What conditions had to be met for an affiliated group to make a Florida consolidated corporate income-tax filing election?

Plain-English summary

Despite the Tax Law Library's “discontinue” subject label, this TAA explained how an affiliated group could make its first Florida consolidated filing election.

The common parent had to be subject to Florida corporate income tax—meaning it had Florida nexus—when the election was made. The Florida consolidated group had to contain the same component members as the federal consolidated return, and each member had to consent.

The group had to file the consolidated Florida return no later than the common parent's original or extended due date. The parent attached Form F-851 or federal Form 851, and each subsidiary executed Form F-1122 for the first consolidated year. Once elected, consolidated filing generally continued in later years while the federal group continued, even if the parent later lost Florida nexus.

What this means for you

Affiliated corporate groups

Confirm parent nexus and group identity before the due date. A subgroup cannot make its own Florida consolidated election.

Corporate tax teams

Collect subsidiary consents and the affiliations schedule before filing the first return; the election cannot be withdrawn after the filing deadline.

Common questions

Did the parent need Florida nexus? Yes, when the election was made.

Did the Florida group have to match the federal group? Yes.

When was the election due? By the original or extended due date for that year's Florida return.

Citations and references

• Fla. Stat. Sec. 220.131
• Fla. Admin. Code R. 12C-1.0131

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 21C1-004

Original ruling text

QUESTION: Is the taxpayer eligible to make a Florida consolidated filing election?
ANSWER: The taxpayer may make a Florida consolidated filing election if the parent company
has nexus at the time the election is made, the other members of the affiliated group consent
to be included in the consolidated return, and the election is made no later than the due date,
or the extended due date, if applicable, of the Florida return filed for that tax year.

June 25, 2021
XXX
XXX
XXX
XXX

Re:

Technical Assistance Advisement 21C1-004
Request for Authority to Discontinue Consolidated Filing
Section 220.131, F.S.
Rule 12C-1.0131(3), F.A.C.
XXX (“the taxpayer”)
FEIN: XXX

Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (“TAA”) pursuant to
s. 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the requirements for electing to file a
consolidated corporate income tax return in Florida. An examination of your letter has established that
you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the
Department is hereby granting your request for a TAA.
FACTS SUPPLIED BY TAXPAYER
Based on the information provided in the TAA request, the taxpayer is a XXX, formed as a limited liability
company (LLC), under the laws of XXX. The taxpayer has elected to be taxed as a corporation for federal
tax purposes, and is XXX of an affiliated group of corporations that file a consolidated federal corporate
income tax return.

XXX
June 25, 2021
Florida Department of Revenue
Page 2
ISSUE
Whether XXX is eligible to elect to file Florida corporate income tax returns on a consolidated basis,
beginning with the tax year ended XXX.

LAW

Section 220.131(1), F.S., states:
(1) Notwithstanding any prior election made with respect to consolidated returns, and
subject to subsection (5), for taxable years beginning on or after September 1, 1984, any
corporation subject to tax under this code which corporation is the parent company of
an affiliated group of corporations may elect, not later than the due date for filing its
return for the taxable year, including any extensions thereof, to consolidate its taxable
income with that of all other members of the group, regardless of whether such
member is subject to tax under this code, and to return such consolidated taxable
income hereunder, in which case all such other members must consent thereto in such
manner as the department may by rule prescribe, provided:
(a) Each member of the group consents to such filing by specific written authorization
at the time the consolidated return is filed;
(b) The affiliated group so filing under this code has filed a consolidated return for
federal income tax purposes for the same taxable year; and
(c) The affiliated group so filing under this code is composed of the identical
component members as those which have consolidated their taxable incomes in such
federal return.
Section 220.131(3), F.S., states:
The filing of a consolidated return for any taxable year shall require the filing of
consolidated returns for all subsequent taxable years so long as the filing taxpayers
remain members of the affiliated group or, in the case of a group having component
members not subject to tax under this code, so long as a consolidated return is filed by
such group for federal income tax purposes, unless the director consents to the filing
of separate returns.
Rule 12C-1.0131, F.A.C., provides:
(1) Unless otherwise distinctly expressed, the terms used in this section shall have the same
meaning as when used in a comparable context in the federal income tax regulations for
consolidated returns. The term “common parent” as used in the federal regulations shall have
the same meaning for Florida corporate tax purposes, and all references to the

XXX
June 25, 2021
Florida Department of Revenue
Page 3
“Commissioner” or “District Director” in the federal regulations shall be construed to mean
“the Executive Director or the Executive Director’s designee” for purposes of these rules.
(a)1. An affiliated group of corporations, as defined in these rules, which did not file a Florida
consolidated return for the immediately preceding taxable year, may file a consolidated return
in lieu of separate returns for the taxable year, provided the common parent is subject to the
Florida Income Tax Code and each corporation which has been a member during any part of
the taxable year for which the consolidated return is to be filed consents, in the manner
provided in paragraph (e) of this subsection, to be bound by the provisions of these
requirements and all applicable sections of the federal consolidated returns regulations.

