Filing of Combined Corporation Business Tax Returns
BACKGROUND: In July 1990, the Department issued Policy Statement No. 90-5 to provide its interpretation of the procedural requirements under Conn. Gen. Stat. §12-223a for filing a combined corporation business tax return and the consequences of not meeting those requirements.
PURPOSE: This Policy Statement describes changes in the Department's interpretation of those procedural requirements and the consequences of not meeting those requirements.
EFFECTIVE DATE: Applicable for income years beginning on or after January 1, 1991.
STATUTORY REQUIREMENTS: A corporation that is included in a consolidated federal income tax return may elect to file a combined corporation business tax return together with such other corporations subject to the corporation business tax as are included in the consolidated federal income tax return. Conn. Gen. Stat. §12-223a(l). When such an election is made, each member of the combined group is jointly and severally liable for the entire tax (including penalties and interest) due from the combined group for each income year that the member is included in the combined return. Conn. Gen. Stat. §12-223d. A corporation's joint and several liability for the income years that it is included in the combined return is not extinguished either by the subsequent discontinuance of the filing of combined returns or by its subsequent exclusion for whatever reason from the combined group.
THE DEPARTMENT'S INTERPRETATION OF THOSE REQUIREMENTS: To be considered by the Department as having complied with the provisions of Conn. Gen. Stat. §12-223a(l), corporations must meet the following conditions:
Each corporation that is included in a combined return must file its written consent to be included in such return with the Department by the due date (or extended due date) of the first combined return in which such consenting corporation is to be included. Form CT-112OCC must be used to make such consent. Where the Form CT-112OCC is timely filed by a consenting corporation, the form need not be filed for succeeding income years in which the corporation is to be included in the combined return; however, where the Form CT-112OCC is not timely filed, another must be filed by the due date (or extended due date) of the next combined return.
Each corporation in the consolidated group that either carries on, or has the right to carry on, business in Connecticut, as those terms are defined in Conn. Agencies Regs. §12-214-1, must be included in the combined return filed. A combined return cannot be voluntarily amended after its due date (or extended due date) to include a corporation that was required to be included in the combined return. The Department will exclude from a combined return any corporation that is otherwise required to be included in a combined return but that fails to file a written consent by the due date (or extended due date) of the combined return. If the Department excludes such a corporation, the excluded corporation must compute its tax on a separate return basis, and any operating loss attributable to a year that such corporation is excluded from a combined return shall be deductible in succeeding years in which the corporation is included in the combined return only against the income of the excluded corporation, pursuant to Conn. Agencies Regs., §12-223a-2(e).
Separate income statements and balance sheets are required for each member of the combined group. In addition, the consolidated federal income tax return income statement and balance sheet are to be attached to the combined return.
DISCONTINUANCE OF FILING OF COMBINED RETURNS:
Where filing of a consolidated federal return is discontinued: Corporations which discontinue filing a consolidated federal return must file separate Connecticut corporation, business tax returns for the applicable years. A copy of the consent to a discontinuance that is received from the Internal Revenue Service shall be filed with each separate return for those years. Upon resumption of filing of consolidated federal tax returns, the corporations must also resume filing combined returns.
Where filing of a consolidated federal return is not discontinued: Where the filing of a consolidated federal return has not been discontinued, an election to discontinue the filing of combined returns must be filed with the Department prior to the beginning of the income year for which separate returns will first be filed. The election to file a separate tax return is irrevocable, and no future election to be included in a combined return will be possible.
However, where mergers, consolidations, dissolutions or other transactions have resulted in only one corporation being left in the combined group, that corporation will not be treated as having elected to file a separate tax return and may be included in a combined return in the future if it is included in a consolidated federal tax return together with other corporations that are carrying on, or having the right to carry on, business in Connecticut.
EFFECT ON OTHER DOCUMENTS: Policy Statement 90-5 (NEW 7/90) is superseded and may not be relied upon for income years beginning on or after January 1, 1991.
Corporation Business Tax