43-947. Consolidated returns by an affiliated group of corporations; definitions

A. On or before the due date, including any extensions, for filing the original return for taxable years beginning from and after December 31, 1993, the common parent of an affiliated group may elect to consolidate the taxable income of all members of the affiliated group, regardless of whether each member is subject to tax under this title.

B. The affiliated group shall file a consolidated return for the year of election and for each succeeding taxable year, unless the department consents to a change of filing method. The election under subsection A by the common parent of the affiliated group is not effective unless it is accompanied by written consents to the election signed by each of the members of the affiliated group. In taxable years after the year of the election, a corporation that was not a member of the Arizona affiliated group in the year of the election but is a member of the affiliated group in the current year is considered to have waived any objection to the filing of the consolidated return to this state by its consent, if any, to join in filing a federal consolidated return pursuant to section 1501 of the internal revenue code by the election previously made by the common parent of the Arizona affiliated group and by the consent of the other members of the Arizona affiliated group previously given and shall be included in the Arizona affiliated group.

C. The department may require a consolidated return for an affiliated group that is eligible, but has not elected, to file a consolidated return under this section if the department determines that a consolidated return is necessary to prevent evasion of taxes or to clearly reflect the taxable income that is attributable to the business conducted in this state by the affiliated group.

D. An affiliated group may file a consolidated return to this state only if the affiliated group properly elected or was required to file a consolidated federal return under section 1501 of the internal revenue code.

E. The Arizona gross income of an Arizona affiliated group is the consolidated federal taxable income of the affiliated group.

F. The affiliated group shall allocate and apportion its income to this state in the manner prescribed in chapter 11, article 4 of this title. For the purposes of allocation and apportionment of income, the Arizona affiliated group is considered to be and shall be treated as a single taxpayer.

G. The department may adopt administrative rules as appropriate to implement this title and title 42 as they relate to consolidated returns by Arizona affiliated groups.

H. For any tax year, all members of an Arizona affiliated group that elected or were required to file a consolidated return to this state under this section are jointly and severally liable for the taxes, interest and penalties of the Arizona affiliated group under this title and title 42.

I. As used in this section:

1. " Affiliated group" means the corporations that have properly elected or are required to file consolidated federal income tax returns under section 1501 of the internal revenue code.

2. " Arizona affiliated group" means the corporations for which a proper election to file a consolidated return under this section has been made or the corporations that are required to file a consolidated return under subsection C.