(A) A group of two or more persons may elect to be a consolidated elected taxpayer for the purposes of this chapter if the group satisfies all of the following requirements:
(1) The group elects to include all persons, including persons enumerated in divisions (E)(2) to (5) of section 5751.01 of the Revised Code, having at least eighty per cent, or having at least fifty per cent, of the value of their ownership interests owned or controlled, directly or constructively through related interests, by common owners during all or any portion of the tax period, together with the common owners.
A group making its initial election on the basis of the eighty per cent ownership test may change its election so that its consolidated elected taxpayer group is formed on the basis of the fifty per cent ownership test if all of the following are satisfied:
(a) When the initial election was made, the group did not have any persons satisfying the fifty per cent ownership test;
(b) One or more of the persons in the initial group subsequently acquires ownership interests in a person such that the fifty per cent ownership test is satisfied, the eighty per cent ownership test is not satisfied, and the acquired person would be required to be included in a combined taxpayer group under section 5751.012 of the Revised Code;
(c) The group requests the change in writing to the commissioner as required by division (D) of this section;
(d) The group has not previously changed its election.
At the election of the group, all entities that are not incorporated or formed under the laws of a state or of the United States and that meet the consolidated elected ownership test shall either be included in the group or all shall be excluded from the group. If, at the time of registration, the group does not include any such entities that meet the consolidated elected ownership test, the group shall elect to either include or exclude the newly acquired entities before the due date of the first return due after the date of the acquisition.
If fifty per cent of the value of a person's ownership interests is owned or controlled by each of two consolidated elected taxpayer groups formed under the fifty per cent ownership or control test, that person is a member of each group for the purposes of this section, and each group shall include in the group's taxable gross receipts fifty per cent of that person's taxable gross receipts. Otherwise, all of that person's taxable gross receipts shall be included in the taxable gross receipts of the consolidated elected taxpayer group of which the person is a member. In no event shall the ownership or control of fifty per cent of the value of a person's ownership interests by two otherwise unrelated groups form the basis for consolidating the groups into a single consolidated elected taxpayer group or permit any exclusion under division (C) of this section of taxable gross receipts between members of the two groups. Division (A)(3) of this section applies with respect to the elections described in this division.
(2) The group makes the election to be treated as a consolidated elected taxpayer in the manner prescribed under division (D) of this section.
(3) Subject to review and audit by the tax commissioner, the group agrees that all of the following apply:
(a) The group shall file reports as a single taxpayer for at least the next eight calendar quarters following the election so long as at least two or more of the members of the group meet the requirements of division (A)(1) of this section.
(b) Before the expiration of the eighth such calendar quarter, the group shall notify the commissioner if it elects to cancel its designation as a consolidated elected taxpayer. If the group does not so notify the tax commissioner, the election remains in effect for another eight calendar quarters.
(c) If, at any time during any of those eight calendar quarters following the election, a former member of the group no longer meets the requirements under division (A)(1) of this section, that member shall report and pay the tax imposed under this chapter separately, as a member of a combined taxpayer, or, if the former member satisfies such requirements with respect to another consolidated elected group, as a member of that consolidated elected group.
(d) The group agrees to the application of division (B) of this section.
(B) A group of persons making the election under this section shall report and pay tax on all of the group's taxable gross receipts even if substantial nexus with this state does not exist for one or more persons in the group.
(a) Members of a consolidated elected taxpayer group shall exclude gross receipts among persons included in the consolidated elected taxpayer group.
(b) Subject to divisions (C)(1)(c) and (C)(2) of this section, nothing in this section shall have the effect of requiring a consolidated elected taxpayer group to include gross receipts received by a person enumerated in divisions (E)(2) to (5) of section 5751.01 of the Revised Code if that person is a member of the group pursuant to the elections made by the group under division (A)(1) of this section.
(i) As used in division (C)(1)(c) of this section, "dealer transfer" means a transfer of property that satisfies both of the following: (I) the property is directly transferred by any means from one member of the group to another member of the group that is a dealer in intangibles but is not a qualifying dealer as defined in section 5707.031 of the Revised Code; and (II) the property is subsequently delivered by the dealer in intangibles to a person that is not a member of the group.
(ii) In the event of a dealer transfer, a consolidated elected taxpayer group shall not exclude, under division (C) of this section, gross receipts from the transfer described in division (C)(1)(c)(i)(I) of this section.
(2) Gross receipts related to the sale or transmission of electricity through the use of an intermediary regional transmission organization approved by the federal energy regulatory commission shall be excluded from taxable gross receipts under division (C)(1) of this section if all other requirements of that division are met, even if the receipts are from and to the same member of the group.
(D) To make the election to be a consolidated elected taxpayer, a group of persons shall notify the commissioner of the election on a form prescribed by the commissioner for that purpose, which shall be signed by one or more individuals with authority, separately or together, to make a binding election on behalf of all persons in the group. Elections under division (A) of this section shall be made on or before the due date for filing the first return due after the election applies.
Any person acquired or formed after the filing of the registration shall be included in the group if the person meets the requirements of division (A)(1) of this section, and the group shall notify the commissioner of any additions to the group on a form prescribed by the commissioner for such purpose.
Cite as R.C. § 5751.011
History. Amended by 129th General AssemblyFile No.186, HB 510, §1, eff. 3/27/2013, applicable to tax periods beginning on or after January 1, 2014 except for a taxpayer that is a corporation or any other person directly or indirectly owned by one or more insurance companies subject to the tax imposed by section 5725.18 or Chapter 5729. of the Revised Code; for such taxpayers, the amendment applies to tax periods beginning on or after January 1, 2013.
Amended by 129th General AssemblyFile No.117, HB 508, §1, eff. 9/6/2012.
Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 1/1/2012.
Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.
Effective Date: 06-30-2005; 03-30-2006; 2006 HB699 03-29-2007
Related Legislative Provision: See 129th General AssemblyFile No.186, HB 510, §4