SB 796 — Income tax, corporate; returns, affiliated corporations.

SESSION ENROLLED VIRGINIA ACTS OF ASSEMBLY ––-- 2023 SESSION CHAPTER E521 An Act to amend and reenact § 58.1-442 of the Code of Virginia, relating to corporate income tax returns;

R O [S 796] Approved LMarch L26, 2023 Be it enacted by the General Assembly of Virginia:

E § 58.1-442.

DA. separate returns, file a combined return, or file a consolidated return of net income for the purpose of this chapter, and the taxes thereunder shall be computed and determined upon the basis of the type of return filed.

FollowingCorporations anthat electionare toaffiliated within the meaning of § 58.1-302 may, for any taxable year, file onseparate returns, file a separate,combined consolidated,return, or combinedfile basisa allconsolidated returnsreturn thereafterof filednet shallincome befor uponthe purpose of this chapter, and the sametaxes basisthereunder unlessshall permissionbe tocomputed changeand isdetermined grantedupon bythe basis of the Department.type of return filed.

B.Following an election to file on a separate, consolidated, or combined basis all returns theB.

For the purpose of subsection A:A:e basis unless permission to change is granted by the Department.

A consolidated return shall mean a single return for a group of corporations affiliated within the meaning of § 58.1-302, prepared in accordance with the principles of § 1502 of the Internal RevBnueRevenue Code and regulations promulgated thereunder.

Permission to file a consolidated return shall not9benot be denied to a group of affiliated corporations filing a consolidated federal return solely because two or more members of such affiliated group would be required to use different apportionment factors Eftwoif or separate returns were filed.

corporation;ionablec. income or loss is computed, utilizing separate apportionment factors for each d.

Apportionable income or loss is computed, utilizing separate apportionment factors for each corporation;

d.

applicable,1. there would have been no decrease in tax liability computed under the proposed election as compared to the affiliated group's former filing method;

For the taxable year immediately preceding the taxable year for which the new election would be applicable, there would have been no decrease in tax liability computed under the proposed election as compared to the affiliated group's former filing method;

Notwithstanding subsections A and C, for taxable years beginning on and after January 1, 2023, but before January 1, 2025, a group of corporations may elect to change the basis of the type of return filed from combined to consolidated, if (i) such corporations are affiliated within the meaning of filed§ on58.1-302; the same basis for at least the preceding 20 years;

and(ii) (iii) on or before January 1, 2022, atas least one member of the affiliated group of which they are membersmembers, isas ait relatedhas entityexisted withinfrom thetime meaning of § 58.1-302 to atime, statehas orfiled nationalon bankthe thatsame isbasis exemptfor fromat filingleast athe Virginiapreceding corporate20 incomeyears; tax return under subdivision 3 of § 58.1-401.

and (iii) on or before January 1, 2022, at least one member of the affiliated group of which they are members is a related entity within the meaning of § 58.1-302 to a state or national bank that is exempt from filing a Virginia corporate income tax return under subdivision 3 of § 58.1-401.

A taxpayer shall provide notification to the Department of Taxation that an election pursuant to this subsection is being made.

of 2 E.

If any provision of subsection D is for any reason held to be invalid or unconstitutional by the decision of a court of competent jurisdiction, then that provision shall not be deemed severable, and all of 2 provisions of subsection D shall expire and be unavailable for any affiliated group that has not made the election as of the date of such decision.