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FAQs on combined reporting and related topics

 

Q: Who must file the return for the combined group under combined reporting?

A: The combined group must appoint a designated agent. The designated agent is required to act on behalf of the combined group in all matters related to the combined return -- including filing.

Pick any member of the combined group to serve as your designated agent -- provided that the member you pick has, itself, a Rhode Island filing requirement under Rhode Island General Laws Chapter 44-11 (“Business Corporation Tax”).

Answer above posted 03/03/2016

Q: What form is used?

A: File your return on Form RI-1120C. Be sure to include Schedule CRS, “Combined Reporting Schedule.” Schedule CRS is new for tax years beginning on or after January 1, 2015. If you are subject to combined reporting, file Schedule CRS along with your Form RI-1120C. For purposes of combined reporting, Schedule CRS is not separate from Form RI-1120C; it is an integral part of your Form RI-1120C filing.

Following is a link to Form RI-1120C for tax year 2015:
http://www.tax.ri.gov/forms/2015/Corp/2015%20RI-1120C_h_02112016.pdf

Following is a link to Form RI-1120C instructions for tax year 2015:
http://www.tax.ri.gov/forms/2015/Corp/2015%20RI-1120C%20Instructions_02112016.pdf

Following is a link to Schedule CRS for tax year 2015:
http://www.tax.ri.gov/forms/2015/Corp/CRS_h_02112016.pdf

Following is a link to Schedule CRS instructions and worksheet for tax year 2015:
http://www.tax.ri.gov/forms/2015/Corp/2015%20CRS%20Schedule%20InstWrksht_FINAL.pdf

Answer above updated 08/01/2016

Q: We have a client with two C corporations. One person is the majority owner of each corporation. The corporations are engaged in a unitary business. Must each file a Form RI-1120C and attach a Schedule CRS to each return?

A: The group must appoint one of the members to serve as a designated agent. The designated agent would file Form RI-1120C on behalf of the entire group, and fill out and attach a Schedule CRS for each member of the group.

Example:

ABC Corp. and XYZ Corp. are C corporations that have common ownership and are engaged in a unitary business. ABC Corp., which has a Rhode Island filing requirement under Rhode Island General Laws Chapter 44-11, is chosen by the group to serve as the designated agent for the group. Thus, ABC Corp. files Form RI-1120C on behalf of the group -- and the filing includes a Schedule CRS for ABC Corp. and a Schedule CRS for XYZ Corp. XYZ Corp. does not file Form RI-1120C.

Answer above posted 08/01/2016

Q: When is the due date for the return?

A: The original due date for Form RI-1120C has not changed:

  • For a calendar year taxpayer, the return is due on or before March 15 in the year following the close of the taxable year. (Thus, for tax year 2015, it is due on or before March 15, 2016.)
  • For a fiscal year filer, the return is due on or before the 15th day of the third month following the close of the fiscal year.

Answer above posted 03/07/2016

Q: Can we e-file Form RI-1120C?

A: Yes, assuming that your software allows for it.

Also, keep in mind that for e-file purposes, we accept only current-year returns. Each year, typically in late November, we hold our annual electronic filing shutdown and switchover. That is when we temporarily close our system to e-filing in order to prepare the system for the upcoming filing season. When the switchover is complete and the Division of Taxation reopens to e-filing the following January, the e-file system reopens –but only for current-year returns.

For example, in November 2015, we held our annual e-file shutdown. When the system reopened in January 2016, the e-file system accepted only returns for the 2015 tax year; returns for the 2014 tax year could no longer be e-filed.

Our current-year e-filing rule means that some fiscal-year filers can e-file, other fiscal-year filers can e-file only if they are willing to e-file early, and some fiscal-year filers cannot e-file.

Answer above posted 03/07/2016

Q: Are we subject to Rhode Island’s corporate e-file mandate?

By statute, paid preparers of tax returns must file Rhode Island tax returns for their clients electronically with the Division of Taxation. The provision applies to each preparer who prepared more than 100 Rhode Island returns in the prior year.

The Division of Taxation has been requiring the electronic filing of corporate tax returns beginning with the filing season that started January 1, 2013.

