Florida Regulations 12C-1.0131: Adjusted Federal Income; Affiliated Groups
Current as of: 2024 | Check for updates
|
Other versions
(1) Unless otherwise distinctly expressed, the terms used in this section shall have the same meaning as when used in a comparable context in the federal income tax regulations for consolidated returns. The term “”common parent”” as used in the federal regulations shall have the same meaning for Florida corporate tax purposes, and all references to the “”Commissioner”” or “”District Director”” in the federal regulations shall be construed to mean “”the Executive Director or the Executive Director’s designee”” for purposes of these rules.
(a)1. An affiliated group of corporations, as defined in these rules, which did not file a Florida consolidated return for the immediately preceding taxable year, may file a consolidated return in lieu of separate returns for the taxable year, provided the common parent is subject to the Florida Income Tax Code and each corporation which has been a member during any part of the taxable year for which the consolidated return is to be filed consents, in the manner provided in paragraph (e) of this subsection, to be bound by the provisions of these requirements and all applicable sections of the federal consolidated returns regulations.
2. A subgroup of the affiliated group may not file a consolidated return.
(b) If a group wishes to exercise its privilege of filing a consolidated return, such consolidated return must be filed not later than the date prescribed, including extensions of time, for the filing of the common parent’s return. Such consolidated return may not be withdrawn after such last day but the group may change the basis of its return at any time prior to such last day.
(c) The consolidated return shall be made on Form F-1120 for the group by the common parent corporation. The parent corporation of the group must attach Form F-851 (affiliations schedule) to the consolidated return. If the Florida and federal groups are identical, a copy of federal Form 851 may be substituted for Form F-851.
(d) If a group wishes to exercise its privilege of filing a consolidated return, then a Form F-1122 must be executed by each subsidiary and must be attached to the consolidated return for such year. Form F-1122 shall not be required for a taxable year if a Florida consolidated return was filed (or was required to be filed) by the group for the immediately preceding taxable year.
(e) If any eligible member of the group fails to file Form F-1122, the Executive Director or the Executive Director’s designee may, under the facts and circumstances, determine that such member has joined in the making of a consolidated return by such group. If the Executive Director or the Executive Director’s designee determines that the member has joined in the making of the consolidated return, such member shall be treated as if it had filed a Form F-1122 for such year for purposes of paragraph (e) of this subsection. The following circumstances, among others, will be taken into account in making this determination:
1. Whether or not the income and deductions of the members were included in the consolidated return;
2. Whether or not a separate return was filed by the member for that taxable year; and,
3. Whether or not the member was included in the affiliations schedule, Form F-851 or federal Form 851, as provided in paragraph (d) of this subsection.
(f) If any eligible member has failed to join in the making of a consolidated return under either paragraph (e) or (f) of this subsection, then the tax liability of each member of the group shall be determined on the basis of separate returns unless the common parent establishes to the satisfaction of the Executive Director or the Executive Director’s designee that the failure of such member to join in the making of the consolidated return was due to a mistake of law or fact, or to inadvertence. In such case, such member shall be treated as if it had filed a Form F-1122 for such year for purposes of paragraph (e) of this subsection, and thus joined in the making of the consolidated return for such year.
(g) The common parent, for all purposes other than the making of the consent required by paragraphs (a) and (b) of this subsection, shall be the sole agent for each subsidiary in the group, duly authorized to act in its own name in all matters relating to the tax liability for the consolidated return year. No subsidiary shall have authority to act for or to represent itself in any such matter. The provisions of this paragraph shall apply whether or not a consolidated return is made for any subsequent year and whether or not one or more subsidiaries have become or have ceased to be members of the group at any time. If a subsidiary has ceased to be a member of the group and if such subsidiary files written notice of such cessation with the Executive Director or the Executive Director’s designee, then upon request of such subsidiary, the Executive Director or the Executive Director’s designee will furnish it with a copy of any notice of deficiency in respect of the tax for a consolidated return year for which it was a member. The filing of such written notification and request by a corporation shall not have the effect of limiting the scope of the agency of the common parent.
(h) Unless the Executive Director or the Executive Director’s designee agrees to the contrary, an agreement entered into by the common parent extending the time within which a notice of deficiency may be issued or levy or proceeding in court begun in respect of the tax for a consolidated return year shall be applicable to each corporation which was a member of the group during any part of such taxable year and to each corporation the income of which was included in the consolidated return for such taxable year, notwithstanding that the liability of any such corporation is subsequently computed on the basis of a separate return under these regulations.
