Chapter 11 of Title 5 of the Delaware Code
Effective Date: October 11, 2020
1.0 This regulation applies to banking organizations and trust companies, other than federal savings banks not headquartered in this State but maintaining branches in this State, that annually elect to pay an alternative franchise tax pursuant to Section 1101A of Title 5 of the Delaware Code. The election to pay the alternative franchise tax is made by filing an original final alternative franchise tax return on the due date, or an amended return within 180 days of the due date of the original return.
“Bank” means every bank and every corporation conducting a banking business of any kind or plan whose principal place of business is in this State, except a national bank.
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A foreign bank branch, foreign bank limited purpose branch or foreign bank agency organized pursuant to Chapter 14 of Title of the Delaware Code, or a resulting branch in this State of a foreign bank authorized pursuant to Chapter 14 of Title 5 of the Delaware Code; or
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“International Banking Facility” means a set of asset and liability accounts, segregated on the books and records of a banking organization, that includes only international banking facility deposits, borrowings and extensions of credit.
“International Banking Transaction” shall mean any of the following transactions, whether engaged in by a banking organization, any foreign branch thereof (established pursuant to Section 771 of Title 5 of the Delaware Code or federal law) or any subsidiary corporation directly or indirectly owned by any banking organization:
“National Bank” means a banking association organized under the authority of the United States and having a principal place of business in this State.
“Net Operating Income Before Taxes” means all pre-tax net income from the operations of a banking organization or trust company, including extraordinary items and other adjustments, computed in accordance with principles used by the Federal Financial Institutions Examination Council or other appropriate federal authority.
“Out-of-state bank” has the same meaning as in Section 795 of Title 5 of the Delaware Code, which is (i) a State bank, as defined in the Federal Deposit Insurance Act, as amended, at 12 U.S.C. § 1813(a), that is not chartered under Delaware law, or (ii) a national bank association created under the National Bank Act (12 U.S.C. § 21 et seq.) whose organization certificate identifies an address outside Delaware as the place at which its discount and deposit operations are to be carried out.
“Resulting branch in this State of an out-of-state bank” has the same meaning as in Section 1101(a) of Title 5 of the Delaware Code, which is a branch office in this State of an out-of-state bank resulting from a merger as provided in Subchapter VII of Chapter 7 of Title 5 of the Delaware Code, and, in addition, a branch office in this State of an out-of-state bank.
“Securities Business” means to engage in the sale, distribution and underwriting of, and deal in, stocks, bonds, debentures, notes or other securities.
“Trust Company” means a trust company or corporation doing a trust company business which has a principal place of business in this State.
3.0 Instructions for Filing the Estimated Alternative Franchise Tax Return
3.5 Rounding. All amounts shall be rounded to the nearest dollar.
3.6.1 The estimated net operating income before taxes of the banking organization or trust company;
3.6.3 Less any deductions set forth in 5 Del.C. §1101A(c)(1);
3.6.5 Apportion the entire net income to the State of Delaware in accordance with 5 Del.C. §1101A(c)(6) (attach Schedule 1 – Apportionment Percentage Calculation Worksheet [apportionment percentage shall be rounded to the nearest tenth of a percent]);
3.6.6 Multiply the elective income tax base by the rate of taxation set forth in 5 Del.C. §1101A(c)(7);
3.6.7 Plus the estimated location benefit tax liability calculated in accordance with 5 Del.C. §1101A(d), (attach Schedule 2 – Location Benefit Tax Calculation Worksheet);
3.6.8 Adjust the subtotal estimated alternative franchise tax for applicable employment tax credits pursuant to 5 Del.C. §1105, calculated in accordance with Regulation No. 1109;
3.6.10 Adjust the subtotal estimated alternative franchise tax for Historic Preservation Tax Credits calculated in accordance with 30 Del.C. Ch. 18 and the regulations thereunder.
3.7.1 40% due on or before June 1 of the current taxable year;
3.7.2 20% due on or before September 1 of the current taxable year;
3.7.3 20% due on or before December 1 of the current taxable year.
4.0 Instructions for Filing the Final Alternative Franchise Tax Return
4.3 Form. The final alternative franchise tax return is contained in this regulation as Form 1114F.
4.4 Rounding. All amounts shall be rounded to the nearest dollar.
4.5.3 Less any deductions set forth in Section 1101A(c)(1) of Title 5 of the Delaware Code;
4.5.5 Apportion the entire net income to the State of Delaware in accordance with Section 1101A(c)(6) of Title 5 of the Delaware Code (attach Schedule 1 – Apportionment Percentage Calculation Worksheet [apportionment percentage shall be rounded to the nearest tenth of a percent]);
4.5.6 Multiply the elective income tax base by the rate of taxation set forth in Section 1101A(c)(7) of Title 5 of the Delaware Code;
4.5.7 Plus the location benefit tax liability calculated in accordance with Section 1101A(d) of Title 5 of the Delaware Code, computed as of December 31 of the year prior to the year for which alternative franchise tax is paid (attach Schedule 2 – Location Benefit Tax Calculation Worksheet);
4.5.8 Adjust the subtotal alternative franchise tax for applicable employment tax credits pursuant to Section 1105 of Title 5 of the Delaware Code calculated in accordance with Regulation No. 1109, (attach Employment Tax Credit Calculation Worksheet);
5.0 Payment of Final Alternative Franchise Tax
6.0 Additional Tax Due to Underpayment of Estimated Alternative Franchise Tax or Installment
6.1 In the case of any underpayment of alternative estimated franchise tax or an installment of estimated alternative tax required by Chapter 11 of Title 5 of the Delaware Code, there shall be added to the tax for the taxable year an amount determined at the rate of 0.05 percent per day upon the amount of the underpayment for the period of the underpayment. The amount of the underpayment shall be the excess of:
7.0 Penalty - Late Payment of Final Alternative Franchise Tax
In the case of a late payment of final alternative franchise tax as required by Chapter 11 of Title 5 of the Delaware Code, there shall be added to the tax a penalty in an amount determined at the rate of 0.05 percent per day until required payment is made.
8.0 Election to be listed as a "Subsidiary Corporation"
8.1 Regulation No. 1101 shall apply to elections to be treated as a subsidiary corporation pursuant to Section 1101A(c)(3) of Title 5 of the Delaware Code.
8.2 Any corporation which has elected to be treated as a "subsidiary corporation" of a banking organization or trust company pursuant to Section 1101A(c)(3) of Title 5 of the Delaware Code and has filed with the State Bank Commissioner the required election form in accordance with Regulation No. 1101 shall provide a report of income for each electing corporation as of December 31 of each year to be submitted in conjunction with the final alternative franchise tax return due January 30; provided, however, that a banking organization may file this return on or before any later date allowed by the Federal Financial Institutions Examination Council guidelines for filing its Report of Condition and Income.
10.0 Election by an Edge Act Corporation to be Taxed in Accordance with Chapter 19 of Title 30
11.0 Instructions for Filing an Amendment to the Final Alternative Franchise Tax Return
Filing. To amend a previously filed final alternative franchise tax return, or to elect the alternative franchise tax method as provided in Section 1101A(a) of Title 5 of the Delaware Code, place a check mark () in the box provided on Form 1114F and complete the return in accordance with Section 4 of this regulation. Attach a complete copy of the original filing along with a statement of explanation for all changes.
1114A.pdf Form 1114E - Estimated Alternative Franchise Tax Return and Form 1114F Final Alternative Franchise Tax Return
https://regulations.delaware.gov/AdminCode/title5/1100/1114A.pdf