However, if you are a corporation, filing your own return, Rhode Island’s e-filing mandate does not apply to you; it applies only to paid preparers of returns.

If you are a paid preparer, and you prepared more than 100 Rhode Island returns in the prior year, you must e-file your client’s Form RI-1120C this year. However, if your client has a fiscal year, and you cannot e-file because the client’s original due date falls after the Tax Division takes down its e-file system for the annual conversion (typically in late November), you will not be subject to the e-file mandate for that return.

Answer above posted 03/07/2016

Q: How long do we get for an extension?

A: Seven months. Thus, for a calendar-year taxpayer whose original due date is mid-March, the extended due date is mid-October.

For tax year 2015, the first year for which combined reporting and single-sales-factor apportionment apply, the original due date for a calendar-year taxpayer is March 15, 2016, and the extended due date is October 17, 2016. (Under the old six-month rule, the extended due date would have been September 15, 2016, but that rule no longer applies to C corporations.)

Answer above posted 03/03/2016

Q: How does the new rule regarding extensions apply to a C corporation that is not part of a combined group?

A: The seven-month rule applies to all C corporations, including those that are part of a combined group and those that are not.

Examples:

  • ABC Corp. is a calendar-year C corporation in Newport, Rhode Island, and is not part of a combined group. Its extended due date for tax year 2015 is October 17, 2016.
  • DEF Corp. is a calendar-year C corporation in New London, Connecticut, and is not part of a combined group. It does business in Rhode Island and has a Rhode Island filing requirement. Its extended due date for tax year 2015 is October 17, 2016.
  • GHI Corp. is a calendar-year C corporation in Cranston, Rhode Island, and is the designated agent for a combined group with a Rhode Island filing requirement. Its extended due date for tax year 2015 is October 17, 2016.
  • JKL Corp. is a calendar-year C corporation in Attleboro, Massachusetts, and is the designated agent for a combined group with a Rhode Island filing requirement. Its extended due date for tax year 2015 is October 17, 2016.

Answer above posted 03/03/2016

Q: If we file an extension for our annual corporate return on Form RI-1120C, does that give us an extension for Schedule CRS, too?

A: Yes. Your Form RI-1120C and Schedule CRS are part of the same package. So if you obtain an extension for your annual return on Form RI-1120C, it is automatically an extension for Schedule CRS. When you eventually do file Form RI-1120C, you will file Schedule CRS along with it. Note that it is an extension of the time to file, not of the time to pay; full payment is still due on or before the original due date of the return.

Answer above posted 03/07/2016

Q: What form is used to file for an extension?

A: Form RI-7004. Your software may have a copy of it. It is also available on our website. For tax year 2015, Form RI-7004 is available through the following link:
http://www.tax.ri.gov/forms/2015/Corp/2015%207004_OCR.pdf

Answer above posted 03/07/2016

 Q: Can we e-file the extension request?

A: If you are making a payment with your extension, and you make the payment with us online, you need not file Form RI-7004. Make payments via the following link:
https://www.ri.gov/taxation/business/index.php

However, if you are not making an extension payment, you must file Form RI-7004 – and you must file it on paper. (We are in the process of upgrading our computer system and hope to offer e-filing of extensions when the upgrade is completed.)

Answer above posted 03/07/2016

Q: What if a combined group includes some subsidiaries/affiliates that filed separately before with Rhode Island and had their own credit carryforwards in their own name, under their own account numbers, or that have overpayments in their own name, under their own account numbers?

A: If that is the case, the designated agent for that combined group should mail us a list or spreadsheet showing the name of each subsidiary/affiliate, the federal employer identification number (EIN) of each, and whether each has a credit carryforward or overpayment on its own account. That way, we can bring the information forward in our system and make sure that it is properly credited to the account of the combined group.

For best results, the designated agent should mail the list or spreadsheet to us before filing the return, with a brief cover letter. Mail to:

Rhode Island Division of Taxation
Corporate Tax Section
One Capitol Hill
Providence, R.I. 02908

Answer above revised 03/07/2016

Q: For tax year 2015, what apportionment formula applies for a C corporation?

A: All C corporations -- including those that are part of a combined group and those that are not -- must use single-sales-factor apportionment for tax years beginning on or after January 1, 2015. You will notice that single-sales-factor apportionment is built in to Form RI-1120C for tax year 2015.

