Looking for a Massachusetts Tax Forms And Templates? Download it for free!

Banks or other corporations in substantial competition with financial

native method of apportionment of income must be made for each

institutions in Massachusetts which derive more than 50% of gross

taxable period.

income from loan origination, lending activities or credit card activi-

Elections Not Requiring Prior Approval from

ties. Credit unions are not subject to the excise. See Technical Infor-

the Department

mation Release (TIR) 95-6.

Receipts Factor. Valuation of Investment and/or Trading Assets and

Corporations included in the new definition of financial institution

Activities by Average Value or Gross Income Method, Schedule E,

which were taxed under Massachusetts General Laws (MGL) Ch. 62

line 1. Interest, dividends, net gains (but not less than zero) and other

(income tax on individuals, trusts, corporate trusts, partnerships and

income from investment and/or trading assets and activities are gen-

S corporations) or MGL Ch. 63, secs. 30 to 42, inclusive (corporate

erally included in the numerator of the receipts factor by multiplying

excise), are now taxed under MGL Ch. 63, sections 1 through 2A

all income from such assets and activities by a fraction, the numera-

inclusive and must now file a Form 63FI, Financial Institution Excise

tor of which is the average value of such assets which are properly

Return for tax years beginning on or after January 1, 1999.

assigned to a regular place of business of the taxpayer in Massachu-

setts and the denominator of which is the average value of all such

The minimum excise for a financial institution is $456. The minimum

assets. In lieu of using this method, the taxpayer may elect to deter-

excise cannot be prorated.

mine the income from investment and/or trading assets and activities

What is Nexus for Purposes of the Mass-

that is included in the numerator of the receipts factor by multiplying

achusetts Financial Institution Excise?

all such income by a fraction, the numerator of which is the gross in-

come from such assets which are properly assigned to a regular place

The financial institution excise applies to any financial institution en-

of business of the taxpayer in Massachusetts and the denominator

gaged in business in Massachusetts. The term “engaged in business”

of which is the gross income from all such assets and activities.

as defined in MGL Ch. 63, sec. 1 includes:

If the taxpayer elects or is required by the Department to use the

a. having a business location in Massachusetts;

gross income method, the taxpayer must use this method on subse-

b. having employees, representatives or independent contractors

quent returns unless the taxpayer receives permission or the Depart-

conducting business activities on its behalf in Massachusetts;

ment requires a different method.

c. maintaining, renting or owning any tangible or real property in

Property Factor. Valuation of All Property Owned, Schedule E, line

Massachusetts;

2e. The average value of property owned by the taxpayer is com-

d. regularly performing services in Massachusetts;

puted on an annual basis by adding the value of the property on the

first day of the taxable year and the value of the property on the

e. regularly engaging in transactions with customers in Massachu-

last day of the taxable year and dividing the sum by two. If averaging

setts that involve intangible property and result in income flowing to

on this basis does not properly reflect average value, the taxpayer

the taxpayer from residents of Massachusetts;

may elect or the Department may require averaging on a more fre-

f. regularly receiving interest income from loans secured by tangible

quent basis.

personal property or real property located in Massachusetts; or

A taxpayer electing to average on a more frequent basis must use

g. regularly soliciting and receiving deposits from customers in

the same method of valuation consistently with respect to property

Massachusetts.

inside and outside of Massachusetts and on all subsequent returns

unless the taxpayer receives permission or the Department requires

With respect to the activities described in (d) through (g) inclusive, ac-

a different method of determining average value.

tivities are presumed, subject to rebuttal, to be conducted on a regu-

lar basis within Massachusetts if any of such activities are conducted

Elections Requiring Prior Approval from

with 100 or more residents of Massachusetts during any taxable year

the Department

or if the taxpayer has $10,000,000 or more of assets attributable

Property Factor. The average value of rented property (real or tan-

to sources within Massachusetts or if the taxpayer has in excess of

gible) is generally determined annually by multiplying the gross rents

$500,000 in receipts attributable to sources within Massachusetts.

payable during the taxable year by eight. A financial institution which

believes that this general method results in inaccurate valuations of

Apportionment

rented property may apply to use any other method which properly

For tax years beginning on or after January 1, 1995, Massachusetts

reflects the value. The taxpayer should make this request by submit-

has adopted a three-factor apportionment formula based on receipts,

ting Form AA-1. A taxpayer that has been unable to obtain prior ap-

property and payroll. Apportionment applies to financial institutions

proval of an alternative method of valuation of rental property should

with income from business activity which is taxable both in Mass-

use the statutory method of valuing rental property on its return and

achusetts and in any other state. See MGL Ch. 63, sec. 2A. The

submit Form AA-1 describing the proposed alternative method. If the

apportionment calculations are reported in Schedule E. It may be

alternative method is approved by the Department, a refund of any

necessary to refer to the detailed provisions of MGL Ch. 63, sec. 2A

overpayment, with interest, if due, will be made.

in order to complete Schedule E.

If an alternative method of valuing rented property is approved, that

Elections Relating to Apportionment

method must be used on all subsequent returns unless the taxpayer

Financial institutions subject to the excise under MGL Ch. 63, secs. 1,

receives prior approval or the Department requires a different method.

2 and 2A and filing Form 63 FI may make certain elections. Two elec-

Alternative Apportionment. A financial institution which believes

tions may be made by the taxpayer without prior approval from the

that the statutory provisions contained in MGL Ch. 63, sec. 2A are

Department and two elections require prior approval from the De-

not reasonably adapted to approximate its net income derived from

partment. Once making an election to use an alternative method of

business carried on within Massachusetts may apply to the Depart-

valuation, the taxpayer will generally be required to use the alterna-

ment to use an alternative method by filing Form AA-1 with its duly

tive method on subsequent returns. However, a request for an alter-

Instructions For Form 63 Fi - Massachusetts Financial Institution Excise Tax Return - 2012 Page 3

Related Articles

Related forms

Related Categories