Passes in the House, Must be Reconciled With The Senate Version
A bill has passed the Michigan House of Representatives that would revise the corporate income tax law to allow "affiliated groups" to elect to file combined returns. In general, the term "affiliated group" would be defined as it is in IRC §1504, except that it would include all United States persons that are corporations, insurance companies, or financial institutions (other than a foreign operating entity) that are commonly owned, directly or indirectly, by any member of the affiliated group and other members of the group of which more than 50% of the ownership interest with voting rights or ownership interests that confer comparable rights is directly or indirectly owned by a common owner or owners.
A taxpayer that is part of an affiliated group would be allowed to elect to have all members of the affiliated group treated as a unitary business group. This group would then file a combined return for 10 years, with the option to renew the election once for another 10 years. The election would be irrevocable and would remain in effect for the time during which ownership requirements are met irrespective of whether the federal consolidated group to which the unitary business group belongs stops filing a federal consolidated return or whether the common parent changes due to a reverse acquisition or acquisition by a related person.
The definition of "unitary business group" would be revised to include an affiliated group that makes the election to file as a unitary business group.
If enacted, the bill would be effective for tax years that begin after 2012.
The bill’s definition of "affiliated group" is revised slightly from the Senate-passed version. In the Senate-passed version, the bill did not provide that the election would be irrevocable.