I.  Introduction

In some cases Massachusetts corporate excise combined reports pursuant to G.L. c. 63, § 32B have been filed on behalf of a combined group by an entity in the group that is not specifically designated by 830 CMR 63.32B.2(11)(a) as eligible to act as the combined group’s principal reporting corporation. For instance, the parent corporation of a federal consolidated group may have acted as the principal reporting corporation and filed the Massachusetts combined report and associated corporate excise returns on behalf of members of the combined group notwithstanding that the parent is not taxable in Massachusetts. The combined reporting regulation allows the Commissioner to approve a corporation as a principal reporting corporation where such corporation is not otherwise specifically designated in the regulation as the eligible principal reporting corporation and where the Commissioner’s approval is in writing. 830 CMR 63.32B.2(11)(a).

Except as otherwise provided, this Directive will serve as the Commissioner’s written approval for any corporation that has filed or is filing in good faith as a combined group’s principal reporting corporation for a particular tax period where the corporation is not the entity specifically designated by 830 CMR 63.32B.2(11)(a) to act as the combined group’s principal reporting corporation. In such cases, except where the Commissioner affirmatively requires the combined group’s combined report and associated corporate excise returns to be filed by the member specifically designated as the combined group’s principal reporting corporation in 830 CMR 63.32B.2(11)(a), the written approval requirement set forth in that section will be deemed satisfied. The Commissioner intends to affirmatively require the combined group’s combined report and associated corporate excise returns to be filed by the member specifically designated as the combined group’s principal reporting corporation in 830 CMR 63.32B.2(11)(a) only in circumstances where the failure to do so may materially affect Massachusetts tax liability, compliance, or collection.

II.  Issue

Under what circumstances may a corporation other than the entity specifically designated by 830 CMR 63.32B.2(11)(a) act as the combined group’s principal reporting corporation under G.L. c. 63, § 32B?

III.  Directive

Pursuant to this Directive, where a combined report was filed or is filed in good faith on behalf of a combined group by a corporation that is not the entity specifically designated by 830 CMR 63.32B.2(11)(a) to act as a principal reporting corporation, such corporation is deemed to be approved as the group’s principal reporting corporation pursuant to said section, except where the Commissioner affirmatively requires the combined group’s combined report and associated corporate excise returns to be filed by the member specifically designated as the combined group’s principal reporting corporation in 830 CMR 63.32B.2(11)(a).

IV.  Commissioner’s Approval of Principal Reporting Corporation

For taxable years beginning on or after January 1, 2009, pursuant to G.L. c. 63, § 32B, Massachusetts law requires certain corporations to file corporate excise returns as members of a combined group. A corporation is generally required to file a combined report when it is subject to tax and engaged in a unitary business with one or more other corporations under common control that are subject to tax, or would be subject to tax if doing business in the Commonwealth, under G.L. c. 63, §§ 2, 2B, 32D, 39 or 52A. These corporate excise returns are filed by the single member of the combined group that is designated as the principal reporting corporation. Chapter 62C defines a principal reporting corporation as “the corporation responsible for the filing of a combined report of income pursuant to section 32B of chapter 63, or any successor thereof, as may be provided for in regulations or other guidance issued by the Commissioner.” G.L. c. 62C, § 1.

Under 830 CMR 63.32B.2(11)(a):

…[e]xcept as otherwise approved in writing by the Commissioner, the principal reporting corporation shall be the taxable member of the combined group that is either the combined group’s common parent corporation, or where there is no such common parent corporation or this parent corporation is not a taxable member of the combined group, the taxable member of the combined group that the group reasonably expects will have the largest amount of Massachusetts taxable net income on a recurring basis.

In some cases Massachusetts corporate excise combined reports pursuant to G.L. c. 63, § 32B have been filed on behalf of a combined group by an entity in the group that is not specifically designated by 830 CMR 63.32B.2(11)(a) as eligible to act as the combined group’s principal reporting corporation. Nevertheless, that section of the regulation authorizes the Commissioner to provide written approval of a different entity to act as the principal reporting corporation. This Directive will serve as the Commissioner’s written approval for any corporation that has filed or is filing in good faith as a combined group’s principal reporting corporation for a particular tax period even if the corporation is not the entity specifically designated by 830 CMR 63.32B.2(11)(a), except where the Commissioner affirmatively requires the combined group’s combined report and associated corporate excise returns to be filed by the member specifically designated as the combined group’s principal reporting corporation in 830 CMR 63.32B.2(11)(a). The Commissioner intends to affirmatively require the combined group’s combined report and associated corporate excise returns to be filed by the member specifically designated as the combined group’s principal reporting corporation in 830 CMR 63.32B.2(11)(a) only in circumstances where the failure to do so may materially affect Massachusetts tax liability, compliance, or collection.


/s/Mark Nunnelly
Mark Nunnelly
Commissioner of Revenue
 

MN:RHF:me

August 28, 2015

DD 15-2