FILING AND PAYMENT PROCEDURES FOR CORPORATIONS INCLUDED IN A COMBINED INCOME FILING
I. FILING PROCEDURES:
Every corporation, other than a QSSS (qualified subchapter "S" subsidiary), either registered to do business in Mississippi or otherwise doing business in the state must file a combination income and franchise tax return. The term combination is used to indicate two separate taxes which are computed in a single return filing. The corporation will compute its Mississippi income/loss and its taxable capital on a separate company basis.
An "affiliated group" of corporations may elect to file on a combined basis for purposes of the income tax provided the requirements of Title 35, Part III, Subpart 08, Chapter 07 are met. The term combined is used to indicate an election where the separately computed net income/loss of a group of affiliated corporations is summed in order to determine the net income subject to tax.
A. Reporting Corporation (Normally the parent corporation)
The reporting corporation of a combined income group will file form 83-310, Summary of Net Income of Corporations, as a part of its combination return filing (In addition to the computation of the reporting corporation's separate company income/loss). The combined net income/loss computed on form 83-310 will be entered on Line 4 of form 83-105. On the face of the return, form 83-105, the reporting corporation will place its name and FEIN on line 3. The reporting corporation will indicate the combined income tax liability and its separate company franchise tax liability on the face of its return filing.
B. Non-Reporting Corporation (Normally a subsidiary corporation)
Every member of a combined group, other than the reporting corporation, must file a combination income and franchise tax return on a separate company basis. Each corporation will report its separately computed Mississippi taxable capital on the face of its return on line 1 (form 83-105). The income or loss computed on form 83-122 will not be reported on the face of its return, rather, the amount will be transferred to form 83-310 which is a supplemental schedule of the reporting corporation's return. A non-reporting corporation will place a zero on line 4 of form 83-105, enter the reporting corporation's name and FEIN on line 3.
As stated previously, each corporate member of a combined income tax group must file a separate return. Each return should be signed, stapled or clipped separately, and use form 83-105 as the face of the return. Any franchise tax remittances must be attached to the face of the return where the liability is indicated. Each corporation must compute, report, and remit its franchise tax separately. Each corporation must compute its income or loss separately. However, the income/loss will not be reported on the face of its return but on form 83-310 which is attached to the reporting corporation's return. The reporting corporation will indicate the combined income tax liability and its separate company franchise tax liability on the face of its return filing.
II. PAYMENT PROCEDURES
In general, a corporation is required to make four quarterly estimated tax payments of at least 90% of its income tax liability. Failure to do so will generally result in underestimate interest and penalties accruing. Estimated payments should be remitted by use of the corporate estimate voucher, form 83-300. For further information concerning underestimate calculations, please see Title 35, Part III, Subpart 11, Chapter 21.
Estimated payments are not required for franchise tax. The franchise tax and any unpaid income tax must be remitted by the due date of the return, not including extensions, to avoid late payment interest and penalty charges.
A payment by one corporation cannot be claimed by another corporation regardless of whether they are members of a combined income tax filing. Likewise, any overpayment of taxes by a corporation may not be claimed by any other corporation.
If an election is made to file on a combined basis for income tax, then any income tax payments including estimates must be made by the reporting corporation. Each member's franchise tax payment must be remitted separately with the following exception. The extension application allows for a single remittance to be applied to one or more corporations in an affiliated group. For a payment to be applied to a corporation other than the reporting corporation, the affiliated member's name, FEIN, and amount must be provided on form 83-180. If the amounts entered do not equal the amount of the remittance, the difference will be considered an adjustment to the reporting corporation's account. Negative payments are not allowed on the form.
Every corporation is responsible for computing its overpayment on a separate company basis. Overpayments may not be transferred between members.
In conclusion, we would like to emphasize that each corporation "doing business" in Mississippi is required to file a return regardless of whether it is included in a combined income tax group. Likewise, each corporation is responsible for submitting sufficient payment to cover its franchise tax liability. Being a member of a combined income tax filing does not relieve a corporation of its separate company franchise tax liability nor does it allow for the shifting of payments between members.
If you have any questions or concerns about the matters discussed, please contact the corporate section at 601-923-7099.