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  • Can a corporation elect to file a consolidated Alabama corporate income tax return?

Can a corporation elect to file a consolidated Alabama corporate income tax return?

For tax periods beginning before January 1, 1999 – No. Alabama’s income tax laws and rules specifically required each corporation to file a separate return with the department (§40-18-39(a) and Rules 810-3-39-.01).

For tax period beginning after December 31, 1998 – Yes. Alabama’s Tax Conformity Act (Act 98-502) allows an Alabama “affiliated group” to elect to file a consolidated Alabama tax return, provided the “group” files a consolidated federal return for the same taxable year. An “Alabama affiliated group” means a group of corporations that constitute an affiliated group as defined in 26 U.S.C. §1504, one or more members of which are subject to tax under §40-18-31.

For tax periods beginning after December 31, 2001 – Yes. Act 2001-1089(HB4) revised the Consolidated filing requirements in Alabama Code Section 40-18-39 for tax periods beginning after December 31, 2001. Alabama consolidated returns can only include Alabama “nexus” companies.

Each corporation included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

The consolidated filing fee is a maximum of $25,000 due by the extended due date of the return. To make the election, the Alabama Form 20C-CRE must be filed by the due date of the return, including extensions, for the first taxable year for which the election is applicable. The consolidated election is binding for 120 consecutive months (10 years).

For tax periods beginning before January 1, 1999 – No. Alabama’s income tax laws and rules specifically required each corporation to file a separate return with the department (§40-18-39(a) and Rules 810-3-39-.01).

For tax period beginning after December 31, 1998 – Yes. Alabama’s Tax Conformity Act (Act 98-502) allows an Alabama “affiliated group” to elect to file a consolidated Alabama tax return, provided the “group” files a consolidated federal return for the same taxable year. An “Alabama affiliated group” means a group of corporations that constitute an affiliated group as defined in 26 U.S.C. §1504, one or more members of which are subject to tax under §40-18-31.

For tax periods beginning after December 31, 2001 – Yes. Act 2001-1089(HB4) revised the Consolidated filing requirements in Alabama Code Section 40-18-39 for tax periods beginning after December 31, 2001. Alabama consolidated returns can only include Alabama “nexus” companies.

Each corporation included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

The consolidated filing fee is a maximum of $25,000 due by the extended due date of the return. To make the election, the Alabama Form 20C-CRE must be filed by the due date of the return, including extensions, for the first taxable year for which the election is applicable. The consolidated election is binding for 120 consecutive months (10 years).

Related FAQs in Corporate Income Tax

The ONE SPOT system will allow returns to be filed with ACH Debit and ACH Credit method payments only. The system will not allow an ACH Debit taxpayer to complete their return filing without completing the necessary information to authorize the ACH Debit payment. The ACH Credit payment is separate from the ONE SPOT system and must be initiated by the taxpayer through their banking institution. Returns successfully submitted for ACH Debit and ACH Credit taxpayers will be exported to the local government.

Upon the completion of the Third Party Designation Form, ALDOR can provide the returns, payments and payment data files to the authorized third party administrator.

When an electronic payment is received by ALDOR in error, the payment will post to the taxpayer’s ALDOR local tax account. ALDOR will not be able to automatically transfer these payments to the non-administered local government due to the possibility the taxpayer’s payment will reject after ALDOR has transferred the payment, causing complicated collection issues. ALDOR will need the taxpayer to advise the Department with what to do with that payment.

The only non-administered local government taxes to be processed through ALDOR will be payments received as the result of legal action, such as final assessment, garnishments, and liens, entered into when the local government was state administered. Payment data for these payments will be available during the first week (5-10 working days) of the month following the tax collection period through the ALDOR website.