2023 District of Columbia Code › Title 47 - Taxation, Licensing, Permits, Assessments, and Fees. [Enacted title] › Chapter 25 - Financial Institution, Guaranty Company, and Public Utility Taxes › § 47–2507. Transitional rules for taxing financial institutions

§ 47–2507. Transitional rules for taxing financial institutions.
(a) Short period. —
(1) For financial institutions with a federal taxable year ending on a date other than June 30th, a short period return must be filed and the tax computed in accordance with § 47-2501 for the period from July 1, 1981, to the end of the taxpayer’s tax year for federal income tax purposes (federal tax year).
(2) The short period return required in paragraph (1) of this subsection shall be filed on or before the last day of the month following the close of the taxpayer’s federal tax year.
(3) Financial institutions required to file a return as described in this subsection are required to make estimated tax payments as follows:
(A) Pay an amount in the short period divided by 12 multiplied by the amount of its tax liability as of June 30, 1980;
(B) If the taxpayer’s short period is 9 months or less, no additional estimated tax payment is due; and
(C) If the taxpayer’s short period is more than 9 months, a second estimated tax payment is due March 31, 1982, in an amount computed in subparagraph (A) of this paragraph.
(b) Transition period. —
(1)(A) The first transition year is a financial institution’s first full taxable year for federal income tax purposes beginning on or after July 1, 1981.
(B) A taxable year for purposes of this subsection is a 12-month period.
(2)(A) For each of the 3 transition years, each financial institution shall calculate its tax liability and file returns under both the gross earnings tax and the franchise tax for the 3 taxable years of the transition period. Each financial institution shall calculate its tax liability as follows:
(i) For the first transition year, the franchise tax plus 100% of the difference between the total of the franchise tax plus the personal property tax and the gross earnings tax computed for the same taxable year; provided, that the computed gross earnings tax is greater than the total of the franchise tax plus the personal property tax; and
(ii) For the 2nd transition year, the franchise tax plus 66 2/3% of the difference between the total of the franchise tax plus the personal property tax and the gross earnings tax computed for the same taxable year; provided, that the computed gross earnings tax is greater than the total of the franchise tax plus the personal property tax;
(iii) For the 3rd transition year, the franchise tax plus 33 1/3% of the difference between the total of the franchise tax plus the personal property tax and the gross earnings tax computed for the same taxable year; provided, that the computed gross earnings tax is greater than the total of the franchise tax plus the personal property tax.
(B) In no event shall the total tax levied be less than the franchise tax plus the personal property tax. Any gross earnings tax paid or accrued under the provisions of this section shall not be allowed as a deduction in arriving at the franchise tax liability.
(3)(A) During the 3-year transition period described in paragraph (2) of this subsection, every financial institution shall make and file a declaration of estimated tax at such time or times and under such conditions, and shall make payments of such tax during its taxable year in such amounts and under such conditions as prescribed in § 47-1812.14 and regulations relating thereto.
(B) For every financial institution required to file a gross earnings tax return and a franchise tax return under the 3-year transition period described in paragraph (2) of this subsection, the underpayment of estimated taxes pursuant to § 47-1812.14(b) for each taxable year within the transition period shall be the excess of:
(i) The cumulative amount of the installments of estimated franchise taxes and gross earnings taxes which would be required to be paid if the estimated taxes were equal to 80% of the sum of the taxes shown on the franchise tax return for the taxable year and the gross earnings tax return for the taxable year, or if a franchise tax return or a gross earnings tax return or both were not filed for the taxable year, 80% of the total franchise taxes and gross earnings taxes for such year, over
(ii) The cumulative amount of installments paid for gross earning taxes for the taxable year plus the cumulative amount of installments paid for franchise taxes for the taxable year on or before the date prescribed for payment pursuant to law or regulation.
(C) After the 3-year transition period, the gross earnings tax provided by § 47-2501 shall not apply to financial institutions and each financial institution shall be subject to the franchise tax as provided by Chapter 18 of this title.
(c) Gross earnings tax return filing. — The gross earnings required for each of the 3 transition years shall be filed with the Mayor on or before the 15th day of March in each year; except, that such returns, if made on the basis of a fiscal year, shall be filed on or before the 15th day of the 3rd month following the close of such fiscal year. During the transition period referred to in subsection (b), there shall be excluded from the gross earnings tax and franchise tax computation all earnings resulting from any IBF time deposit or IBF loan.
(d) Filing extension. — The Mayor may grant a reasonable extension of time for filing the returns required by subsection (c) of this section whenever in his judgment good cause exists therefor, and he shall keep a record of every such extension. Except in the case of a taxpayer who is not within the continental limits of the United States, no extension shall be granted for more than 6 months, and in no case shall such extension be granted for more than 1 year.
(July 1, 1902, 32 Stat. 622, ch. 1352, § 6, par. 20; Sept. 13, 1980, D.C. Law 3-95, § 301, 27 DCR 3509; July 24, 1982, D.C. Law 4-130, § 3, 29 DCR 2412; Sept. 17, 1982, D.C. Law 4-150, § 201, 29 DCR 3377; enacted, Apr. 9, 1997, D.C. Law 11-254, § 2, 44 DCR 1575.)
Prior Codifications
1981 Ed., § 47-2507.
Section References
This section is referenced in § 47-1807.02, § 47-1812.14, and § 47-2515.
Cross References
Income and franchise taxes, declaration of estimated tax by corporations, financial institutions, and unincorporated businesses, see § 47-1812.14.
Tax on corporations and financial institutions, same—levy and rates, subject to transition rules, see § 47-1807.02.
Editor's Notes
Mayor authorized to issue regulations: Section 401 of D.C. Law 4-150 provided that the Mayor shall issue regulations necessary to carry out the provisions of the act.
Mayor authorized to issue rules: Section 1102 of D.C. Law 5-14 provided that the Mayor shall issue rules necessary to carry out the provisions of the act.