Virginia info request has short deadline, $10K fine for failure to report

May 28, 2021

A little-noticed bill enacted last month in Virginia could carry a nasty bite for business taxpayers - and time is already running short to avoid penalties.

On April 7 Virginia enacted House Bill 1800 requiring business to file a new informational report with the Department of Taxation. It applies to C corporations with Virginia Nexus and to "members of a unitary business group."

Any C corporation required to submit such report that fails to do so on or before July 1, 2021 is subject to a penalty of $10,000. Each member of the combined group could be assessed a $10,000 penalty.  The Department has been sending notices to inform corporate tax filers of this new reporting requirement.

Any corporation currently filing in Virginia would generally be considered part of a "unitary" business. A unitary business may consist of a single entity, or it may include multiple corporate entities. 

Virginia defines a unitary business as a single economic enterprise made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated to provide a significant flow of value among its separate parts. Foreign entities are not members of the unitary group unless they have more than 20% of their average property, payroll and sales in the United States. 

The state currently does not require combined reporting.  The informational reporting will be used to evaluate the adoption of mandatory unitary combined reporting.  

The new report must be based on taxable year 2019 computations. Taxpayers will compute 2019 tax as if they had been required to file on a unitary basis and report the difference in tax owed as a result of filing a unitary combined report compared to the tax owed under the current filing requirements.  

The informational report will be filed electronically.  The Virginia Department of Taxation has issued a reference guide to assist taxpayers.

Please contact your Eide Bailly tax pro or the Eide Bailly SALT team if you have questions.


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