(i) If the common parent corporation contemplates dissolution, or is about to be dissolved, or if for any other reason its existence is about to terminate, it shall forthwith notify the Executive Director or the Executive Director’s designee of such fact and designate another member to act as its agent in its place to the same extent and subject to the same conditions and limitations as are applicable to the common parent. If the notice thus required is not given by the common parent, the remaining members may, subject to the approval of the Executive Director or the Executive Director’s designee, designate another member to act as such agent, and notice of such designation shall be given to the Executive Director or the Executive Director’s designee. Until a notice in writing designating a new agent has been approved by the Executive Director or the Executive Director’s designee, any notice of deficiency or other communications mailed to the common parent shall be considered as having been properly mailed to the agent of the group. If the Executive Director or the Executive Director’s designee has reason to believe that the existence of the common parent has terminated, the Executive Director or the Executive Director’s designee may, if deemed advisable, deal directly with any member in respect of its liability.
(2) If the Executive Director or the Executive Director’s designee establishes that members of an affiliated group of corporations which are subject to tax have engaged in non-arms’s length transactions which cause a material distortion of income apportioned to this state, the Executive Director or the Executive Director’s designee may require the filing of a consolidated return in order to fairly represent the tax base attributable to this state.
(3)(a)1. A group which filed, or was required to file, a consolidated return for the immediately preceding taxable year is required to file a consolidated return for the taxable year unless it has permission to discontinue filing consolidated returns under paragraph (b) or (c) of this subsection; or as long as a federal consolidated return is filed.
2. The requirement set forth in Florida Statutes § 220.131(1), that the parent company of an affiliated group must be subject to the Florida Income Tax Code is a condition that is necessary for an affiliated group to make an election to file a Florida consolidated return. There is no requirement in Florida Statutes § 220.131, that the parent be subject to the Florida Income Tax Code in each subsequent year. Therefore, the affiliated group may not break its consolidated election because the parent company no longer has nexus with Florida.
(b)1. Notwithstanding that a consolidated return is required for a taxable year, the Executive Director or the Executive Director’s designee is authorized to grant permission to a group to discontinue filing consolidated returns. Any such application shall be made to Technical Assistance and Dispute Resolution, P.O. Box 7443, Tallahassee, Florida 32314-7443, and shall be made not later than the 90th day before the due date for the filing of the consolidated return, including extensions of time. Permission to revoke will be contingent upon an agreement between the taxpayer and the Executive Director or the Executive Director’s designee to the terms, conditions, and adjustment under which the change will be effected.
2. The Executive Director or the Executive Director’s designee is authorized to grant permission to a group to discontinue filing consolidated returns if the net result of all amendments to the Florida Income Tax Code or the Internal Revenue Code or regulations with effective dates commencing within the taxable year has a substantial adverse effect on the consolidated tax liability of the group for such year relative to what the aggregate tax liability would be if the members of the group filed separate returns for such year. Other factors which will be taken into account in determining whether good cause exists for granting permission to discontinue filing consolidated returns beginning with the taxable year include:
a. Changes in law or circumstances, including changes which do not affect income tax liability;
b. Changes in law which are first effective in the taxable year and which result in a substantial reduction in the consolidated net operating loss for such year relative to what the aggregate net operating losses would be if the members of the group filed separate returns for such year; and,
c. Changes in the Florida Income Tax Code or the Internal Revenue Code or regulations which are effective prior to the taxable year but which first have a substantial adverse effect on the filing of a consolidated return relative to the filing of separate returns by members of the group in such year.
3. Permission to revoke may be contingent upon an agreement between the taxpayer and the Executive Director or the Executive Director’s designee to the terms, conditions, and adjustment under which the change will be effected.
(c) The Executive Director or the Executive Director’s designee may grant all groups or a particular class of groups permission to discontinue filing consolidated returns if any provision of the Florida Income Tax Code or the Internal Revenue Code or regulations has been amended and such amendment is of the type which could have a substantial adverse effect on the filing of consolidated returns by substantially all groups or all such groups, as the case may be, relative to the filing of separate returns. Ordinarily, the permission to discontinue shall apply to the taxable year which includes the effective date of such amendment.
(d) If a group has permission under paragraph (b) or (c) of this subsection to discontinue filing consolidated returns for any taxable year and such group wishes to exercise such election, then the common parent must file a separate return for such year on or before the last day prescribed by law including extensions of time for the filing of the consolidated return for such year.
(e) A group shall be considered as remaining in existence, for the purposes of these rules, in accordance with the rules prescribed in s. 1.1502-75(d) of the Federal Income Tax Regulations.
