A N A C T
RELATING TO BANK TAXES
It is enacted by the General Assembly as follows:
SECTION 1. Section 44-14-3 of the General Laws in Chapter 44-14 entitled "Taxation of Banks" is hereby amended to read as follows:
44-14-3. Tax on state banks -- (a) Each banking institution organized or incorporated under the laws of this state or having its principal place of business or a branch located within the limits of this state shall annually pay a tax or excise to the state for the privilege of existing as a banking institution during any part of the taxable year. The tax is measured by:
(1) Net income, as defined in section 44-14-10, for the income period and is be computed at the rate of nine percent (9%) of the net income; or
(2) Authorized capital stock as of the last day of the income period and is computed at the rate of two dollars fifty cents ($2.50) for each ten thousand dollars ($10,000), or fractional part, of an authorized capital stock; whichever measure yields the greater amount of tax.
(b) In the case of a banking institution not organized or incorporated under the laws of this state but having its principal place of business or branch located within the limits of this state, its net income is apportioned to this state under rules and regulations promulgated by the tax administrator.
(c)(1) Provided, however, a banking institution having an election in effect under subchapter S. 26 U.S.C. Section 1361 et seq., (including a banking institution that is a qualified subchapter S subsidiary, as defined by 26 U.S.C. Section 1361, of a corporation or banking institution having an election in effect under 26 U.S.C. Section 1361 et. Seq.) shall not be subject to the Rhode Island tax or excise on banking institutions, except that the banking institution shall be subject to the provisions of subsection (a) (1) to the extent such income is subjected to federal tax under subchapter S.
(2) The shareholders of the banking institution who are residents of Rhode Island shall include in their income their proportionate share of the banking institution's federal taxable income.
(3) If any shareholder of the banking institution is a nonresident during any part of the banking institution's taxable year, he or she shall file a Rhode Island personal income tax return in accordance with such rules and regulations as promulgated by the tax administrator.
SECTION 2. This act shall take effect upon passage.