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New VA Reporting Requirements for Corporations - Due July 1, 2021

By: Amy Hilfiker

The Virginia Department of Taxation has been tasked with putting together a report detailing the revenue impacts of combined corporate income tax reporting.  Virginia recently passed legislation requiring all corporations that are members of a defined “unitary business” to file a one-time informational report, containing the unitary combined net income of the group.  A "unitary business" means a single economic enterprise made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts.

The report must be based on taxable year 2019 computations and include the difference in tax owed as a result of filing a unitary combined report compared to the tax owed under the current filing requirements.  Any difference in the tax is for informational reporting purposes only and would not be payable.  The reports must be submitted to the Department of Taxation on or before July 1, 2021, which will not be extended. Any corporation required to submit a report that fails to do so on or before July 1, 2021, or that makes a material omission or misstatement in connection with their report will be subject to a penalty of $10,000.

If you received a letter from Virginia Tax about this new reporting requirement, you will need to complete the brief questionnaire online to determine whether or not your corporation falls under the reporting requirement.  All corporations receiving a letter must respond to not be subject to the $10,000 penalty.  If you have any questions or would like our assistance with completing the questionnaire or combined information reporting, please contact your tax advisor.