District of Columbia ~ Corporate Income Tax: Combined Reporting Transitional Year Guidance Provided

The District of Columbia’s Office of Tax and Revenue has issued a notice on the requirements for closing out a separate entity account that will now be filing a combined report, due dates for filing the combined report for Form D-20 (Corporation Franchise Tax Return) and D-30 (Unincorporated Business Franchise Tax Return) filers, posting of estimated tax payments that were made on a separate entity basis to the designated agent’s account, the requirements for filing an extension of time to file a return, and the status of combined reporting schedules and proposed regulations.

Closing Out the Separate Entity

If an entity filed a District return on a stand-alone basis (separate reporting) or District consolidated return for the tax year beginning prior to December 31, 2010, and that entity will now be filing on a combined reporting basis for the tax year beginning after December 31, 2010, that entity (or entities) will be required to file a separate “final” return showing “zeros” except if separate estimated tax payments were made, in which case that amount would be reflected on line 40(b) of Form D-20 or D-30. Additionally, if an extension to file a return (Form FR-128) is requested, the payment made with the extension to file a return shall also be reflected on line 40(a) of Form D-20 or D-30 on the separate final zero return.

Designated Agent

Entities filing the separate final zero return must also include their designated agent’s name and FEIN in the space provided so that the estimated tax payments from line 40(b) and any payment with extension from line 40(a) can be transferred to the designated agent’s account. All separate final zero returns, the composite return (Form D-20 or D-30) along with the combined group schedules should be submitted together.

Estimated Tax Payments

Estimated tax payments that were made on a separate entity basis for the tax year beginning after December 31, 2010, will be electronically transferred and posted to the designated agent’s combined group’s account when the separate final zero return is filed.

Extension of Time to File

For the transitional year only, each member of the combined group must file a separate extension of time to file a return and submit the payment made with the extension. The designated agent will also file an extension and submit the payment with extension but only for itself and not on behalf of the other group members. In the following tax year (after the transitional year), only the designated agent may file the extension on behalf of the entire combined group.

Status of Combined Reporting Schedules and Proposed Regulations

Combined reporting schedules to be submitted with either the Form D-20 or D-30 are expected to be posted on the OTR web page by March 13, 2012. The combined reporting proposed regulations are undergoing revisions and clarification pursuant to comments obtained during the comment period.

OTR Notice 2012-3, District of Columbia Office of Tax and Revenue, March 8, 2012

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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