Answer above posted 03/03/2016

Q: When are estimated tax payments due?

A: Ordinarily, a C corporation whose estimated tax for the taxable year is reasonably expected to exceed a certain threshold ($500 for tax year 2015, $450 for 2016 and later tax years) must file a declaration of estimated tax and make advance payments equal to 100 percent of the estimated tax. The first installment must be in the amount of 40 percent of the estimated tax; the second and last installment must be in the amount of 60 percent of the estimated tax.

For tax years beginning on or after January 1, 2015, any taxpayer required to file a combined report in accordance with Rhode Island General Laws § 44-11-4.1 must compute estimated payments as follows:

  • The installments must equal 100 percent of the tax due for the prior year plus any additional tax due to the combined reporting provisions under Rhode Island General Laws § 44-11-4.1; or
  • The installments must equal 100 percent of the current year tax liability.

Note that estimated payments may be made online:
https://www.ri.gov/taxation/business/index.php

Answer above posted 03/07/2016

Q: I would like some guidance regarding a combined return and the minimum tax. Do I have to pay the minimum tax for each entity in the combined return, or do I have to pay one minimum tax for the combined entities?

A: The annual corporate minimum tax payable is the amount provided under Rhode Island General Laws § 44-11-2(e). The combined group pays either the tax due based on the amount of its net income apportioned to Rhode Island, using the applicable rate, or the minimum tax, whichever amount is higher.

To compute the minimum tax, the combined group must determine the number of its members that have nexus in Rhode Island and multiply that number by the amount of the minimum tax. The sum must be compared to the actual tax due for the entire combined group. The combined group must pay whichever amount is higher.

Taxpayers and their advisers should review Rhode Island General Laws  § 44-11-2 to determine the current tax rate and the current minimum tax, as well as other applicable statutes, and the Division of Taxation regulation on nexus. For tax year 2015, the annual corporate minimum tax is $500 and the corporate income tax rate is 7 percent.
Example:

Bryant Corp., Bentley Corp., Brandeis Corp., and Babson Corp. are all C corporations that together comprise a combined group which is engaged in a unitary business and is subject to Rhode Island combined reporting. Each has a current-year net operating loss.

The combined group determines that three of its members have Rhode Island nexus and multiplies that number by the $500 minimum tax, for a total of $1,500. The group compares that sum to its tax liability calculated under the standard formula, which is 7 percent of the income apportioned to Rhode Island. Because the group has a current-year NOL of $50,000, the group owes no tax under the standard formula, so it must pay the minimum tax of $1,500. The NOL is carried forward.

Example of corporate minimum tax in context of combined reporting TY 2015

Entity name:

Rhode Island nexus:

NOL:

Minimum tax:

Bryant Corp.

Yes

($5,000)

$500

Bentley Corp.

Yes

($10,000)

$500

Brandeis Corp.

Yes

($15,000)

$500

Babson Corp.

No

($20,000)

n/a

Total tax:

$1,500

Answer above posted 03/07/2016

Q: Whom may we contact at the Division of Taxation for answers about combined reporting and single-sales-factor apportionment?

A: Call our Corporate Tax section from 8:30 a.m. to 3:30 p.m. business days at (401) 574-8935.

Answer above posted 03/03/2016

Q: Are there any additional resources?

A: A section of our website contains regulations involving single-sales-factor apportionment, combined reporting, and related topics. Please use the following link:
http://www.tax.ri.gov/Tax%20Website/TAX/combinedreporting/

Answer above posted 03/03/2016

The FAQs above are informal, plain-language summaries and are for general information purposes only. They focus on some of the practical issues and concerns that corporations and their tax advisers may face regarding combined reporting and related topics. For more detailed information, please see the Division of Taxation’s regulation on combined reporting.

Also, the FAQs above are not a substitute for Rhode Island General Laws or for Rhode Island Division of Taxation regulations. Nothing contained in the FAQs above in any way alters or otherwise changes any provisions of Rhode Island statutes, regulations, or formal rulings. The names of corporations or other entities the FAQs above are not intended to represent the names of actual corporations.