DEPARTMENT OF STATE REVENUE

Revenue Ruling #2006-05 IT

September 11, 2006

ISSUE

The taxpayer requests the Department to rule whether the taxpayer may elect to file a consolidated return with its Indiana subsidiaries for the 2005 tax year, even though they filed separate company returns in prior years.

STATEMENT OF FACTS

The parent and its Indiana subsidiaries, hereinafter "taxpayer", operate hospitals and health care facilities in Indiana. The taxpayer previously has filed separate company returns. The taxpayer files a federal consolidated income tax return.

DISCUSSION

IC 6-3-2-1(b) imposes a tax at the rate of 8.5% on the adjusted gross income derived from sources in Indiana.

Furthermore, Indiana permits an affiliated group of corporations to file a consolidated return for purposes of the adjusted gross income tax ("AGIT"). The regulations of IRC section 1502 are incorporated by reference. IC 6-3-4-14. The inclusion of a member in an affiliated group in the consolidated return is deemed to be its consent to the consolidated filing. 45 IAC 3.1-1-110. IRC Section 1504 is adopted to define an affiliated group, except that no member of the affiliated group may be included in the Indiana return unless it has adjusted gross income derived from sources within Indiana. IC 6-3-4-14; 45 IAC 3.1-1-111.

Specifically, IC 6-3-4-14 permits a consolidated filing under the following conditions:

For purposes of the gross income tax, which was repealed in 2003, an affiliated group was required to elect consolidated filing at the time it filed its first annual return. IC 6-2.1-5-5(d); 45 IAC 1-1-163.

Similarly for purposes of the utility receipts tax, an affiliated group must elect consolidated filing at the time it files its first annual return pursuant to IC 6-2.3-6-5; Indiana Department of Revenue, Instructions for Schedule 8-D.

There is, however, no such requirement for AGIT. Furthermore, the Indiana Tax Court has consistently ruled that each tax year stands on its own merits and that each year will be reviewed independently.

The taxpayer satisfies all the requirements to file an Indiana consolidated return, therefore, may elect to do same.

RULING

The Department rules the taxpayer may elect to file a consolidated Indiana adjusted gross income tax return commencing with the 2005 tax year.

CAVEAT

This ruling is issued to the taxpayer requesting it on the assumption that the taxpayer's facts and circumstances, as stated herein are correct. If the facts and circumstances given are not correct, or if they change, then the taxpayer requesting this ruling may not rely on it. However, other taxpayers with substantially identical factual situations may rely on this ruling for informational purposes in preparing returns and making tax decisions. If a taxpayer relies on this ruling and the Department discovers, upon examination, that the fact situation of the taxpayer is different in any material respect from the facts and circumstances given in this ruling, then the ruling will not afford the taxpayer any protection. It should be noted that subsequent to the publication of this ruling a change in statute, regulation, or case law could void the ruling. If this occurs, the ruling will not afford the taxpayer any protection.

DIN: 20061101-IR-045060458NRA

Composed: Apr 28,2024 12:51:16AM EDT

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