Financial Institution Excise

Learn if your business is subject to financial institution excise tax.

Companies subject to financial institution excise

Massachusetts financial institution excise applies to:

• Banks
• Trust companies
• 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 
• Subsidiaries of bank holding companies
• Savings and loan holding companies
• Corporations subject to supervision by the Massachusetts Division of Banks
• Other corporations
• Certain other corporations that derive more than 50% of gross income from loan origination,lending activities and credit card activities.

Credit unions are not subject to the excise.

For more information see

• (TIR) 95-6
• Instructions for Form 63 FI, Financial Institution Excise Return.

Engaged in Business - Massachusetts Nexus

The financial institution excise applies to any financial institution engaged in business in Massachusetts.

The term "engaged in business," includes:

• Having a business location in Massachusetts
• Having employees, representatives or independent contractors conducting business activities on its behalf in Massachusetts
• Maintaining, renting or owning any tangible or real property in Massachusetts
• Regularly performing services in Massachusetts
• Regularly engaging in transactions with customers in Massachusetts that involve intangible property and result in income flowing to the taxpayer from residents of Massachusetts
• Regularly receiving interest income from loans secured by tangible personal property or real property located in Massachusetts or
• Regularly soliciting and receiving deposits from customers in Massachusetts.

The activities described in the last 4 bullets above are presumed to be conducted on a regular basis in Massachusetts if:

• They are conducted with 100 or more residents of Massachusetts during any taxable year 
• The taxpayer has $10,000,000 or more of assets from sources in Massachusetts or
• The taxpayer has more than $500,000 in receipts from sources in Massachusetts.

Estimated Payments

Estimated payment requirements and procedures are the same as other corporations.

See TIR 16-9 for more information on filing estimated payments.

See 63-FI-ES Instructions for Financial Institution Estimated Excise Payment Worksheet. Financial Institution Estimated Tax Payment Instructions and Worksheet. Form 63-FI-ES is filed through third party software only. No form is required when making an electronic estimated payment on MassTaxConnect. 

Go to the MassTaxConnect video tutorial, How to Make an Estimated Payment for Businesses.