On May 5, Georgia Gov. Brian Kemp signed House Bill 1058 into law, which provides corporate taxpayers the ability to elect to file a consolidated tax return. The consolidated tax return will be post-apportionment and nexus consolidated, meaning a taxpayer’s Georgia taxable income will be the sum of the consolidated post-apportioned incomes of each separate entity included in the filing. The statute provides that members are jointly and severally liable for the group’s tax. The election is binding on the taxpayer and the Department of Revenue for a five-year period, after which the taxpayer may reelect to file a consolidated tax return. The changes are applicable for tax years beginning on or after Jan. 1, 2023.
GA statutory changes to consolidated tax return election
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The biggest change under the new law is that taxpayers no longer are required to obtain permission from the Department of Revenue to file a consolidated tax return. Under the new law, the election to file a consolidated tax return is made by checking a box on a timely filed return, including extensions. For tax years beginning before Jan. 1, 2023, a Georgia consolidated tax return is allowed under Georgia Code Section 48-7-21 if a taxpayer requests and receives permission from the Department of Revenue. If the department grants permission, the taxpayer is bound to continue filing a consolidated tax return until permission to stop filing a consolidated return is received. A taxpayer is not required to file an application to file a consolidated tax return until 75 days prior to filing the return, including extensions.
It is unclear how the new law will affect taxpayers that enter into consolidated tax return filing agreements with the Department of Revenue prior to the effective date of the new law. Taxpayers with existing consolidated filing agreements with the department and those considering filing a consolidated filing election application for tax years beginning prior to Jan. 1, 2023, should consult with their tax adviser for the latest developments.
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Our experienced tax professionals can help you tackle your most pressing tax challenges. Contact the Crowe tax team today.
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