A04598
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
742
Session of
2023
INTRODUCED BY HUTCHINSON, AUMENT, STEFANO, BAKER, COLEMAN,
ROBINSON, COSTA AND BARTOLOTTA, JUNE 1, 2023
REFERRED TO FINANCE, JUNE 1, 2023
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in bank and trust company shares tax, further
providing for ascertainment of taxable amount and exclusion
of United States obligations; and providing for ascertainment
of taxable amount and construction.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 701.1(b), (b.1) and (c) of the act of
March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971, are amended to read:
Section 701.1. Ascertainment of Taxable Amount; Exclusion of
United States Obligations.--* * *
(b) A deduction for the value of United States obligations
shall be provided from the taxable amount of shares in an amount
equal to the same percentage of total bank equity capital as the
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book value of obligations of the United States bears to the book
value of the total assets. In computing the deduction for United
States obligations, any goodwill [recorded as a result of the
use of purchase accounting for an acquisition or combination as
described in this section and occurring after June 30, 2001,]
deducted from the taxable amount of shares under subsection
(b.1) shall be subtracted from the book value of total bank
equity capital and disregarded in determining the deduction
provided for obligations of the United States. For purposes of
this article, United States obligations shall be obligations
coming within the scope of 31 U.S.C. ยง 3124 (relating to
exemption from taxation).
(b.1) A deduction for goodwill shall be provided from the
taxable amount of shares in an amount equal to the value of any
goodwill recorded [as a result of the use of purchase accounting
for an acquisition or combination as described in this section]
in the Reports of Condition of the institution pursuant to
generally accepted accounting principles because of an
acquisition or business combination and occurring after June 30,
2001.
[(c) For purposes of this section:
(1) a mere change in identity, form or place of organization
of one institution, however effected, shall be treated as if a
single institution had been in existence prior to as well as
after such change; and
(2) if there is a combination of two or more institutions
into one, the book values and deductions for United States
obligations from the Reports of Condition of the constituent
institutions shall be combined. For purposes of this section, a
combination shall include any acquisition required to be
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accounted for by using the purchase method in accordance with
generally accepted accounting principles or a statutory merger
or consolidation.]
Section 2. The General Assembly finds and declares that the
amendment of section 701.1(b), (b.1) and (c) of the act is
intended to clarify the treatment of goodwill by section 701.1
as amended by section 5 of the act of July 25, 2007 (P.L.373,
No.55), section 22 of the act of July 9, 2013 (P.L.270, No.52),
and section 15.5 of the act of July 13, 2016 (P.L.526, No.84).
Section 2. The amendment of section 701.1(b), (b.1) and (c)
of the act shall apply to the ascertainment of the taxable
amount of shares after December 31, 2024, and to the report and
the payment of the bank and trust company shares tax due after
March 14, 2025.
Section 3. The General Assembly finds and declares as
follows:
(1) The amendment of section 701.1(b), (b.1) and (c) of
the act shall not be relied upon to:
(i) ascertain the taxable amount of shares for a
period prior to January 1, 2025;
(ii) ascertain the amount of tax due prior to March
15, 2025; or
(iii) authorize a refund of a tax paid for a period
for which a report was due prior to March 15, 2025,
beyond the extent to which the refund would have
otherwise been due notwithstanding the amendment of
section 701.1(b), (b.1) and (c) of the act.
(2) In ascertaining the taxable amount of shares for a
period prior to January 1, 2025, the amount of goodwill
subtracted and disregarded in calculating the deduction for
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United States obligations under section 701.1(b) of the act,
and the amount of goodwill deducted from the taxable amount
of shares under section 701.1(b.1) of the act, shall be
determined based on the law as in effect prior to the
effective date of this section, without any inference that
the amendment of section 701.1(b), (b.1) and (c) of the act
expanded, or confirmed any administrative determination that
limited or restricted, the extent to which goodwill could be
subtracted and disregarded under section 701.1(b) of the act
or deducted under section 701.1(b.1) of the act.
Section 3 4. This act shall take effect immediately.
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