Should Your Manufacturing Company Make the Virginia Single Sales Factor Election?
Affiliated groups of corporations that file a Virginia consolidated return including retailers and manufacturers along with other non-retailers and non-manufacturers, may still benefit from electing the single sales factor method for manufacturers.
Manufacturers, starting with tax years beginning after 7/1/2011, may elect to use the single sales factor method. The election is phased-in over three years. For more info, check out my previous post.
Retail companies, starting with tax years beginning after 7/1//2012, will be required to use the single sales factor method. For more info, check out my previous post.
How Do These Changes Impact a Virginia Consolidated Return
In a Virginia consolidated return, retailers and manufacturers would still get to make the election. If the consolidated return includes non-retailers and non-manufacturers who are required to use the standard double-weighted sales factor formula, then the mixed apportionment method would come into play.
The mixed apportionment method would still allow a retailer and manufacturer to benefit from their single sales factor apportionment percentages. This result coupled with some additional planning may provide significant benefit to taxpayers filing a Virginia consolidated return.
If you would like to analyze your company's situation for planning opportunities, please contact me.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.