Renner Business News; June 14, 2021—Mary Ann Dougherty, CPA

The Commonwealth of Virginia has a new, one-time filing requirement for corporations, including nonprofits, operating in Virginia. The report’s purpose is informational, but the penalty for not filing timely is significant.

What is a Unitary Business?

Virginia defines a “Unitary Business” as a single economic enterprise made up either of separate parts of a single business entity—or 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. § 3-5.23 A.2.

Who is Exempt from this Requirement?

  • In-state, unitary businesses operating through one entity for tax purposes and operating only in Virginia are not required to file.
  • S-Corporations are not considered Unitary Businesses and are not required to file.
  • Certain insurance and banking entities need not file.

If You’re not Required to File…

  • If your business received a letter from the Virginia Tax about this new reporting requirement, and you are not required to file a report, you will need to go online at https://www.business.tax.virginia.gov/unitary/#/ubg/ and complete a questionnaire. This will help to avoid any future notices for non-filing.

If You’re Not Exempt…

  • The penalty for not filing a report when required is $10,000.
  • The report will show the amount of tax as if the corporation filed as a combined group compared to the amount of tax on separate returns as currently filed.
  • Partnerships held directly or indirectly, if they meet the definition above, will be included in the calculation.
  • The unitary business group should appoint one corporation for the purpose of filing the unitary combined report. Any member of the group can be selected if they have nexus to Virginia.
  • Certain foreign incorporated entities are excluded from the calculations.
  • Nonprofits or related nonprofit groups with only one business return (990-T, 1065 or 1120) do not need to file.
  • Nonprofits or related nonprofit groups with more than one business return must file.
  • Corporations that file tax returns in multiple states will need to file the report.
  • The report is based on the 2019 taxable year.
  • The report is filed on the Virginia Tax website. You will use the same login used for your other Virginia taxes. The website is https://www.webupload.tax.virginia.gov/user/login
  • No tax is due with the report. The information will be used to provide the General Assembly a report on the revenue impact of combined corporate income tax reporting.

To Find More Resources

Virginia Tax has more details online, including a Unitary Report Template.

Virginia Tax also has more detailed instructions in its Unitary Combined Report Reference Guide.

The above information is general in nature and intended to promote awareness of the new requirement. There are more details. Consult your tax advisor for assistance with your specific facts and circumstances. Contact us if you would like help with this filing requirement.

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