parent on or before the due date of the Alabama consolidated
return, including extensions, and on or before the date the consolidated return
is filed for the first taxable year for which the election is to be effective.
The election to file a consolidated return is irrevocable and is binding for
120 consecutive months (10 years).
(ii) If the election to file Consolidated
Alabama Financial Institution Excise Tax (Form ET-C) is not filed by the date
the bank holding company's returns are received by the department, a separate
Form ET-1 must be filed for each financial institution.
(iii) A proforma Form ET-1 must be completed
for each member participating in the consolidation. These documents must be
attached to the Form ET-1C.
(iv)
Management fees allocated to affiliates may not exceed the cost of the parent
company's operations in rendering services to its subsidiaries which are part
of the Alabama consolidated Financial Institution Excise Tax return. Interest
expense incurred by the parent on funds borrowed and invested in subsidiaries
or otherwise will not be allowed to be included in computation of such
management fees.
(b)
S Corporations.
1. The return must be accompanied by a copy
of the federal Form 1120S.
2.
Federal Taxable Income is the total of all shareholders' pro rata share items
of income (loss) and deductions reported on Schedule K of the S corporation's
Federal form 1120S.
3. The
shareholders of the S corporation are not required to report as Alabama income
the shareholder's pro rata share of the corporation's separately stated and
non-separately stated income but must report as income any cash or property
distributions received from the corporation.
(c)
Sub Chapter K
entities.
1. The return must be
accompanied by a copy of the federal Form 1065.
2. Federal Taxable Income is the total of all
partners' distributive share items income (loss) and deductions reported on
Schedule K of the Subchapter K's Federal Form 1065.
(d)
Trusts.
1. The return must be accompanied by a copy
of the federal Form 1041.
(e)
Credit Unions.
1. Taxable income for credit unions is
defined in §
40-16-1.3 as financial statement
income, which is the final net income amount, total revenue less total
expenses, calculated for financial statement purposes.
2. The following supporting documentation, if
applicable, must be submitted with Form ET-1:
(i) A copy of the credit union's federal Form
990/990T.
(ii) Annual financial
statements including but not limited to the financial information reported to
National Credit Union Administration (NCUA), American Share Insurance (ASI) or
other reporting or regulatory entity.
(iii) Approved Capital Preservation
Plan.
(6) The civil penalties found in §
40-2A-11, Code of Ala.
1975, are applicable and are not exclusive.
Authors: Lessie Hallum, Kathleen Abrams
Statutory Authority: Code of Ala.
1975, §§
40-2A-7(a)(5),
40-2A-11, Chapter 16, Title 40,
IRC §1361(b)(3). Administrative Rule
810-9-1-.05.