2. A subgroup of the affiliated group may not file a consolidated return.
   (b) If a group wishes to exercise its privilege of filing a consolidated return, such consolidated
   return must be filed not later than the date prescribed, including extensions of time, for the
   filing of the common parent’s return. Such consolidated return may not be withdrawn after
   such last day but the group may change the basis of its return at any time prior to such last
   day.
   (c) The consolidated return shall be made on Form F-1120 for the group by the common
   parent corporation. The parent corporation of the group must attach Form F-851 (affiliations
   schedule) to the consolidated return. If the Florida and federal groups are identical, a copy of
   federal Form 851 may be substituted for Form F-851.
   (d) If a group wishes to exercise its privilege of filing a consolidated return, then a Form F-1122
   must be executed by each subsidiary and must be attached to the consolidated return for such
   year. Form F-1122 shall not be required for a taxable year if a Florida consolidated return was
   filed (or was required to be filed) by the group for the immediately preceding taxable year.
   (e) If any eligible member of the group fails to file Form F-1122, the Executive Director or the
   Executive Director’s designee may, under the facts and circumstances, determine that such
   member has joined in the making of a consolidated return by such group. If the Executive
   Director or the Executive Director’s designee determines that the member has joined in the
   making of the consolidated return, such member shall be treated as if it had filed a Form F1122 for such year for purposes of paragraph (e) of this subsection. The following
   circumstances, among others, will be taken into account in making this determination:
3. Whether or not the income and deductions of the members were included in the
   consolidated return;
4. Whether or not a separate return was filed by the member for that taxable year; and,
5. Whether or not the member was included in the affiliations schedule, Form F-851 or federal
   Form 851, as provided in paragraph (d) of this subsection.
   (f) If any eligible member has failed to join in the making of a consolidated return under either
   paragraph (e) or (f) of this subsection, then the tax liability of each member of the group shall
   be determined on the basis of separate returns unless the common parent establishes to the
   satisfaction of the Executive Director or the Executive Director’s designee that the failure of
   such member to join in the making of the consolidated return was due to a mistake of law or
   fact, or to inadvertence. In such case, such member shall be treated as if it had filed a Form F1122 for such year for purposes of paragraph (e) of this subsection, and thus joined in the
   making of the consolidated return for such year.
   (g) The common parent, for all purposes other than the making of the consent required by
   paragraphs (a) and (b) of this subsection, shall be the sole agent for each subsidiary in the

XXX
June 25, 2021
Florida Department of Revenue
Page 4
group, duly authorized to act in its own name in all matters relating to the tax liability for the
consolidated return year. No subsidiary shall have authority to act for or to represent itself in
any such matter. The provisions of this paragraph shall apply whether or not a consolidated
return is made for any subsequent year and whether or not one or more subsidiaries have
become or have ceased to be members of the group at any time. If a subsidiary has ceased to
be a member of the group and if such subsidiary files written notice of such cessation with the
Executive Director or the Executive Director’s designee, then upon request of such subsidiary,
the Executive Director or the Executive Director’s designee will furnish it with a copy of any
notice of deficiency in respect of the tax for a consolidated return year for which it was a
member. The filing of such written notification and request by a corporation shall not have the
effect of limiting the scope of the agency of the common parent.
(h) Unless the Executive Director or the Executive Director’s designee agrees to the contrary,
an agreement entered into by the common parent extending the time within which a notice of
deficiency may be issued or levy or proceeding in court begun in respect of the tax for a
consolidated return year shall be applicable to each corporation which was a member of the
group during any part of such taxable year and to each corporation the income of which was
included in the consolidated return for such taxable year, notwithstanding that the liability of
any such corporation is subsequently computed on the basis of a separate return under these
regulations.
(i) If the common parent corporation contemplates dissolution, or is about to be dissolved, or
if for any other reason its existence is about to terminate, it shall forthwith notify the
Executive Director or the Executive Director’s designee of such fact and designate another
member to act as its agent in its place to the same extent and subject to the same conditions
and limitations as are applicable to the common parent. If the notice thus required is not given
by the common parent, the remaining members may, subject to the approval of the Executive
Director or the Executive Director’s designee, designate another member to act as such agent,
and notice of such designation shall be given to the Executive Director or the Executive
Director’s designee. Until a notice in writing designating a new agent has been approved by
the Executive Director or the Executive Director’s designee, any notice of deficiency or other
communications mailed to the common parent shall be considered as having been properly
mailed to the agent of the group. If the Executive Director or the Executive Director’s designee
has reason to believe that the existence of the common parent has terminated, the Executive
Director or the Executive Director’s designee may, if deemed advisable, deal directly with any
member in respect of its liability.
(2) If the Executive Director or the Executive Director’s designee establishes that members of
an affiliated group of corporations which are subject to tax have engaged in non-arms’s length
transactions which cause a material distortion of income apportioned to this state, the
Executive Director or the Executive Director’s designee may require the filing of a consolidated
return in order to fairly represent the tax base attributable to this state.
(3)(a)1. A group which filed, or was required to file, a consolidated return for the immediately
preceding taxable year is required to file a consolidated return for the taxable year unless it
has permission to discontinue filing consolidated returns under paragraph (b) or (c) of this
subsection; or as long as a federal consolidated return is filed.

