Current through Register Vol. 56, No. 18, September 16, 2024
(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.
