Who Has to Pay This Tax?
Banking corporations are defined as follows:
NOTE: Provisions that are related to the Gramm-Leach-Bliley Act of 1999 (applicable in tax years beginning after 1999 and before 2006) require certain banking corporations be taxed during each of the transition years under the General Corporation Tax or the Banking Corporation Tax applied to that corporation for its immediately preceding taxable year.
These provisions also allow corporations that were formed after 1999, and that are financial subsidiaries owned by a financial holding company, to elect to be taxed under the General Corporation Tax or the Banking Corporation Tax in their first year but require them to be taxed under the tax elected for each subsequent transitional year. However, for tax years beginning in 2009, certain taxpayers who previously elected to be taxed under the General Corporation Tax based on these provisions will now be required to be taxed under the Banking Corporation Tax if certain conditions are met.
Who is Exempt from this Tax?
The following types of corporations are exempt from banking corporation tax:
The banking corporation tax rate is the largest of the following four options:
Important Definitions Related to Tax Rate
"Entire net income" is defined as the total net income from all sources, which is the same as the entire taxable income (i) that the taxpayer is required to report to the US Treasury Department, or (ii) that the taxpayer (in the case of a corporation that is exempt from Federal income tax but subject to banking corporation tax) would have been required to report to the US Treasury but for the exemption, or (iii) that, in the case of a corporation that is organized under the laws of a country other than the United States, is effectively connected with the conduct of a trade or business within the US, subject to certain modifications.
NOTE: For the tax years beginning after 1996, S-corporations that are banking corporations must compute entire net income for bank tax purposes, as if an election under Subchapter S had not been made. In addition, banking corporation taxpayers must treat their qualified Subchapter S subsidiaries (QSSS) as separate and distinct corporations and determine income as if no (QSSS) election had been made.
"Alternative entire net income" is defined as the taxpayer’s entire net income, adjusted to eliminate the effect of certain tax benefits allowed in the calculation of entire net income.
"Taxable assets" are defined as the taxpayer’s balance sheet assets valued at their average value during the tax year, with certain exclusions and modifications.
"Allocation" - A taxpayer whose entire net income, alternative entire net income, taxable assets, or issued capital stock is derived from business that is carried on within and without the City is permitted to allocate those amounts under a formula. This formula takes into account the taxpayer’s payroll, receipts, and deposits within and without the City. The allocation, however, cannot include the issued capital stock percentage. For banking corporations that substantially provide management, administrative or distributive services to investment companies, a single receipts factor will replace the three-factor allocation formula used for tax years beginning before 2009. This begins for tax years starting in or after 2009 and is phased in over a ten-year period. Issuer's allocation percentage information is available online. The NYC Department of Finance keeps a record of the issuer's allocation percentages (IAP) for all general corporations and banking corporations.
Forms and Reports
Paying Estimated Tax
If the preceding year’s tax was more than $1,000, the taxpayer must pay an amount equal to 25% of this tax at the time the preceding year’s tax return is filed or at the time a request for an extension is filed, as the first installment of estimated tax for the current year.
The other estimated tax payments are due as follows:
|If the requirement for filing a Declaration of Estimated Tax is first met…||The due date for filing is…|
|Before June 1||June 15|
|June 1, up to August 31||September 15|
|September 1, up to November 30||December 15|
Instead of the December 15 Declaration, a completed tax report, with payment of balance due, if any, may be filed by February 15 of the following year.
Estimated tax for fiscal year taxpayers
The corresponding months of the fiscal year should be substituted for the months specified above.
Local Law: Title 11, Chapter 6 (Subchapter 3), Administrative Code Enabling Act: Chapter 772 Laws of 1966
Business Corporation Tax