2. The requirement set forth in section 220.131(1), F.S., that the parent company of an
   affiliated group must be subject to the Florida Income Tax Code is a condition that is necessary

XXX
June 25, 2021
Florida Department of Revenue
Page 5
for an affiliated group to make an election to file a Florida consolidated return. There is no
requirement in section 220.131, F.S., that the parent be subject to the Florida Income Tax
Code in each subsequent year. Therefore, the affiliated group may not break its consolidated
election because the parent company no longer has nexus with Florida.

ANALYSIS
Section 220.131(1), F.S., allows “any corporation subject to tax under this code which corporation is
the parent company of an affiliated group of corporations” to elect to consolidate its taxable
income with that of all other members of the group, if the parent corporation has nexus with
Florida at the time the consolidated filing election is made and the other members of the affiliated
group consent to be included in the consolidated return. It also requires that the affiliated group
included in the consolidated Florida return be identical to the affiliated group included in the
consolidated federal return.
Once such election is made, the consolidated group is required to continue filing a consolidated
Florida return as long as it continues to file a consolidated federal return, regardless of whether the
parent corporation continues to have nexus in Florida. The language of s. 220.131(1), F.S., clearly
indicates that it is the parent corporation that both makes the election to consolidate and files the
consolidated return.
As stated in s. 220.131(1), F.S., the parent corporation that makes a consolidated filing election
must be subject to Florida corporate income tax, that is, have nexus with Florida, at the time it
makes a consolidated filing election. It is not required to maintain nexus in subsequent years, but
the group must continue to file a consolidated Florida corporate income tax return in all
subsequent years. Rule 12C-1.0131, F.A.C., requires that Form F-851 (affiliations schedule) or a
copy of federal Form 851 be attached to the Florida consolidated return. Additionally, Form F-1122
is to be executed by each subsidiary and attached to the first consolidated Florida corporate
income tax return filed by the affiliated group, to reflect the consent of each subsidiary to be
included in the consolidated Florida return. Form F-1122 is not required to be attached to
subsequent consolidated Florida corporate income tax returns filed for future tax years.
CONCLUSION
The XXX and its affiliates may make an election to file their Florida corporate income tax returns on a
consolidated basis if the parent company has nexus with Florida at the time the election is made, and
the other members of the affiliated group consent to be included in the consolidated return. For
assistance in determining if the parent corporation has nexus with Florida, please see Rule 12C-1.011,
F.A.C.
If the XXX is eligible to elect to file a consolidated Florida corporate income tax return and wishes to
make the election for the tax year ended XXX, the election must be made no later than the due date, or
the extended due date, if applicable, of the Florida tax return for that tax year.

XXX
June 25, 2021
Florida Department of Revenue
Page 6

This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on
the Department only under the facts and circumstances described in the request for this advice as
specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial
interpretations of the statutes or rules, upon which this advice is based, may subject similar future
transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related documents are public records
under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22,
F.S. Your name, address, and any other details, which might lead to identification of the taxpayer, must
be deleted before disclosure. In an effort to protect the confidentiality of such information, we request
you provide the undersigned with an edited copy of your request for Technical Assistance Advisement,
backup material and response within fifteen days of the date of this advisement.
Sincerely,

Suzanne C. Paul
Suzanne C. Paul
Tax Law Specialist
Technical Assistance and Dispute Resolution