PRINTER'S NO. 1938
No. 1269 Session of 2006
INTRODUCED BY D. WHITE, WOZNIAK, PUNT AND SCARNATI,
JUNE 22, 2006
REFERRED TO FINANCE, JUNE 22, 2006
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing, in bank and trust company
11 shares tax, for ascertainment of taxable amount and exclusion
12 of United States obligations.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Section 701.1(c) of the act of March 4, 1971
16 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
17 June 16, 1994 (P.L.279, No.48), is amended to read:
18 Section 701.1. Ascertainment of Taxable Amount; Exclusion of
19 United States Obligations.--* * *
20 (c) For purposes of this section:
21 (1) a mere change in identity, form or place of organization
22 of one institution, however effected, shall be treated as if a
1 single institution had been in existence prior to as well as
2 after such change; and
3 (2) the combination of two or more institutions into one
4 shall be treated as if the constituent institutions had been a
5 single institution in existence prior to as well as after the
6 combination and the book values and deductions for United States
7 obligations from the Reports of Condition of the constituent
8 institutions shall be combined. For purposes of the preceding
9 sentence, a combination shall include any acquisition required
10 to be accounted for by the surviving institution under the
11 pooling of interest method or the purchase method in accordance
12 with generally accepted accounting principles or a statutory
13 merger or consolidation[.]: Provided, however, That for years
14 beginning after December 31, 2006, any addition to goodwill
15 created as a result of a combination occurring after June 30,
16 2001, may be disregarded by the institution in determining the
17 taxable value of shares and the book value of capital stock paid
18 in, surplus and undivided profits used to determine the
19 percentage deduction provided for obligations of the United
20 States.
21 Section 2. The General Assembly declares that the amendment
22 of section 701.1(c) of the act is intended to clarify that,
23 notwithstanding the promulgation of the Statement of Financial
24 Accounting Standards No. 141 adopted by the Financial Accounting
25 Standards Board on June 30, 2001, and which requires the use of
26 the purchase method of accounting for combinations, for purposes
27 of determining the taxable value of shares, the book value of
28 any surplus may be determined on a pooled basis without any
29 addition to the value of goodwill ascribed to a combination
30 occurring after June 30, 2001. This act shall not be construed
20060S1269B1938 - 2 -
1 to authorize institutions to seek refunds of any additional bank
2 or shares company tax paid as a result of the mandatory use of
3 purchase accounting as required by the Statement of Financial
4 Accounting Standards No. 141.
5 Section 3. This act shall take effect in 60 days or December
6 31, 2006, whichever is sooner.
F20L72JLW/20060S1269B1938 - 3 -