| Chapter 351 |
| 2026 -- H 8611 Enacted 06/23/2026 |
| A N A C T |
| RELATING TO TAXATION -- TAXATION OF BANKS |
Introduced By: Representative Alex D. Marszalkowski |
| Date Introduced: June 03, 2026 |
| It is enacted by the General Assembly as follows: |
| SECTION 1. Section 44-14-14.1 of the General Laws in Chapter 44-14 entitled "Taxation |
| of Banks" is hereby amended to read as follows: |
| 44-14-14.1. Apportionment and allocation of income for purposes of taxation. |
| (a) Except as specifically provided in this chapter a banking institution whose business |
| activity is taxable both within and outside of this state shall allocate and apportion its net income |
| as provided in §§ 44-14-14.1 — 44-14-14.5. A financial institution organized under the laws of a |
| foreign country, the Commonwealth of Puerto Rico, or a territory or possession of the United States |
| whose effectively connected income (as defined under the federal Internal Revenue Code) is |
| taxable both within this state and within another state, other than the state in which it is organized |
| shall allocate and apportion its net income as provided in §§ 44-14-14.1 — 44-14-14.5. |
| (b) All income shall be apportioned to this state by multiplying this income by the |
| apportionment percentage. The apportionment percentage is determined by adding the taxpayer’s |
| receipts factor (as described in § 44-14-14.3), property factor (as described in § 44-14-14.4), and |
| payroll factor (as described in § 44-14-14.5) together and dividing the sum by three. If one of the |
| factors is missing, the two remaining factors are added and the sum is divided by two. If two of the |
| factors are missing, the remaining factor is the apportionment percentage. A factor is missing if |
| both its numerator and denominator are zero, but it is not missing merely because its numerator is |
| zero. |
| (c) Each factor shall be computed according to the method of accounting (cash or accrual |
| basis) used by the taxpayer for the taxable year. |
| (d) For tax years ending prior to January 1, 2025, if the allocation and apportionment |
| provisions of §§ 44-14-14.1 — 44-14-14.5 do not fairly represent the extent of the taxpayer’s |
| business activity in this state, the taxpayer may petition for or the tax administrator may require, in |
| respect to all or any part of the taxpayer’s business activity, if reasonable: |
| (1) The exclusion of any one or more of the factors; |
| (2) The inclusion of one or more additional factors which will fairly represent the |
| taxpayer’s business activity in this state; or |
| (3) The employment of any other method to effectuate an equitable allocation and |
| apportionment of the taxpayer’s income. |
| (e) For tax years beginning on or after January 1, 2025, if the allocation and apportionment |
| provisions of §§ 44-14-14.1 — 44-14-14.5 or subsection (f) of this section are not reasonably |
| adapted to approximate the net income derived from business carried on within the state, a banking |
| institution may apply to the tax administrator, or the tax administrator may require the banking |
| institution, to have its income derived from business carried on within the state determined by an |
| alternative method. Such application shall be made by attaching to its duly-filed return a statement |
| of the reasons why the banking institution believes that §§ 44-14-14.1 — 44-14-14.5 or subsection |
| (f) of this section are not reasonably adapted to approximate its net income derived from business |
| carried on within the state and a description of the method sought by it. A banking institution which |
| so applies shall, upon receipt of a request therefor from the tax administrator, file with the tax |
| administrator, under oath of its treasurer, a statement of such additional information as the tax |
| administrator may require. |
| If, after such application by the banking institution, or after the tax administrator’s own |
| review, the tax administrator determines that §§ 44-14-14.1 — 44-14-14.5 or subsection (f) of this |
| section are not reasonably adapted to approximate the banking institution’s net income derived |
| from business carried on within the state, the tax administrator shall by reasonable methods |
| determine the amount of net income derived from business activity carried on within the state. The |
| amount thus determined shall be the net income taxable under § 44-14-3 or § 44-14-4 and the |
| foregoing determination shall be in lieu of the determination required by §§ 44-14-14.1 — 44-14- |
| 14.5 or subsection (f) of this section. If an alternative method is used by the tax administrator |
| hereunder, the tax administrator, in their discretion, may require similar information from such |
| banking institution if it shall appear that such alternative method or §§ 44-14-14.1 — 44-14-14.5 |
| or subsection (f) of this section are not reasonably adapted to approximate for the applicable year |
| the banking institution’s net income derived from business carried on within the state and may |
| again by reasonable methods determine such income. |
| (f) For tax years beginning on or after January 1, 2025, except as specifically provided in |
| this chapter a banking institution whose business activity is taxable both within and outside of this |
| state may elect to allocate and apportion its net income by multiplying its net income by its receipts |
| factor as described in § 44-14-14.3. For purposes of an election made pursuant to this subsection |
| (f), the following shall apply: |
| (1) An election shall be made by filing the form prescribed by the tax administrator with |
| the taxpayer’s duly-filed return. The election shall take effect in the tax year for which the taxpayer |
| makes the election and shall remain in effect for all subsequent tax years; except that, after a |
| minimum of five (5) subsequent tax years after the tax year for which the election is made, in the |
| event of a material change of facts or law, a taxpayer may apply to the tax administrator to revoke |
| the election. Such application shall be made by attaching a statement of the event of a material |
| change of facts or law to the taxpayer’s duly-filed return. A banking institution which so applies |
| shall, upon receipt of a request therefor from the tax administrator, file with the tax administrator, |
| under oath of its treasurer, a statement of such additional information as the tax administrator may |
| require. |
| (2) If the receipts factor is missing, the whole of the banking institution’s net income shall |
| be taxable pursuant to §§ 44-14-3 — 44-14-4. The receipts factor shall be missing if both its |
| numerator and denominator are zero, but it shall not be missing merely because its numerator is |
| zero. |
| (3) The receipts factor shall be computed according to the method of accounting (cash or |
| accrual basis) used by the taxpayer for the taxable year. |
| (4) A banking institution electing apportionment under this subsection shall not claim any |
| benefit pursuant to chapter 64.5 of title 42. |
| SECTION 2. This act shall take effect upon passage and be effective for tax years |
| beginning on or after January 1, 2025. |
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| LC006561 |
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