[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1220 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1220
To amend the Internal Revenue Code of 1986 to encourage a strong
community-based banking system.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 27, 2001
Mr. Sessions (for himself, Mr. Pomeroy, and Mr. Hall of Texas)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to encourage a strong
community-based banking system.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
This Act may be cited as the ``Community Savings and Investment Act
of 2001''.
SEC. 2. INCOME TAX ON QUALIFIED COMMUNITY LENDERS.
(a) In General.--Section 11 of the Internal Revenue Code of 1986
(relating to tax imposed on corporations) is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection:
``(d) Qualified Community Lenders.--
``(1) In general.--In the case of a qualified community
lender, in lieu of the amount of tax under subsection (b) the
amount of tax imposed by subsection (a) for a taxable year
shall be the sum of--
``(A) 15 percent of so much of the taxable income
as exceeds $250,000 but does not exceed $1,000,000, and
``(B) the highest rate of tax imposed by subsection
(b) multiplied by so much of the taxable income as
exceeds $1,000,000.
``(2) Qualified community lender.--For purposes of
paragraph (1), the term `qualified community lender' means a
bank--
``(A) which achieved a rating of `satisfactory
record of meeting community credit needs', or better,
at the most recent examination of such bank under the
Community Reinvestment Act of 1977,
``(B) whose outstanding local community loans at
all times during the taxable year comprised not less
than 60 percent of the total outstanding loans,
``(C) meets the ownership requirements of paragraph
(3), and
``(D) at all times during the taxable year has
total assets of not more than $1,000,000,000.''.
``(3) Ownership requirements.--
``(A) In general.--The ownership requirements of
this paragraph are met with respect to any bank if--
``(i) no shares of, or other ownership
interests in, the bank are publicly traded, or
``(ii) in the case of a bank the shares of
which or ownership interests in which are
publicly traded, the last known address of the
holders of at least \2/3\ of all such shares or
interests, including persons for whose benefit
such shares or interests are held by another,
is in the home State of the bank or a State
contiguous to such home State.
``(B) Home state defined.--For purposes of
subparagraph (A), the term `home State' means--
``(i) with respect to a national bank or
Federal savings association, the State in which
the main office of the bank or savings
association is located, and
``(ii) with respect to a State bank or
State savings association, the State by which
the bank or savings association is chartered.
``(4) Other definitions.--For purposes of this subsection--
``(A) Bank.--The term `bank'--
``(i) has the meaning given to such term in
section 581, and
``(ii) includes any bank--
``(I) in which at least 80 percent
of the shares of, or other ownership
interests in the bank are owned by
other qualified community lenders, and
``(II) the sole purpose of which is
to serve the banking needs of such
lenders.
``(B) Local community loan.--The term `local
community loan' means--
``(i) any loan originated by a bank to any
person, other than a related person with
respect to the bank, who is a resident of a
community in which the bank is chartered or in
which it operates an office at which deposits
are accepted, and
``(ii) any loan originated by a bank to any
person, other than a related person with
respect to the bank, who is engaged in a trade
or business in any such community, to the
extent that all or substantially all of the
proceeds of such loan are expended in
connection with the trade or business of such
person in any such community.
``(C) Related person.--The term `related person'
means, with respect to any bank, any affiliate of the
bank, any person who is a director, officer, or
principal shareholder of the bank, and any member of
the immediate family of any such person.''.
(b) S Corporation Income.--
(1) In general.--Section 1 of such Code (relating to tax
imposed) is amended by adding at the end the following new
subsection:
``(i) Community Lender Income From S Corporation.--
``(1) In general.--If a taxpayer has community lender
income from a S corporation for any taxable year, the tax
imposed by this section for such taxable year shall be the sum
of--
``(A) the tax computed at the rates and in the same
manner as if this subsection had not been enacted on
the greater of--
``(i) taxable income reduced by community
lender income, or
``(ii) the lesser of--
``(I) the amount of taxable income
taxed at a rate below 28 percent, or
``(II) taxable income reduced by
community lender income, and
``(B) a tax on community lender income computed
at--
``(i) a rate of zero on zero-rate community
lender income,
``(ii) a rate of 15 percent on 15 percent
community lender income, and
``(iii) the highest rate in effect under
this section with respect to the taxpayer on
the excess of community lender income on which
a tax is determined under clause (i) or (ii).
``(2) Community lender income.--For purposes of paragraph
(1)--
``(A) In general.--The term `qualified community
lender income' means taxable income (if any) of a
qualified community lender (as defined in section
11(d)(2)) that is an S corporation, determined at the
entity level.
``(B) Zero-rate community lender income.--The term
`zero-rate community lender income' means the
taxpayer's pro rata share of so much of community
lender income as does not exceed $250,000.
``(C) 15 percent community lender income.--The term
`15 percent community lender income' means the
taxpayer's pro rata share of so much of community
lender income as exceeds $250,000 but does not exceed
$1,000,000.
``(D) Special rules.--
``(i) For purposes of this paragraph, the
taxpayer's pro rata share of community lender
income shall be determined under part II of
subchapter S.
``(ii) This subsection shall be applied
after the application of subsection (h).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
SEC. 3. EXCLUSION FROM INCOME TAXATION FOR INCOME DERIVED FROM BANKING
SERVICES WITHIN DISTRESSED COMMUNITIES.
(a) Federal Taxation.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically excluded
from gross income) is amended by redesignating section 139 as section
140 and by inserting after section 138 the following new section:
``SEC. 139. BANKING SERVICES WITHIN DISTRESSED COMMUNITIES.
``(a) In General.--At the election of the taxpayer, gross income
shall not include distressed community banking income.
``(b) Distressed Community Banking Income.--For purposes of
subsection (a), the term `distressed community banking income' means
net income of a qualified depository institution which is derived from
the active conduct of a banking business in a distressed community.
``(c) Qualified Depository Institution.--An institution is a
qualified depository institution if--
``(1) such institution is an insured depository institution
(as defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)),
``(2) such institution is located in, or has a branch
located in, a qualified distressed community, and
``(3) as of the last day of the taxable year, at least 85
percent of its loans from its location within the qualified
distressed community are local community loans (as defined in
section 11(d)(4)(B)).
``(d) Distressed Community.--The term `distressed community' has
the meaning given the term `qualified distressed community' by section
233 of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a(b)).''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 139 and inserting after the item relating to
section 138 the following new items:
``Sec. 139. Banking services within
distressed communities.
``Sec. 140. Cross references to other
Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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