N.J. Admin. Code § 18:7-1.14

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:7-1.14 - Subjectivity of foreign banks and foreign national banks

(a) The following terms, as used in this section, shall have the following meanings:

1. "Banking corporation" means those banking corporations subject to tax under N.J.S.A. 54:10A-34, which are defined in N.J.S.A. 54:10A-36 as New Jersey chartered banks, national banks headquartered in New Jersey, and foreign national banks.

2. "Foreign bank" means commercial banks chartered in foreign states of the United States or in foreign countries.

3. "Foreign national bank" means national banks headquartered in foreign states of the United States.

(b) Applicable rules concerning tax nexus and subjectivity to the corporation business tax, which are contained in this chapter shall apply to foreign banks, as well as to any other taxable entity, including banking corporations. In particular, but without limitation thereto, foreign banks and foreign national banks shall be subject to N.J.A.C. 18:7-1.6 and 1.8 through 1.11.

(c) Any foreign bank or foreign national bank, which engages in any activity described or contemplated in P.L. 1996, c. 17, effective April 17, 1996, shall be subject to the corporation business tax in this State.

(d) Foreign banks subject to the corporation business tax shall file the applicable corporation business tax return for the respective privilege period and pay the applicable tax thereon to the Director of the Division of Taxation.

(e) Foreign national banks subject to the corporation business tax shall file the applicable corporation business tax return for the respective privilege period and pay the applicable tax thereon to the Director of the Division of Taxation. See N.J.S.A. 54:10A-34.1 and N.J.A.C. 18:7-21.25 for information on transitioning accounting periods and normalizing reporting of income of a banking corporation.

(f) Examples of bank activity and income reporting methods (prior to the completion of filing transitionary short period returns required at N.J.S.A. 54:10A-34.1 or N.J.A.C. 18:7-21.25) in New Jersey include the following:

1. A Pennsylvania state chartered bank reports on the calendar year basis. It began doing business in Pennsylvania in a prior year and it begins doing business in New Jersey on July 1 of Year 1. It is required to file on April 15 of Year 2, its first annual corporation business tax return (CBT-100) and to pay the Year 1 corporation business tax for the short period July 1 of Year 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

2. A national bank that will report on the calendar year basis has its principal office in New Jersey. It begins doing business on July 1 of Year 1. Pursuant to N.J.S.A. 54:10A-34, it is required to file its first annual corporation business tax return (BFC-1) for the Year 2 privilege period with an assessment date of January 1 of Year 2 and to pay a Year 2 corporation business tax on April 15 of Year 2 based on income from July 1 of Year 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

3. A national bank reports on the calendar year basis and has its principal office in Philadelphia. Prior to July 1 of Year 1, it was not doing business anywhere. On that date it began doing business in both Pennsylvania and New Jersey. Pursuant to N.J.S.A. 54:10A-34, it is required to file its first annual corporation business tax return (BFC-1) for the Year 2 privilege period with an assessment date of January 1 of Year 2 and to pay a Year 2 corporation business tax on April 15 of Year 2, based on income from July 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

4. A national bank that reports on the calendar year basis and has its principal office in Philadelphia began doing business prior to January 1 of Year 1. It begins doing business in New Jersey on July 1 of Year 1. Pursuant to N.J.S.A. 54:10A-34, it is required to file its first annual corporation business tax return (BFC-1) on April 15 of Year 2 for the Year 2 privilege period with an assessment date of January 1 of Year 2, based on its income from July 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

5. A calendar year New Jersey State chartered bank begins doing business on July 1 of Year 1. Pursuant to N.J.S.A. 54:10A-34, it is required to file its first annual corporation business tax return (BFC-1) for the Year 2 privilege period with an assessment date of January 1 of Year 2 and to pay a Year 2 corporation business tax on April 15 of Year 2, based on income from July 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

6. On June 30 of Year 1, a New Jersey State chartered bank merges into another New Jersey State chartered bank. Under N.J.S.A. 54:10A-34(5), the surviving bank's return (BFC-1) for the Year 2 privilege period will be based on its income from January 1 to December 31 of Year 1 and the income of the bank that merged into it from January 1 to June 30 of Year 1.

7. On July 31 of Year 1, a Pennsylvania state chartered bank merges into a New Jersey chartered bank. Prior to the merger, the Pennsylvania state chartered bank was doing business in New Jersey and reporting on the calendar year basis using a CBT-100 return. The New Jersey State chartered bank will file on April 15 of Year 2, under N.J.S.A. 54:10A-34, a BFC-1 return for the Year 2 privilege period that will be based on its income from January 1 to December 31 of Year 1. In addition, the Pennsylvania state chartered bank will file on November 15 of Year 1, a CBT-100 return for the pre-merger short period covering January 1 to July 31 of Year 1 under N.J.S.A. 54:10A-2, which will be based on its pre-merger Year 1 income.

8. On July 31 of Year 1, a New Jersey State chartered bank merges into a Pennsylvania state chartered bank. Prior to the merger, the Pennsylvania state chartered bank was doing business in New Jersey and reporting on the calendar year basis. The Pennsylvania state chartered bank's Year 1 CBT-100 return filed April 15 of Year 2 for the Year 1 calendar year will be based on its income from January 1 to December 31 of Year 1. In addition, the New Jersey State chartered bank will file on November 15 of Year 1 under N.J.S.A. 54:10A-2, a Year 1 CBT-100 return reporting its pre-merger Year 1 income. This return will be in addition to the BFC-1 return required to be filed, under N.J.S.A. 54:10A-34, by April 15 of Year 1 by the New Jersey State chartered bank for the Year 1 privilege period that is based on its income from the prior year.

