N.J. Admin. Code § 18:7-8.1 - Business allocation factor; computation
(a) The
business allocation factor is computed on the basis of the average percentage
resulting from the following three fractions:
1. Average value of real and tangible
personal property in New Jersey over the average value of such property both
within and outside New Jersey (this is usually referred to as the property
fraction);
2. Receipts allocable to
New Jersey over receipts both within and outside New Jersey (this is usually
referred to as the receipts fraction in this subchapter but may also be
referred to as the sales fraction. The terms may be used interchangeably for
fiscal periods beginning on or after July 1, 1996);
3. Payroll allocable to New Jersey over
payroll within and outside New Jersey (this is usually referred to as the
payroll fraction).
(b)
The business allocation factor is weighted as follows:
1. For fiscal or calendar accounting years
beginning before July 1, 1996, the business allocation factor is computed by
adding together the percentages derived from the foregoing three fractions for
the period covered by the return, and dividing the total of the percentages by
three.
2. For fiscal or calendar
accounting years beginning on or after July 1, 1996, the business allocation
factor is computed by adding together the percentages derived by adding the
property fraction, the payroll fraction, and twice the receipts for the period
covered by the return, and dividing the total of the percentages by
four.
(c) If the
receipts fraction is missing, the other two percentages are added and the sum
is divided by two, and if both the receipts fraction and one other fraction are
missing, the remaining percentage may be used as the business allocation
factor. If the receipts fraction is present and either the property or payroll
fraction is absent, then the percentages represented by the two fractions
present are added together and divided by three. A fraction is not missing
merely because its numerator is zero, but it is missing if both its numerator
and denominator are zero.
(d) For
privilege periods beginning on or after January 1, 2012, the business
allocation factor is computed according to the following schedule:
1. For privilege periods beginning on or
after January 1, 2012, but before January 1, 2013, 15 percent of the property
fraction plus 70 percent of the sales fraction plus 15 percent of the payroll
fraction;
2. For privilege periods
beginning on or after January 1, 2013, but before January 1, 2014, five percent
of the property fraction plus 90 percent of the sales fraction plus five
percent of the payroll fraction; and
3. For privilege periods beginning on or
after January 1, 2014, 100 percent of the sales fraction.
(e) For taxpayers with fiscal year privilege
periods, the business allocation factor is computed according to the following
schedule:
1. For a taxpayer that has a
privilege period that begins in 2011 and ends in 2012, the business allocation
factor is computed with the numerator consisting of the property fraction, plus
twice the sales fraction plus the payroll fraction and the denominator of which
is four (double weighted sales factor allocation method);
2. For the taxpayer that has a privilege
period that begins in 2012 and ends in 2013, the sales fraction will account
for 70 percent of the allocation, and the property and payroll fractions will
each account for 15 percent of the allocation;
3. For the taxpayer that has a privilege
period that begins in 2013 and ends in 2014, the sales fraction will account
for 90 percent of the allocation, and property and payroll fractions will each
account for five percent of the allocation; and
4. For privilege periods beginning in 2014
and for all subsequent privilege periods, the sales fraction will account for
100 percent of the allocation.
Example: Company A has a privilege period that begins August 1, 2011, and ends on July 31, 2012. For the Company A's 2011-2012 privilege period, Company A must use the double weighted sales factor allocation method. For Company A's 2012-2013 privilege period, Company A must use the 70% sales factor allocation method. For Company A's 2013-2014 privilege period, Company A must use the 90% sales fraction method. For Company A's 2014-2015 privilege period and all subsequent privilege periods, Company A will use the 100% sales factor allocation method.
(f) For privilege periods beginning on or
after January 1, 2012, the determination of the sales factor for airlines is as
follows:
1. The sales fraction for the
transportation revenues of a taxpayer that is an airline shall be determined as
the ratio of revenue miles in this State divided by total revenue
miles.
2. For a taxpayer that is an
airline engaged in the transportation of passengers, the transportation of
freight, or the rental of aircraft, the ratio shall be determined by an average
of a passenger revenue mile fraction, freight revenue mile fraction, and rental
revenue mile fraction weighted to reflect the taxpayer's relative gross
receipts from passenger transportation, freight transportation, and rentals,
respectively.
(g) As
used in (f) above, "revenue miles" means passenger revenue miles for
passengers, ton revenue miles for freight, or aircraft revenue miles for
aircraft rentals.
1. The passenger revenue
mile fraction is determined by multiplying the number of revenue-paying
passengers aboard the vehicle by the distance traveled in New Jersey divided by
the number of revenue-paying passengers aboard the vehicle multiplied by the
distance traveled everywhere.
2.
The freight revenue mile fraction is determined by dividing the revenue freight
ton miles in New Jersey by the revenue freight to miles everywhere. A freight
revenue ton mile is equal to one ton carried one mile.
3. The rental revenue mile fraction is
determined by dividing the number of rental miles flown in New Jersey by total
rental miles flown.
