CHAPTER 434
FORMERLY
HOUSE BILL NO. 1110
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND PARTS II AND III OF TITLE 5 OF THE DELAWARE CODE RELATING TO BANKING BY PROVIDING FOR A FRANCHISE TAX ON THE NET EARNINGS OF BANKS, NATIONAL BANKS, TRUST COMPANIES AND BUILDING AND LOAN ASSOCIATIONS.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Amend Chapter 11, Part II, Title 5 of the Delaware Code, by striking all subchapter titles and all sections thereof and substituting in lieu thereof the following:
§1101. Tax on net earnings
A franchise tax is hereby imposed on the net income of banks, trust companies and national banks. The net income on which such tax is imposed shall be that defined by the Federal Deposit Insurance Corporation (12 CFR 335) or other appropriate Federal authority and reported to the State Bank Commissioner pursuant to 5 Delaware Code, Section 904, reduced by interest income from obligations of the State of Delaware and its political subdivisions, as well as any dividends and contributions to net income from subsidiaries.
§1102. Statement to be filed with the Commissioner
For purposes of assessment, the president, cashier or treasurer of every bank, national bank and every trust company, shall, in each year, file with the December 31st call report, a true statement, verified by oath, setting forth the net income of such bank or trust company as defined in this chapter.
§1103. Determination, certification, notification and review of tax
(a) The State Bank Commissioner shall, after the 10th day of January and prior to the 15th day of February in each year, ascertain from an inspection of the statements filed for December 31 in accordance with Section 1102 of this title, and from any other sources of information which are open to him, the names and places of business of all banks, trust companies and national banks in this State, the amount of net income of each as defined in this chapter, and the amount of tax levied thereon in accordance with the provisions of this chapter.
(b) The amount determined to be the tax levied as aforesaid, shall, within 15 days after same has been determined, be certified by the State Bank Commissioner to each bank, trust company and national bank.
(c) The assessment shall be reviewed and corrected by the State Bank Commissioner upon application by any party interested, prior to the first day of April in the year in which the tax is levied, if, upon such application, good cause be shown for correction.
§1104. Date of payment and collection of tax
Taxes imposed under this chapter are due and payable on or before the first day of May in the year in which they are assessed, and after that date shall be collected by the State Bank Commissioner, together with a penalty of one percent for each month or fraction of a month that the same remain unpaid after that date.
§1105. Rate of taxation
The rate of tax upon the net income as defined in this chapter of banks, trust companies and national banks shall be seven and two-tenths percent.
§1106. Disposition of taxes
All moneys collected or received under this chapter shall be the moneys of the State of Delaware, and the State Bank Commissioner shall pay all amount so collected and received into the General Fund of the State Treasury.
§1107. Duties of the Attorney General
The Attorney General shall act as the legal representative of the State of Delaware in all actions or proceedings had under this chapter, and shall render legal assistance to the State Bank Commissioner in executing the provisions hereof.
§1108. State corporation income and other taxes: exemption
Notwithstanding the provisions of Title 30 of the Delaware Code, all banks, trust companies and national banks being taxed in accordance with the provisions of this chapter, shall be exempt from the State corporation income tax as of January 1, 1974 and the taxation of income of banks, trust companies and national banks under this chapter shall be in lieu of occupational taxes or taxes upon the income, capital, and assets of such bank, except that no real estate owned or acquired by such bank or trust company shall be exempt from taxation."
Section 2. Amend Part III, Title 5 of the Delaware Code, by adding a new Chapter 18, Taxation, to read as follows:
"CHAPTER 18. TAXATION
§1801. Annual Franchise Tax
Every building and loan association created under this code, or any other law of this State, or any other state, or the United States of America, and doing business in this State, shall pay to the State Bank Commissioner, for the use of this State, an annual franchise tax equal to seven and two-tenths percent of its net earnings. The tax imposed shall be computed on the total annual net earnings after federal taxes, as computed through the application of generally accepted accounting principles for the next previous year of each building and loan association doing business in the State of Delaware. The computation shall be made on a fiscal year basis, whichever the building and loan association is using for its regular accounting. The computation shall be based on all operations and branches of the building and loan association and upon the annual net earnings of the building and loan association as an entirety. The computation shall be made after the calculation or allowance of any dividends or interest paid or credited on savings accounts and investment certificates or other apportionment of profits; provided, however, that with respect to foreign building and loan associations admitted to do business in the State of Delaware the computation shall be based on that part of the yearly net earnings of the building and loan association as an entirety which bears the same ratio to the total annual net earnings of the building and loan association as an entirety as the total of all loans made by the building and loan association on the security of property located in Delaware bears to the total of all loans made by the building and loan association as an entirety, both as shown by the books of the building and loan association on the last day of the accounting year of the building and loan association. If by reason of any law of any foreign jurisdiction a building and loan association chartered in this State or admitted to do business in this State and doing business in such other jurisdiction is required to pay a franchise tax to said foreign jurisdiction based upon its savings accounts or free shares purchased in the State of Delaware, or is required to pay to said foreign jurisdiction a tax on its gross receipts including its gross receipts from business done in the State of Delaware, or is required to pay to said foreign jurisdiction a tax on its income including income derived from business done in the State of Delaware, then the tax imposed by this section shall be reduced to the extent of any such franchise or gross receipts or income tax so paid to said foreign jurisdiction based on savings accounts or free shares purchaser in the State of Delaware, or on business done in the State of Delaware.
§1802. Report of net earnings and payment of tax
Within sixty days after the end of its fiscal year the building and loan association, acting through its president, treasurer, or other proper officer, shall report under oath to the State Bank Commissioner, the net earnings of the building and loan association for that next previous taxable period, and at the same time the building and loan association shall pay to the State Bank Commissioner the proper amount of tax for that period as computed under this chapter.
§1803. Tax Lien
If any building and loan association shall fail to pay any tax due under the provisions of this chapter, on or before the due date, the full amount of all such tax due the State shall be a lien in favor of the State upon all property and all rights to property, real or personal, belonging to such building and loan association.
In addition, a penalty of one percent shall be assessed for each month or fraction thereof that the same remain unpaid after such date.
§1804. State corporation income tax; exemption
All building and loan associations being taxed in accordance with the provisions of this chapter shall be exempt from the State corporation income tax beginning with the fiscal year for each such building and loan association in which this chapter shall become effective.
§1805. Rules and regulations
The State Bank Commissioner may, from time to time, adopt and promulgate rules and regulations for the reporting and collection of the franchise taxes imposed in accordance with this chapter and not inconsistent with the provisions of this title.
§1806. Exemption from other taxes
The taxation of the income of the building and loan associations under this chapter shall be in lieu of all taxes upon the capital, surplus, property and assets of such organization, except that no real estate owned by any such organization constituting the whole or any part of its capital, surplus or assets shall be exempt from taxation."
Section 3. This act shall be effective as of January 1, 1974. For purposes of payment of the tax imposed by Section 2 of this Act, building and loan associations whose fiscal years end after January 1, 1974 and before January 1, 1975 shall pay the tax on that pro rata portion of the net earnings of the association accrued after January 1, 1974.
Section 4. All other laws or parts of laws now in effect inconsistent with the provisions of this Act are hereby repealed, superseded, modified or amended so far as necessary to conform to and give full force and effect to the provisions of this Act.
Approved July 10, 1974.