(f) If a consolidated return includes the income of a corporation which was not a member of the group at any time during the consolidated return year, the tax liability of such corporation will be determined upon the basis of a separate return (or a consolidated return of another group, if paragraph (1)(f) or (3)(a) of this section applies), and the consolidated return will be considered as including only the income of the corporations which were members of the group during that taxable year. If a consolidated return includes the income of two or more corporations which were not members of the group but which constitute another group, the tax liability of such corporations will be computed in the same manner as if separate returns had been made by such corporations unless the Executive Director or the Executive Director’s designee upon application, approves the making of a consolidated return for the other group, or unless, under paragraph (a) of this subsection, a consolidated return is required for the other group.
(g) In any case in which amounts have been assessed and paid upon the basis of a consolidated return and the tax liability of one or more of the corporations included in the consolidated return is to be computed in the manner described in paragraph (f) of this subsection, the amounts so paid shall be allocated between the group composed of the corporations properly included in the consolidated return and each of the corporations the tax liability of which is to be computed on a separate basis (or on the basis of a consolidated return of another group) in such manner as the corporations which were included in the consolidated return may, subject to the approval of the Executive Director or the Executive Director’s designee, agree upon; or, in the absence of an agreement upon the method used in allocating the tax liability of the members of the group, under s. 1552(a) of the Internal Revenue Code.
(h) The taxable year of members of the group, including rules for changing to the parent’s taxable year, income to be included in the consolidated return, income to be included in and the time for making separate returns for periods not included in a consolidated return for the purposes of these rules shall be in accordance with the rules prescribed in the federal income tax regulations.
(4)(a) Unless otherwise provided by these rules or manifestly inconsistent with the provisions of the Florida Income Tax Code, the consolidated taxable income for a consolidated return year under these rules shall be determined in the same manner and under the same procedures, including intercompany adjustments and eliminations, as are required by the federal income tax regulations in the case of a federal consolidated return.
(b) If the Florida affiliated group differs in its members from the federal affiliated group because of an election made within 90 days of December 20, 1984, or upon filing the taxpayer’s first return after December 20, 1984, to file consolidated returns on the same basis that consolidated returns were filed for the taxable year immediately preceding the taxable year beginning on or after September 1, 1982, such non-qualifying members shall not be considered includible corporations and all computations hereunder shall be made as if such members were not members of the affiliated group.
(c) The apportionment provisions of Florida Statutes § 220.15, shall be taken into account by an affiliated group doing business within and without Florida.
(5) Estimated tax. Cross reference: Fl. Admin. Code R. 12C-1.034
Rulemaking Authority 213.06(1), 220.131(1), 220.51 FS. Law Implemented 220.13, 220.131, 220.15, 220.151, 220.152 FS. History-New 10-20-72, Amended 10-20-73, 8-4-75, 8-23-76, 12-18-83, Formerly 12C-1.131, Amended 12-21-88, 4-8-92, 5-17-94, 3-18-96.
Terms Used In Florida Regulations 12C-1.0131
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
2. A subgroup of the affiliated group may not file a consolidated return.
(b) If a group wishes to exercise its privilege of filing a consolidated return, such consolidated return must be filed not later than the date prescribed, including extensions of time, for the filing of the common parent’s return. Such consolidated return may not be withdrawn after such last day but the group may change the basis of its return at any time prior to such last day.
(c) The consolidated return shall be made on Form F-1120 for the group by the common parent corporation. The parent corporation of the group must attach Form F-851 (affiliations schedule) to the consolidated return. If the Florida and federal groups are identical, a copy of federal Form 851 may be substituted for Form F-851.
(d) If a group wishes to exercise its privilege of filing a consolidated return, then a Form F-1122 must be executed by each subsidiary and must be attached to the consolidated return for such year. Form F-1122 shall not be required for a taxable year if a Florida consolidated return was filed (or was required to be filed) by the group for the immediately preceding taxable year.
(e) If any eligible member of the group fails to file Form F-1122, the Executive Director or the Executive Director’s designee may, under the facts and circumstances, determine that such member has joined in the making of a consolidated return by such group. If the Executive Director or the Executive Director’s designee determines that the member has joined in the making of the consolidated return, such member shall be treated as if it had filed a Form F-1122 for such year for purposes of paragraph (e) of this subsection. The following circumstances, among others, will be taken into account in making this determination:
1. Whether or not the income and deductions of the members were included in the consolidated return;
2. Whether or not a separate return was filed by the member for that taxable year; and,
3. Whether or not the member was included in the affiliations schedule, Form F-851 or federal Form 851, as provided in paragraph (d) of this subsection.
