Personal Property Tax

County Bulletin

TO: ALL COUNTY AUDITORS - Bulletin No. 248

FROM: Edgar L. Lindley, Tax Commissioner

DATE: January 31, 1979

RE: Guidelines for Consolidated Personal Property Tax Returns

A parent corporation and its subsidiary corporations are permitted, pursuant to Section 5711.14 of the Revised Code, to file consolidated personal property tax returns, subject to certain limitations. The sole advantage of consolidation is the elimination of the intangible tax on inter-company indebtedness. Values for tangible personal property are not affected; each corporation remains a separate taxpayer.

The consolidated tax return must include the parent corporation and, except as noted, every subsidiary corporation in which the parent owns or controls at least 51% of the outstanding common stock. Subsidiary corporations cannot be included when for any particular year they

1) do not employ the same tax listing date as their parent or are prohibited by Tax Commissioner Rule 5703-3-04 from using the same tax listing date as their parent, or

2) are not authorized by the Tax Commissioner under Rule 5703-3-04 to employ the same tax listing date as their parent, or

3) first engage in business in Ohio on or after January 1 of that year, or

4) are defined by law and required to file separately as a financial institution, a dealer in intangibles or a public utility, or

5) are defined by law as a domestic or foreign insurance company.

If a subsidiary corporation is prohibited because of one or more of the above reasons from being included in the consolidation, it must file a separate tax return and balance sheet and does not receive the benefit of any inter-company eliminations.

In the year in which a consolidated return is first intended to be filed, a written notice must be filed by the parent corporation with the Tax Commissioner on or before the due-date or extended due-date for filing the tax return. This notice may be included with the consolidated return, if it is timely filed. Consolidated returns must be filed each year thereafter until notification to the contrary is given in writing by the parent corporation to the Tax Commissioner on or before April 20 of the year in which use of the consolidated return is discontinued.

If all the Ohio taxable personal property of every corporation included in the consolidation is located in a single county, the consolidated filing must consist of the following:

1) a separate tax return (Form 920) for the parent to list the tangible personal property it owns and the net intangible property of all the members in the consolidation, together with a consolidating balance sheet.

2) a separate tax return (Form 920) for each subsidiary to list the tangible personal property it owns.

On the parent’s tax return, its name must be followed by the words "and Subsidiaries." On each subsidiary’s tax return, the "consolidated" box must be checked and the name of the parent corporation must be entered below. All tax returns and the consolidating balance sheet shall be filed together with the appropriate County Auditor.

If the combines taxable personal property of all corporations included in the consolidation is located in more than one Ohio county, the consolidated filing must be on an inter-county tax return (Form 945). The parent’s name as it appears on the tax return must be followed by the words "and Subsidiaries." The "Taxpayer Identification for Consolidated Returns" page must be completed, listing all subsidiaries which hold an Ohio charter or license, or which have tangible or intangible property with an Ohio situs. The personal property owned by each corporation must be separately listed and identified in both the schedules and recapitulation. The group’s net intangible property is to be listed in the appropriate schedules and will be taxes to the parent corporation. A consolidating balance sheet must also be included with the tax return.The consolidating balance sheet referred to in both instances must reflect the same account titles that are on prescribed Form 921 (Ohio Balance Sheet). At least one column must be provided for the parent corporation, for each subsidiary corporation included in the consolidation for inert-company eliminations and for the colsolidated totals of the entire group. To the extent any one corporation has property situsable in and out of Ohio, two columns must be provided for that corporation. If any subsidiary is a foreign corporation not licensed to do business in Ohio and has no property in Ohio, it is not required to file a tax return but must be reflected on the consolidating balance sheet.It should be noted that the only intercompany eliminations recognized for personal property tax purposes are those for intercompany advances and for investments in the capital stock, bonds, or other indebtedness of members of the group. Profits on intercompany sales are not permitted to be eliminated, but elimination of iner-division profits within a single corporation is permitted.

This bulletin is written in conjunction with Section 5711.14 of the Revised Code and Rules 5703-3-04 and 6705-3-05 of the Ohio Administrative Code. Nothing contained herein shall apply to a taxpayer defined by law and required to file as a financial institution, dealer in intangibles, public utility, or domestic or foreign insurance company.