Tax Type
Corporation Income Tax
Description
Request for Termination of Consolidated Filing
Topic
Returns and Payments
Date Issued
08-24-2001
August 24, 2001
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to your letter in which you request permission for ***** (the "Taxpayer") to remove an affiliated corporation from its Virginia consolidated income tax return and file separate returns for the taxable year ended December 31, 2000. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer and its affiliate have filed a consolidated Virginia corporation income tax return for a number of years. Both corporations have manufacturing facilities in Virginia and are subject to Virginia tax. The Taxpayer requests that it be allowed to change from consolidated filing status to filing on a separate company basis. RULING
Title 23 of the Virginia Administrative Code (VAC) 10-120-322, copy enclosed, provides that in the first year two or more members of an affiliated group of corporations are required to file Virginia returns, the group may elect to file separate returns, a consolidated return, or a combined return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the department. Absent extraordinary circumstances, permission to change from the consolidated filing method is generally not granted by the department.
A consolidated return includes the net income and apportionment factors of all members of the affiliated group which would be subject to Virginia tax if separate returns were to be filed. See 23 VAC 10-120-322. According to the information you have provided, the affiliate in question is still subject to Virginia income tax because of its operations in Virginia.
You state that the decision to file a consolidated return was based on an anticipated move of the executive functions of the affiliate to Virginia. However, this transfer never occurred. As such, you request permission for the Taxpayer and its affiliate to file separate Virginia income tax returns. Based on the facts provided, no extraordinary circumstances exist to warrant granting permission to change to filing on a separate basis. Accordingly, permission to file separate Virginia returns is denied.
If you have any questions regarding this ruling, please contact ***** in the department's Appeals and Rulings Office at *****. .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/31578P
Rulings of the Tax Commissioner