DC Combined Reporting For Corporations Becomes Effective

On  September 14th, 2011, the District of Columbia Fiscal Year 2012 Budget Support Act of 2011 (“Budget Act”) became law, which is earlier than the initially anticipated effective date of October 21, 2011.  The Budget Act contains several changes to DC tax rules including creating a combined reporting for multistate corporations.  The DC combined reporting regime is effective for tax years beginning after December 31, 2010.  For example, if a combined group’s taxable year begins on January 1, 2011, the first, second and third “catch up” payments are due on December 15, 2011 together with the fourth quarter payment under combined reporting. 

The new combined reporting rule requires that two or more corporations that are part of a water’s-edge combined group file a multi-state combined report unless they make an election to file a world-wide combined report.  This combined reporting rule applies retroactively for tax years beginning after December 31, 2010.  The DC Office of Tax and Revenue (“OTR”) issued flyers explaining the effective date of combined reporting and the due dates for combined reporting, and it is anticipated that will provide additional guidance on the combined reporting in the future.  For a primer on combined reporting see the Institute on Taxation and Economic Policy report.