Accounting & Tax Tips

June 1, 2021

New Tax Reporting Requirements for Virginia Corporations Due July 1

Corporations that are members of a unitary business group and subject to Virginia income tax may need to file a one-time report with Virginia’s Department of Taxation by July 1, 2021. If you received a letter from Virginia Tax about this new reporting requirement, you will need to fill out this Brief Questionnaire to determine whether or not your corporation is required to file by the July deadline. 

Background on the Unitary Combined Report

On April 7, Virginia House Bill H.B. 1800 was ratified to include a requirement for corporations that are members of a unitary business group to file a corporate income tax informational report.

The report is intended to 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. 

Taxpayers must use their 2019 corporate income tax calculations to complete the report. Failure to file the unitary combined report by July 1 or a material omission or misstatement in the report can result in a $10,000 penalty.

Virginia Tax has issued a Reference Guide providing additional background and instructions for the filing. 

Definition of Unitary Business

According to the Combined Reporting Requirement Instructions, the definition of a “unitary business” is as follows:

“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. A “unitary business” includes that part of the business that meets such definition and is conducted by a taxpayer through the taxpayer’s interest in a partnership, whether the interest in that partnership is held directly or indirectly through a series of partnerships or other pass-through entities.” 

Additional information on the new reporting requirements are available on the Virginia Tax website. You may also click the button below to schedule a consultation on how the new reporting requirements may impact your corporation.

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