[4] For tax purposes, the Internal Revenue Service (IRS) treats all domestic companies in the same manner for tax purposes, without regard to where they were originally formed or organized within the United States, but applies different rules to companies that are formed or organized outside of the US.
One reason for operating as a holding company with separate domestic corporations is because of potential liability issues such as in operating facilities which have high potential liabilities in the event of accident or failure.
In some cases, because of ownership rules, the laws of a jurisdiction may require separate businesses to be operated by subsidiaries in order to protect the business of the subsidiary from the operations of the parent.
This is most prevalent in the case of subsidiaries which are banks or public utilities such as electric power companies.
A corporation that chartered in Washington, D.C. is not federally chartered and for legal purposes is treated in the same manner as a domestic business corporation that was incorporated in any of the fifty states.
While there may be tax benefits as a result of choosing where a corporation's domestic jurisdiction is located, registering as a foreign corporation in another state can create new tax liabilities.
An issue that occurred during the 1990s for some larger companies involved tax treaties which allowed a corporation to change its jurisdiction as a domestic corporation from a U.S. State to the country of Bermuda, allowing it to save huge amounts of tax payments.