The Massachusetts financial institution excise applies to banks, trust companies and federal or state savings and loan associations existing by authority of the United States, or any state or a foreign country. It also applies to bank holding companies and subsidiaries of bank holding companies; savings and loan holding companies; corporations subject to supervision by the Massachusetts Division of Banks; and other corporations in substantial competition with financial institutions in Massachusetts that derive more than 50 percent of gross income from loan origination, lending activities or credit card activities. Credit unions are not subject to the excise.
Nexus for Purposes of the Massachusetts Financial Institution Excise
The financial institution excise applies to any financial institution engaged in business in Massachusetts. The term "engaged in business," as defined in Massachusetts General Laws Ch. 63, sec. 1, includes:
a. having a business location in Massachusetts;
b. having employees, representatives or independent contractors conducting business activities on its behalf in Massachusetts;
c. maintaining, renting or owning any tangible or real property in Massachusetts;
d. regularly performing services in Massachusetts;
e. regularly engaging in transactions with customers in Massachusetts that involve intangible property and result in income flowing to the taxpayer from residents of Massachusetts;
f. regularly receiving interest income from loans secured by tangible personal property or real property located in Massachusetts; or
g. regularly soliciting and receiving deposits from customers in Massachusetts.
With respect to the activities described in (d) through (g) inclusive, activities are presumed, subject to rebuttal, to be conducted on a regular basis within Massachusetts if any of such activities are conducted with 100 or more residents of Massachusetts during any taxable year or if the taxpayer has $10,000,000 or more of assets attributable to sources within Massachusetts or if the taxpayer has in excess of $500,000 in receipts attributable to sources within Massachusetts.
All financial institutions that reasonably estimate their excise to be in excess of $1,000 for the taxable year are required to make estimated tax payments to the Commonwealth. Estimated payment requirements and procedures for financial institutions are the same as those for corporations. Note: Financial institutions with $100,000 or more in gross income are required to make all payments by electronic means; paper returns are still required. Detailed information concerning the Department's electronic filing and payment requirements may be obtained from Technical Information Release (TIR) 04-30.
Entities may use to comply with their payment requirements.