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Virginia Combined Reporting Work Group Recommends No Legislative Action

Tax Development Nov 09, 2021

Virginia Combined Reporting Work Group Recommends No Legislative Action

The Virginia Combined Reporting Work Group (“Work Group”) was established to evaluate the results of the mandatory combined reporting initiative last summer, which required taxpayers to report their potential corporate income tax liability under a combined reporting methodology. Based on the results of that initiative, the Work Group determined that the existing tax policy requiring add-back of certain intercompany transactions is sufficient to deter abusive tax planning.

The results of the proforma combined reporting by taxpayers indicated that 13% of taxpayers would pay more income tax under combined reporting rules, while 14% paid less and the remaining 73% paid about the same in tax. Based on these results, the Work Group recommended no further study regarding implementation of combined reporting at this time.

The Work Group also recommended against both market-based sourcing and a single sales factor method for apportioning income across all corporate taxpayers. It was concluded that consideration should be given by individual business sectors, rather than mandating this change for all corporate taxpayers. 

Please reach out to our Ryan specialists for any questions regarding Virginia income taxes.

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