On April 7, the Virginia legislature enacted House Bill 1800, which requires corporations that are members of a unitary business to file a report with the Virginia Department of Taxation on or before July 1, 2021. In recent years the legislature has introduced, but never passed, legislation that would require unitary combined reporting for corporations. This requirement allows the state to study the effect of a change to mandatory unitary combined reporting. Groups treated as a unitary business with even one member with a Virginia filing obligation that fail to file this report by the due date are subject to a penalty of up to $10,000 per entity that should have been included in the combined reporting.
The bill defines “unitary business” to include entities that are commonly controlled and for which there is synergy or flow of value. A unitary business does not include a business subject to (or that would be subject to if doing business in Virginia) the insurance premiums license tax or bank franchise tax. A foreign corporation that has an average of 80% or more in property, payroll, and sales factors outside the U.S. is excluded from the unitary combined report. Specific rules exist related to reporting of income, expenses, and apportionment factors of foreign corporations that are subject to the provisions of a federal income tax treaty. The bill includes the definition of unitary business partnerships and parts of the business held through the interest in a partnership.