SB12 Alabama 2015 2nd Special Session

Summary

Primary Sponsor

Linda Coleman-MadisonSenator

Democrat

Session

Second Special Session 2015

Title

Corporate income tax, combined reporting of income required, Secs. 40-18-36, 40-18-38, 40-18-38.1 added; Secs. 40-18-1, 40-18-30, 40-18-31, 40-18-39 am'd.

Summary

SB12 would require Alabama corporate income tax to use combined reporting for unitary businesses, filing one return for related entities instead of separate returns.

What This Bill Does

If enacted, related entities in a unitary business would file a single corporate income tax return for Alabama, with income and apportionment factors combined across the group. The tax would be calculated on the Alabama group's income using the standard corporate tax rate and allocated among members. The bill also creates election options for how to treat income: a water's-edge election or an affiliated group consolidated return, each lasting 10 years with withdrawal rules and anti-avoidance provisions; the Department would issue rules to implement the transition.

Who It Affects

• Large Alabama corporations that operate as a unitary business (parent plus subsidiaries) would file one combined return instead of multiple separate returns.
• Members of Alabama affiliated groups, including some foreign corporations, who may elect to file Alabama consolidated returns or use the water's-edge election, affecting which income and apportionment factors are included and how the tax is computed.

Key Provisions

• Requires combined reporting for unitary businesses, with each member's tax based on its share of the combined group's Alabama income and apportionment factors.
• Adds a water's-edge election allowing certain members to be included or excluded from the combined group based on specific criteria, with a 10-year term and withdrawal provisions; noncompliance can lead to the election being disregarded.
• Allows an Alabama affiliated group to elect to file an Alabama consolidated return for 10 years, with joint and several liability and an asset-based annual fee; includes rules for foreign corporations and intercompany transactions.
• Gives the Department of Revenue authority to issue regulations to implement transition rules and to address tax avoidance or income distortions, including potential retroactive denial of consolidation for abusive cases.
• Updates definitions and framework (unitary business, affiliated group, etc.) to support the new combined reporting system and provides transition provisions for moving from separate returns to unitary reporting.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation