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History
- Referred to investigations and government operations
- Referred to investigations and government operations
Full text
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Sponsor's memo
BILL NUMBER:S5457
Title of bill
An act to amend the tax law, in relation to the computation of entire net income of thrift institutions
Purpose
To update the Tax Law and provide comparable tax treatment to smaller commercial banks and thrift institutions which have similar investments and portfolios.
Summary of provisions
Amends Section 1453(h) of the Tax Law to provide that these tax provisions which are currently applicable to thrift institutions may also be applicable to a qualified community bank with assets of less than $8 billion.
Justification
Under the current tax law, qualified thrift institutions are allowed deductions for bad debts under rules which are more favorable than accorded to other financial institutions. To qualify for this deduction, a thrift must meet an asset test which requires 60% of their assets to be qualifying assets including cash, government obligations and residential mortgage loans. Many small community commercial banks have assets on their balance sheet which would meet the asset test for qualified thrifts. Community banks, whether operating as a thrift or commercial bank, have very similar balance sheets and missions.
There are no longer any material distinctions between community commercial banks and community thrift institutions. They both have similar loan portfolios and investments in the communities which they serve. However, they are subject to different tax provisions which can place them at a competitive disadvantage. This bill creates a level playing field between community banks.
Community banks are an important source of funding for small business and farm loans, as was recently highlighted by a Department of Financial Services report. This proposed change would help encourage community banks. Mergers and acquisitions have depleted the ranks of these important community growth engines. This bill would provide a positive inducement for these institutions to function in the current competitive environment, and to strengthen their local economies.
Fiscal implications
To be determined
Effective date
This act shall take effect January 1st next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.