Consolidated Tax Return

A comprehensive tax return that encompasses a group of smaller entities. Consolidated tax returns are often filed by business conglomerates on behalf of all subsidiary firms. They are filed both for simplicity and to allow the parent organization to receive tax benefits that may otherwise be forfeited. However, conglomerates do not need to file this type of return if they choose not to do so.

Consolidated tax returns are filed using the same forms and rules as all other taxpaying entities; however, a parent-subsidiary relationship must exist in order to allow for this type of filing. The IRS has allowed consolidated tax returns for nearly 100 years, and rules for filing have remained largely unchanged since the 1960s.