Withdrawal from NYC Commonly Owned Group Election Allowed

For a limited time, certain New York City taxpayers can withdraw the commonly owned group election made on a 2015 or 2016 combined business corporation tax return.

To withdraw the election, all corporations in the original combined group must follow required procedures by June 1, 2018.

Procedures include filing an amended return with the New York City Department of Finance. New York City’s withdrawal generally follows the rules for New York State withdrawal from the election.

Eligibility to Withdraw the Election

Taxpayers can withdraw from the commonly owned group election if they meet three requirements.

  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 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.
  3.  The 2015 or 2016 combined return did not include any other corporations that met the ownership or control requirements.

Withdrawal Procedure: Filing Amended Returns

To withdraw the election, the designated agent must, by June 1, 2018, file an amended Form NYC-2A for the first year the commonly owned group election was made. The only corporations in the combined group included on the amended return are those corporations meeting both:

  • the ownership requirement; and
  • the unitary business requirement.

When preparing the amended return, the agent must:

  • not mark the box on Form NYC-2A, Schedule A, line 28(a);
  • mark an X in the amended return box on Form NYC-2A, page 1;
  • include a statement that the commonly owned group election is being withdrawn based on Finance Memorandum 18-3;
  • include an amended Form NYC-2A Affiliations Schedule, as well as any other required forms or attachments; and
  • include an amended Form NYC-2A/BC for each combined group member included in the amended combined return.

The filing deadline is June 1, 2018. The department will not recognize amended withdrawal returns submitted after June 1, 2018.

Taxpayer Members Not Included in Amended Group Return

All corporations that were taxpayer members included in the original combined return for 2015 and 2016, but not included in the  amended combined returns, must

  1. file their own business corporation 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 Finance Memorandum 18-3.

Returns for Nontaxpayer Members

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, they must file combined with that taxpayer for those tax years by June 1, 2018 if they:

  • meet the combined filing ownership or control requirements; and
  • are unitary with another taxpayer for tax year 2015 and 2016.

Finance Memorandum 18-3, New York City Department of Finance, March 29, 2018, ¶600-850

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All stories by: CCHTaxGroup