(f) If any eligible member has failed to join in the making of a consolidated return under either paragraph (e) or (f) of this subsection, then the tax liability of each member of the group shall be determined on the basis of separate returns unless the common parent establishes to the satisfaction of the Executive Director or the Executive Director’s designee that the failure of such member to join in the making of the consolidated return was due to a mistake of law or fact, or to inadvertence. In such case, such member shall be treated as if it had filed a Form F-1122 for such year for purposes of paragraph (e) of this subsection, and thus joined in the making of the consolidated return for such year.
(g) The common parent, for all purposes other than the making of the consent required by paragraphs (a) and (b) of this subsection, shall be the sole agent for each subsidiary in the group, duly authorized to act in its own name in all matters relating to the tax liability for the consolidated return year. No subsidiary shall have authority to act for or to represent itself in any such matter. The provisions of this paragraph shall apply whether or not a consolidated return is made for any subsequent year and whether or not one or more subsidiaries have become or have ceased to be members of the group at any time. If a subsidiary has ceased to be a member of the group and if such subsidiary files written notice of such cessation with the Executive Director or the Executive Director’s designee, then upon request of such subsidiary, the Executive Director or the Executive Director’s designee will furnish it with a copy of any notice of deficiency in respect of the tax for a consolidated return year for which it was a member. The filing of such written notification and request by a corporation shall not have the effect of limiting the scope of the agency of the common parent.
(h) Unless the Executive Director or the Executive Director’s designee agrees to the contrary, an agreement entered into by the common parent extending the time within which a notice of deficiency may be issued or levy or proceeding in court begun in respect of the tax for a consolidated return year shall be applicable to each corporation which was a member of the group during any part of such taxable year and to each corporation the income of which was included in the consolidated return for such taxable year, notwithstanding that the liability of any such corporation is subsequently computed on the basis of a separate return under these regulations.
(i) If the common parent corporation contemplates dissolution, or is about to be dissolved, or if for any other reason its existence is about to terminate, it shall forthwith notify the Executive Director or the Executive Director’s designee of such fact and designate another member to act as its agent in its place to the same extent and subject to the same conditions and limitations as are applicable to the common parent. If the notice thus required is not given by the common parent, the remaining members may, subject to the approval of the Executive Director or the Executive Director’s designee, designate another member to act as such agent, and notice of such designation shall be given to the Executive Director or the Executive Director’s designee. Until a notice in writing designating a new agent has been approved by the Executive Director or the Executive Director’s designee, any notice of deficiency or other communications mailed to the common parent shall be considered as having been properly mailed to the agent of the group. If the Executive Director or the Executive Director’s designee has reason to believe that the existence of the common parent has terminated, the Executive Director or the Executive Director’s designee may, if deemed advisable, deal directly with any member in respect of its liability.
(2) If the Executive Director or the Executive Director’s designee establishes that members of an affiliated group of corporations which are subject to tax have engaged in non-arms’s length transactions which cause a material distortion of income apportioned to this state, the Executive Director or the Executive Director’s designee may require the filing of a consolidated return in order to fairly represent the tax base attributable to this state.
(3)(a)1. A group which filed, or was required to file, a consolidated return for the immediately preceding taxable year is required to file a consolidated return for the taxable year unless it has permission to discontinue filing consolidated returns under paragraph (b) or (c) of this subsection; or as long as a federal consolidated return is filed.
2. The requirement set forth in Florida Statutes § 220.131(1), that the parent company of an affiliated group must be subject to the Florida Income Tax Code is a condition that is necessary for an affiliated group to make an election to file a Florida consolidated return. There is no requirement in Florida Statutes § 220.131, that the parent be subject to the Florida Income Tax Code in each subsequent year. Therefore, the affiliated group may not break its consolidated election because the parent company no longer has nexus with Florida.
(b)1. Notwithstanding that a consolidated return is required for a taxable year, the Executive Director or the Executive Director’s designee is authorized to grant permission to a group to discontinue filing consolidated returns. Any such application shall be made to Technical Assistance and Dispute Resolution, P.O. Box 7443, Tallahassee, Florida 32314-7443, and shall be made not later than the 90th day before the due date for the filing of the consolidated return, including extensions of time. Permission to revoke will be contingent upon an agreement between the taxpayer and the Executive Director or the Executive Director’s designee to the terms, conditions, and adjustment under which the change will be effected.
