MASSACHUSETTS DEPARTMENT OF REVENUE REGULATION FACT SHEET
TITLE: 830 CMR 63.32B.2: Combined Reporting
Regulation promulgated: 5/29/09. Emergency regulation promulgated 12/29/09; 3/19/10; Regulation amended 6/11/10.
The purpose of this 830 CMR 63.32B.2 is to provide rules for the combined reporting of income as required by M.G.L. c. 63, § 32B. The M.G.L. c. 63, § 32B reporting requirement recognizes that a unitary business can be conducted not only through separate divisions of a single corporation but also through corporations related by common ownership such that in either instance, in the case of a multi-state business, it is appropriate and constitutionally permissible to apportion the resulting income of the unitary business even if that income arises from activities conducted outside the state. A combined report is a computational schedule that is generally required to be filed when a corporation that is subject to tax under M.G.L. c. 63 is engaged in a unitary business with one or more other corporations that are required to be included in a combined report under M.G.L. c. 63, § 32B. In such cases, in the case of a multi-state business, the combined report is required to calculate the corporation's taxable net income derived from the unitary business as its share, attributable to the commonwealth, of the apportionable income or loss of the combined group engaged in the unitary business.
The amendments to sections (5)(b)2.-5., (6)(c)1.-2, and (7)(f) revise the language in the current Combined Reporting regulation that determines the separate income of a member of a combined group that is to be included in the combined group’s taxable income in any case in which such member was not incorporated in the United States and not treated as a U.S. corporation under the federal Internal Revenue Code (i.e. “non-U.S. corporations"). The amendment would apply only where the combined group has not made a worldwide election, i.e., where the group is filing a “water’s edge” combined report. The amendment makes clear that in the context of a water’s edge report, non-U.S. corporations are only to take into account items of income that are within the scope of federal gross income of such corporations under the Code (with any Massachusetts adjustments thereto). The amendment also includes other related changes, including a revision to an apportionment provision of the regulation to make clear that when a non-U.S. corporation includes only those items of income that are included in federal gross income, it must limit its apportionment factors to the factors that relate to such federal gross income.
The regulation has been reviewed for its economic impact on small businesses as required by St. 2010, c. 240, § 167. The following criteria have been considered: (1) the continuing need for this regulation; (2) the nature of complaints and comments about this regulation received by the Department from the public; (3) the complexity of the regulation; (4) the extent to which this regulation overlaps, duplicates, or conflicts with other federal, state and local government regulations; (5) the length of time since the regulation was enacted and/or amended; and (6) the degree to which technology, economic conditions or other factors have changed the subject areas affected by this regulation. This review recommended that this regulation continue without change.
Massachusetts Department of Revenue
Rulings and Regulations Bureau
100 Cambridge Street, 7th floor
Boston, Massachusetts 02114
FAX: (617) 626-3290