Virginia corporations that are members of a unitary group are required to file an informational report, due July 1, 2021. This one-time report will show the difference between the amount of tax the corporation would pay if it filed as part of a unitary combined group compared to the amount of tax owed based on how the corporation currently files in Virginia. The requirement was introduced in Virginia’s budget bill, H.B. 1800, which was ratified on April 7, 2021.

The report is due July 1, 2021. There is no extension available to file. Taxpayers must use 2019 corporate income tax calculations to complete the report. Failure to file the report on or before July 1, 2021 or a material omission or misstatement in the report can result in a $10,000 penalty.

For the purpose of this informational report, a unitary group does not include any foreign corporation (organized or incorporated in a foreign country) if the foreign corporation’s average property, payroll and sales factors outside of the U.S. are 80% or more. Further, the informational report computations do not include the income of any foreign corporation whose income is not subject to federal income tax because of a United States tax treaty. Finally, a unitary group also does not include corporations that are subject to Virginia’s insurance premiums license tax or bank franchise tax.

A designated member will need file the report and provide information as if filing a unitary combined report under both the Joyce and Finnigan methods.

At a minimum, all Virginia C-corporations are expected to respond to the correspondence received by July 1 to indicate whether or not they are members of a unitary group. If a corporation indicates they are not a member of a unitary group, no further information will be required. All Virginia C-corporations should ensure they respond to avoid potential notices from Virginia.

Please contact our tax professionals should you have any questions.

Insight

The Virginia Department of Taxation’s website indicates that taxpayers will be able to file their report using the department’s Web Upload application and that taxpayers should continue to check out website for more details.