2. The Executive Director or the Executive Director’s designee is authorized to grant permission to a group to discontinue filing consolidated returns if the net result of all amendments to the Florida Income Tax Code or the Internal Revenue Code or regulations with effective dates commencing within the taxable year has a substantial adverse effect on the consolidated tax liability of the group for such year relative to what the aggregate tax liability would be if the members of the group filed separate returns for such year. Other factors which will be taken into account in determining whether good cause exists for granting permission to discontinue filing consolidated returns beginning with the taxable year include:
a. Changes in law or circumstances, including changes which do not affect income tax liability;
b. Changes in law which are first effective in the taxable year and which result in a substantial reduction in the consolidated net operating loss for such year relative to what the aggregate net operating losses would be if the members of the group filed separate returns for such year; and,
c. Changes in the Florida Income Tax Code or the Internal Revenue Code or regulations which are effective prior to the taxable year but which first have a substantial adverse effect on the filing of a consolidated return relative to the filing of separate returns by members of the group in such year.
3. Permission to revoke may be contingent upon an agreement between the taxpayer and the Executive Director or the Executive Director’s designee to the terms, conditions, and adjustment under which the change will be effected.
(c) The Executive Director or the Executive Director’s designee may grant all groups or a particular class of groups permission to discontinue filing consolidated returns if any provision of the Florida Income Tax Code or the Internal Revenue Code or regulations has been amended and such amendment is of the type which could have a substantial adverse effect on the filing of consolidated returns by substantially all groups or all such groups, as the case may be, relative to the filing of separate returns. Ordinarily, the permission to discontinue shall apply to the taxable year which includes the effective date of such amendment.
(d) If a group has permission under paragraph (b) or (c) of this subsection to discontinue filing consolidated returns for any taxable year and such group wishes to exercise such election, then the common parent must file a separate return for such year on or before the last day prescribed by law including extensions of time for the filing of the consolidated return for such year.
(e) A group shall be considered as remaining in existence, for the purposes of these rules, in accordance with the rules prescribed in s. 1.1502-75(d) of the Federal Income Tax Regulations.
(f) If a consolidated return includes the income of a corporation which was not a member of the group at any time during the consolidated return year, the tax liability of such corporation will be determined upon the basis of a separate return (or a consolidated return of another group, if paragraph (1)(f) or (3)(a) of this section applies), and the consolidated return will be considered as including only the income of the corporations which were members of the group during that taxable year. If a consolidated return includes the income of two or more corporations which were not members of the group but which constitute another group, the tax liability of such corporations will be computed in the same manner as if separate returns had been made by such corporations unless the Executive Director or the Executive Director’s designee upon application, approves the making of a consolidated return for the other group, or unless, under paragraph (a) of this subsection, a consolidated return is required for the other group.
(g) In any case in which amounts have been assessed and paid upon the basis of a consolidated return and the tax liability of one or more of the corporations included in the consolidated return is to be computed in the manner described in paragraph (f) of this subsection, the amounts so paid shall be allocated between the group composed of the corporations properly included in the consolidated return and each of the corporations the tax liability of which is to be computed on a separate basis (or on the basis of a consolidated return of another group) in such manner as the corporations which were included in the consolidated return may, subject to the approval of the Executive Director or the Executive Director’s designee, agree upon; or, in the absence of an agreement upon the method used in allocating the tax liability of the members of the group, under s. 1552(a) of the Internal Revenue Code.
(h) The taxable year of members of the group, including rules for changing to the parent’s taxable year, income to be included in the consolidated return, income to be included in and the time for making separate returns for periods not included in a consolidated return for the purposes of these rules shall be in accordance with the rules prescribed in the federal income tax regulations.
(4)(a) Unless otherwise provided by these rules or manifestly inconsistent with the provisions of the Florida Income Tax Code, the consolidated taxable income for a consolidated return year under these rules shall be determined in the same manner and under the same procedures, including intercompany adjustments and eliminations, as are required by the federal income tax regulations in the case of a federal consolidated return.
(b) If the Florida affiliated group differs in its members from the federal affiliated group because of an election made within 90 days of December 20, 1984, or upon filing the taxpayer’s first return after December 20, 1984, to file consolidated returns on the same basis that consolidated returns were filed for the taxable year immediately preceding the taxable year beginning on or after September 1, 1982, such non-qualifying members shall not be considered includible corporations and all computations hereunder shall be made as if such members were not members of the affiliated group.
(c) The apportionment provisions of Florida Statutes § 220.15, shall be taken into account by an affiliated group doing business within and without Florida.
(5) Estimated tax. Cross reference: Fl. Admin. Code R. 12C-1.034
Rulemaking Authority 213.06(1), 220.131(1), 220.51 FS. Law Implemented 220.13, 220.131, 220.15, 220.151, 220.152 FS. History-New 10-20-72, Amended 10-20-73, 8-4-75, 8-23-76, 12-18-83, Formerly 12C-1.131, Amended 12-21-88, 4-8-92, 5-17-94, 3-18-96.