9. On July 1 of Year 1, a national bank headquartered in New Jersey merges into a national bank headquartered in Pennsylvania. Prior to the merger, the New Jersey national bank was only doing business in New Jersey and the Pennsylvania national bank was only doing business outside of New Jersey. The Pennsylvania national bank reports for Federal tax purposes on the calendar year basis. The Pennsylvania national bank is required to file its first annual corporation business tax return (BFC-1) on April 15 of Year 2 for the Year 2 privilege period with an assessment date of January 1 of Year 2 based on its income from July 1 through December 31 of Year 1 and the income of the New Jersey national bank that merged into it from the short period covering January 1 to June 30 of Year 1.

(g) Examples of bank activity and income reporting methods for periods after the completion of filing transitionary short period returns, as required at N.J.S.A. 54:10A-34.1 or N.J.A.C. 18:7-21.25 (for taxpayers that were already filing New Jersey returns and for taxpayers that are subsequently required to file New Jersey returns) include the following:

1. A Pennsylvania state-chartered bank reports on the calendar year basis. The bank began doing business in Pennsylvania in a prior year and it begins doing business in New Jersey on July 1 of Year 1. The bank is required to file on May 15 (30 days after the April 15 Federal due date) of Year 2, its first annual corporation business tax return and to pay the Year 1 corporation business tax for the short period July 1 of Year 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

2. A national bank that will report on the calendar year basis has its principal office in New Jersey. It begins doing business on July 1 of Year 1. The national bank is required to file its first annual corporation business tax return for the Year 1 privilege period and to pay the Year 1 corporation business tax on May 15 (30 days after the April 15 Federal due date) of Year 2 based on income from July 1 of Year 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

3. A national bank reports on the calendar year basis and has its principal office in Philadelphia, PA. Prior to July 1 of Year 1, it was not doing business anywhere. On July 1 of Year 1, it began doing business in both Pennsylvania and New Jersey. The national bank is required to file its first annual corporation business tax return for the Year 1 privilege period and to pay the Year 1 corporation business tax on May 15 (30 days after the Federal due date of April 15) of Year 2, based on income from July 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

4. A national bank that reports on a fiscal year basis for Federal purposes (ending July 31) and has its principal office in Philadelphia, PA began doing business in Pennsylvania prior to July 31. It begins doing business in New Jersey on August 1 of the Fiscal Year 1. It is required to file its first annual corporation business tax return on December 15 (30 days after the Federal due date of November 15) of Fiscal Year 2 for the Fiscal Year 1 privilege period. Thereafter, it would continue to file returns for a 12-month fiscal year period and pay the annual tax due.

5. A calendar year New Jersey State-chartered bank begins doing business on July 1 of Year 1. It is required to file its first annual corporation business tax return for the Year 1 privilege period and to pay a Year 1 corporation business tax on May 15 (30 days after the Federal due date of April 15) of Year 2, based on income from July 1 to December 31 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

6. On June 30 of Year 1, a New Jersey State-chartered bank merges into another New Jersey State-chartered bank. The New Jersey State-chartered bank will also file corporation business tax returns for the pre-merger short period. The surviving bank's corporation business tax return for the Year 1 privilege period will be based on its income from January 1 to December 31 of Year 1 and the income of the bank that merged into it from January 1 to June 30 of Year 1. Thereafter, it would continue to file returns for a 12-month calendar year period and pay the annual tax due.

7. On July 31 of Year 1, a Pennsylvania state-chartered bank merges into a New Jersey State-chartered bank. Prior to the merger, the Pennsylvania state-chartered bank was doing business in New Jersey and reporting on a calendar year basis. The New Jersey State-chartered bank will file on May 15 (30 days after the Federal due date of April 15) of Year 2, for the Year 1 privilege period that will be based on its income from January 1 to December 31 of Year 1. In addition, the Pennsylvania state-chartered bank will file a corporation business tax return for the pre-merger short period covering January 1 to July 31 of Year 1 pursuant to N.J.S.A. 54:10A-2, which will be based on reporting the income and tax liabilities for its pre-merger months of Year 1.

8. On July 31 of Year 1, a New Jersey State-chartered bank merges into a Pennsylvania state-chartered bank. Prior to the merger, the Pennsylvania state-chartered bank was doing business in New Jersey and reporting on the calendar year basis. The Pennsylvania state-chartered bank's Year 1 corporation business tax return filed May 15 (30 days after the Federal due date of April 15) of Year 2 for the Year 1 calendar year will be based on its income from January 1 to December 31 of Year 1. In addition, the New Jersey State-chartered bank will file on December 15 of Year 1 pursuant to N.J.S.A. 54:10A-2, a Year 1 corporation business tax return reporting its pre-merger Year 1 income. This return will be in addition to the corporation business tax return required to be filed by May 15 of Year 2 by the New Jersey State-chartered bank for its prior annual privilege period.

(h) For banks that are members of a combined group, see N.J.A.C. 18:7-21 for more information on combined groups and combined reporting.

N.J. Admin. Code § 18:7-1.14

Amended by 49 N.J.R. 1694(a), effective 6/19/2017

Amended by 54 N.J.R. 1819(a), effective 9/19/2022