Tax Type
Corporation Income Tax
Description
Amended combined corporation income tax returns
Topic
Accounting Periods and Methods
Payment and Refund
Date Issued
04-12-2003
April 15, 2003
Re: § 58.1-1824 Protective Claim: Corporate Income Tax
Dear ***************:
This will reply to your request for refund of corporate income taxes paid by ************** (the "Taxpayer") and its affiliated corporations for the taxable years ended December 31, 1992 and 1994. I apologize for the delay in the Department's response.
FACTS
The Taxpayer filed amended combined corporation income tax returns for the taxable years ended December 31, 1992, 1993, and 1994. The amended returns for the 1992 and 1994 taxable years result in refunds, while the amended return for the 1993 taxable year does not change the tax due. The claims result from the Taxpayer erroneously omitting certain subsidiaries (the "Subsidiaries") from the original Virginia combined return. This case is being treated as a protective claim for refund pursuant to Va. Code § 58.1-1824.
The Subsidiaries operate solely to hold and issue securities. The Taxpayer asserts that the Subsidiaries are commercially domiciled in Virginia and is requesting refunds for the 1992 and 1994 taxable years because of the reduction in the Virginia combined taxable income resulting from the inclusion of the Subsidiaries.
DETERMINATION
Pursuant to Va. Code § 58.1-442, an affiliated group of corporations may elect to file a combined Virginia income tax return. Title 23 of the Virginia Administrative Code ("VAC") 10-120-323 provides that a corporation may be included in a combined Virginia income tax return if it would be subject to Virginia income tax if a separate return were to be filed, is affiliated with a group of corporations as defined by Va. Code §58.1-302, and uses the same taxable year for income tax filing.
In general, a corporation that is commercially domiciled in Virginia will be subject to tax on its income and be eligible to be included in a combined Virginia income tax return. Under 23 VAC 10-120-140, the commercial domicile of a corporation is defined as the location of the principal office where "the business affairs of the corporation are normally directed or managed." This is usually a corporation's headquarters. The regulation goes on to state:
-
- If the corporation has no office then the commercial domicile may be where the officers, directors and shareholders regularly meet or where the principal officer or majority shareholder/officer conducts the affairs of the corporation, depending upon the facts and circumstances.
In this case, the Subsidiaries have no office, employees, or tangible assets. The Taxpayer has provided evidence to show that the Subsidiaries' affairs were conducted primarily by officers located at the Taxpayer's headquarters in Virginia. As such, Virginia will be considered to be the commercial domicile of the Subsidiaries for Virginia income tax purposes.
Accordingly, the Subsidiaries are properly included in the combined corporation income tax returns filed by the Taxpayer for the years at issue. Based on this determination, refunds for the taxable years ended December 31, 1992 and 1994 are due and will be issued with applicable refund interest.
Copies of the Code of Virginia and regulation sections cited are available online in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have any other questions, you may contact ********* in the Office of Policy and Administration, Appeals and Rulings, at *********.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
-
-
-
-
-
-
-
- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
-
-
-
-
-
-
AR/13729O
Rulings of the Tax Commissioner