Corporations subject to Virginia income tax may need to file a one-time report with Virginia Tax by July 1, 2021. This report will show the difference between the amount of tax the corporation would pay if it filed as part of a unitary combined group and the amount of tax based on how they currently file. Use your 2019 Corporation Income Tax calculations to complete this report. See Item 3-5.23 of the Enrolled Budget Bill (House Bill 1800) for more information, including the definition of a unitary business.

My corporation received a letter in the mail about this report. What am I required to do?

If you received a letter in the mail from us on corporate reporting for unitary businesses, you should determine whether you are subject to the requirement to submit a completed report to us. 

We have developed an optional, brief questionnaire that you may complete to tell us whether or not your corporation falls under this requirement to submit a completed report to us. You will not be penalized for failing to complete this optional questionnaire. Only corporations defined as a unitary business are required to file a report with us. See Item 3-5.23 of the Enrolled Budget Bill(House Bill 1800) for the definition of a unitary business. If your corporation falls under this definition, you are required to file a report with us via our Web Upload application. You may only be penalized if you meet the requirements and do not file a report with us by July 1.

More information from the Virginia Department of Taxation: https://www.tax.virginia.gov/news/corporate-unitary

What does this mean for dental offices?

This stems from a legislative effort to change tax returns mainly for big companies with operations in multiple states.  Recently passed budget language requires “unitary business” corporations to file a report with the Department of Taxation with the combined net income of the group by July 1, 2021.  A “unitary business” is an entity or an enterprise with an interdependent, integrated, and interrelated group of businesses that share value among them.  Think Amazon, International Paper, etc. who may have manufacturing, distribution, and retail all under one corporate roof.  

Unfortunately, it appears that DOT is unable to determine on its own who is a unitary business and is therefore requiring every corporation in VA to fill out a questionnaire to make such a determination.  I would advise members who receive that communication from DOT to fill out the questionnaire even if they think or know they aren’t a unitary business.