(h)
Taxpayers in the gaming industry (casinos and online betting) shall report and
include their receipts in the same manner as for Federal tax purposes in
accordance with U.S. G.A.A.P. or I.F.R.S. (as applicable). Where there are
material differences in accounting methods between U.S. G.A.A.P. and I.F.R.S.
that cause a material numerical difference, taxpayers must include an
explanation for the difference in their books, records, and work papers, which
shall be made available to the Division of Taxation upon request.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(a) The business allocation factor is computed on the basis of the average percentage resulting from the following three fractions:
1. Average value of real and tangible personal property in New Jersey over the average value of such property both within and outside New Jersey (this is usually referred to as the property fraction);
2. Receipts allocable to New Jersey over receipts both within and outside New Jersey (this is usually referred to as the receipts fraction in this subchapter but may also be referred to as the sales fraction. The terms may be used interchangeably for fiscal periods beginning on or after July 1, 1996);
3. Payroll allocable to New Jersey over payroll within and outside New Jersey (this is usually referred to as the payroll fraction).
(b) The business allocation factor is weighted as follows:
1. For fiscal or calendar accounting years beginning before July 1, 1996, the business allocation factor is computed by adding together the percentages derived from the foregoing three fractions for the period covered by the return, and dividing the total of the percentages by three.
2. For fiscal or calendar accounting years beginning on or after July 1, 1996, the business allocation factor is computed by adding together the percentages derived by adding the property fraction, the payroll fraction, and twice the receipts for the period covered by the return, and dividing the total of the percentages by four.
(c) If the receipts fraction is missing, the other two percentages are added and the sum is divided by two, and if both the receipts fraction and one other fraction are missing, the remaining percentage may be used as the business allocation factor. If the receipts fraction is present and either the property or payroll fraction is absent, then the percentages represented by the two fractions present are added together and divided by three. A fraction is not missing merely because its numerator is zero, but it is missing if both its numerator and denominator are zero.
(d) For privilege periods beginning on or after January 1, 2012, the business allocation factor is computed according to the following schedule:
1. For privilege periods beginning on or after January 1, 2012, but before January 1, 2013, 15 percent of the property fraction plus 70 percent of the sales fraction plus 15 percent of the payroll fraction;
2. For privilege periods beginning on or after January 1, 2013, but before January 1, 2014, five percent of the property fraction plus 90 percent of the sales fraction plus five percent of the payroll fraction; and
3. For privilege periods beginning on or after January 1, 2014, 100 percent of the sales fraction.
(e) For taxpayers with fiscal year privilege periods, the business allocation factor is computed according to the following schedule:
1. For a taxpayer that has a privilege period that begins in 2011 and ends in 2012, the business allocation factor is computed with the numerator consisting of the property fraction, plus twice the sales fraction plus the payroll fraction and the denominator of which is four (double weighted sales factor allocation method);
2. For the taxpayer that has a privilege period that begins in 2012 and ends in 2013, the sales fraction will account for 70 percent of the allocation, and the property and payroll fractions will each account for 15 percent of the allocation;
3. For the taxpayer that has a privilege period that begins in 2013 and ends in 2014, the sales fraction will account for 90 percent of the allocation, and property and payroll fractions will each account for five percent of the allocation; and
4. For privilege periods beginning in 2014 and for all subsequent privilege periods, the sales fraction will account for 100 percent of the allocation.
Example: Company A has a privilege period that begins August 1, 2011, and ends on July 31, 2012. For the Company A's 2011-2012 privilege period, Company A must use the double weighted sales factor allocation method. For Company A's 2012-2013 privilege period, Company A must use the 70% sales factor allocation method. For Company A's 2013-2014 privilege period, Company A must use the 90% sales fraction method. For Company A's 2014-2015 privilege period and all subsequent privilege periods, Company A will use the 100% sales factor allocation method.
(f) For privilege periods beginning on or after January 1, 2012, the determination of the sales factor for airlines is as follows:
1. The sales fraction for the transportation revenues of a taxpayer that is an airline shall be determined as the ratio of revenue miles in this State divided by total revenue miles.
2. For a taxpayer that is an airline engaged in the transportation of passengers, the transportation of freight, or the rental of aircraft, the ratio shall be determined by an average of a passenger revenue mile fraction, freight revenue mile fraction, and rental revenue mile fraction weighted to reflect the taxpayer's relative gross receipts from passenger transportation, freight transportation, and rentals, respectively.
(g) As used in (f) above, "revenue miles" means passenger revenue miles for passengers, ton revenue miles for freight, or aircraft revenue miles for aircraft rentals.
1. The passenger revenue mile fraction is determined by multiplying the number of revenue-paying passengers aboard the vehicle by the distance traveled in New Jersey divided by the number of revenue-paying passengers aboard the vehicle multiplied by the distance traveled everywhere.
2. The freight revenue mile fraction is determined by dividing the revenue freight ton miles in New Jersey by the revenue freight to miles everywhere. A freight revenue ton mile is equal to one ton carried one mile.
3. The rental revenue mile fraction is determined by dividing the number of rental miles flown in New Jersey by total rental miles flown.