HB159 Alabama 2020 Session

Updated Feb 22, 2026

Summary

Primary Sponsor: Craig LipscombRepresentative
Republican
Session: Regular Session 2020
Title: Credit Unions, financial institution excise tax, taxable income, calculation, reserve for losses deleted, assessment and refunds further provided for tax years prior to 1-1-2020, Act 2019-284, 2019 Reg. Sess., am'd; Sec. 40-16-1.3 am'd.
Summary: HB 159 clarifies how credit unions calculate Alabama's financial institution excise tax and updates rules on assessments, refunds, and reserve accounting.
What This Bill Does
It defines credit unions' net income as financial statement income (revenues minus expenses) allocated to Alabama under Department of Revenue rules, with specific subtractions. It allows dividends from other credit unions and CU Service Organizations as deductions, and permits additions to reserves for losses, bad debts, and extraordinary expenses in place of traditional deductions, with withdrawals added to taxable income in the year withdrawn and transfers between reserve accounts excluded from taxable income. It prohibitions double deductions and including items in income for more than one taxpayer. It also states that no assessments or refunds for tax years ending before January 1, 2020 may be made to adjust reserve additions, and any such prior assessments are void or denied; the act becomes operative for tax years after 2019, effective January 1, 2020.

Who It Affects
Credit unions operating in Alabama: their method for calculating Alabama financial institution excise tax net income changes, including what counts as income and how reserves are handled.
State regulators and tax administrators (Alabama Department of Revenue and the Alabama Credit Union Administration): responsible for adopting rules, approving Capital Preservation Plans, and enforcing the revised tax calculation and refund/assessment provisions.

Key Provisions
Net income for credit unions is defined as financial statement income (final net income) reported to the IRS as tax-exempt and to ACUA, adjusted by specified subtractions and allocated/apportioned to Alabama under DR rules.
Allowed subtractions include dividends from other credit unions and CU Service Organizations, and additions to reserves for losses, bad debts, and extraordinary expenses in lieu of deductions, with regular reserves defined by each credit union's Capital Preservation Plan and approved by ACUA; withdrawals from these reserves are included in taxable income in the year of withdrawal; transfers between reserve accounts not included in taxable income.
Prohibits double deductions, deductions for items excluded from income, and including any item in Alabama net income for more than one taxpayer.
No assessments or refunds for tax years ending before 2020 to adjust reserve additions; any prior assessments involving such changes are void or denied; operative for tax years beginning after 2019; effective January 1, 2020.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Banks and Banking