New York Allows Withdrawal of Group Election in Some Cases

For a limited time, certain New York taxpayers can withdraw the commonly owned group election made on a 2015 or 2016 combined return. For the withdrawal to be allowed, all corporations in the original combined group must follow all of the required procedures by June 1, 2018.

New York City also allows a withdrawal of the election.

Eligibility

The withdrawal procedure is available only if:

  1. the combined group’s designated agent made the commonly owned group election for the first time on the group’s original, timely filed 2015 or 2016 combined return;
  2. the corporations included in the combined return identically matched the corporations in the designated agent’s federal consolidated return for that tax year; and
  3. the 2015 or 2016 combined return did not include any other corporations that met the Article 9-A combined filing ownership requirements.

Withdrawal Procedure

To withdraw the election, the designated agent must:

  • file an amended Form CT-3-A for the first year the commonly owned group election was made, but not mark the box on Form CT-3-A, Part 1, Section C, line 5;
  • mark an X in the amended return box on Form CT-3-A, page 1 and complete Form CT-3-A, Part 1, Section C, line 2a;
  • include a statement that the commonly owned group election is being withdrawn based on memorandum TSB-M-18(1)C;
  • include only those corporations meeting both the ownership requirement and the unitary business requirement in the combined group on the amended return;
  • include an amended Form CT-60, as well as any other required forms or attachments;
  • file an amended Form CT-3-A/BC for each combined group member included in the amended combined return; and
  • file these amended returns by June 1, 2018.

No attempted withdrawal made after June 1, 2018, will be recognized.

All corporations that were taxpayer members included in the original combined return for 2015 and 2016, but not included in the designated agent’s amended combined returns for those tax years, must:

  1. file their own corporate franchise tax returns for those tax years by June 1, 2018, on a combined or separate basis, as applicable; and
  2. include a statement that the commonly owned group election is being withdrawn based on memorandum TSB-M-18(1)C and provide the name and employer identification number of the designated agent on the original combined return for 2015 and 2016.

For nontaxpayer members of the designated agent’s original combined return that were not included in its amended returns for tax years 2015 and 2016, if they meet the combined filing ownership requirements and are unitary with another taxpayer for tax year 2015 and 2016, they must file combined with that taxpayer for those tax years by June 1, 2018.

TSB-M-18(1)C, New York Department of Taxation and Finance, March 22, 2018, ¶409-230

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