Previously reported legislation (TAXDAY, 2011/05/02, S.20), replaces the three-factor allocation formula of the New Jersey corporation business tax (CBT) allocation factor with a single sales factor formula and makes changes to the determination of the sales factor for the airline industry. The single sales factor is phased in over three years, beginning with privilege periods beginning after January 2011. For privilege periods beginning in 2012, the sales factor will account for 70% of the allocation, and the property and payroll factors will each account for 15% of the allocation. For privilege periods beginning in 2013, the sales factor will account for 90% of the allocation, and the property and payroll factors will each account for 5% of the allocation. For privilege periods beginning after 2013, the sales factor will account for 100% of the allocation.
Taxpayers with a tax year that begins prior to January 1, 2012, must continue to use the allocation factor consisting of the property factor, twice the sales factor, and the payroll factor, for their 2011-2012 tax year. A Supplemental Schedule J is required to be completed and attached to Form CBT-100.
Sales Factor for Airlines
Also, the sales factor for airlines for privilege periods beginning after 2011 will be determined as the ratio of an airline’s revenue miles in New Jersey divided by an airline’s total revenue miles. Where an airline is engaged in the transportation of passengers, the transportation of freight, or the rental of aircraft, the ratio will be determined by an average of a passenger revenue mile factor, freight revenue mile factor, and rental revenue mile factor weighted to reflect the taxpayer’s relative gross receipts from passenger transportation, freight transportation, and rentals. “Revenue miles” means passenger revenue miles for passengers, ton revenue miles for freight, or aircraft revenue miles for aircraft rentals, as defined by the United States Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics: Air Carrier Statistics.
The passenger revenue mile factor is determined by multiplying the number of revenue-paying passengers aboard the aircraft by the distance traveled in New Jersey divided by the number of revenue-paying passengers aboard the aircraft multiplied by the distance traveled everywhere. The freight revenue mile factor is determined by dividing the revenue freight ton miles in New Jersey by the revenue freight ton miles everywhere. A freight revenue ton mile is equal to one ton carried one mile. The rental revenue mile factor is determined by dividing the number of rental miles flown in New Jersey by total rental miles flown.
Notice, New Jersey Division of Taxation, August 12, 2011