Tax Type
Individual Income Tax
Description
Nonresident shareholders
Topic
Taxability of Persons and Transactions
Date Issued
06-18-1985
June 18, 1985
RE: Ruling Request: Nonresident Shareholders
Individual Income Tax
Dear ****
This will reply to your letter of May 6, 1985 concerning the procedures for filing a single unified Virginia nonresident income tax return for the nonresident shareholders of ***** (hereinafter referred to as Corporation).
Facts & Proposal
Corporation is a non-Virginia corporation doing business in Virginia with a portion of its taxable income allocable to sources within Virginia. Effective March 15, 1985, Corporation elected S-corporation status under the provisions of Internal Revenue Code '§1361 et seq.
Corporation has three shareholders, each of whom is a nonresident of Virginia. Each shareholder is a calendar year taxpayer and has no income from Virginia sources other than his share of taxable income from Corporation attributable to Virginia sources.
Corporation requests permission to file a single unified nonresident individual income tax return on behalf of its Virginia nonresident shareholders for taxable years beginning on and after January 1, 1985, based on the following conditions:
l. All nonresident shareholders elect to join in the filing of such a return, and a statement to such effect will be included in the return.
2. The unified return will reflect only the income or loss attributable to Virginia nonresident shareholders who have no income from Virginia sources other than income attributable to Corporation.
3. A schedule will be provided containing the total income of Corporation and the amount attributable to Virginia under the applicable state apportionment formula.
4. The return will include each such nonresident shareholder's name, address, social security number and Virginia taxable income attributable to each nonresident shareholder.
5. The Virginia income tax will be computed at 5.75% of Corporation income attributable to the nonresident shareholders without benefit of itemized deductions, standard deductions, personal exemptions or credit for income taxes paid to states of residence.
6. The return will contain a statement indicating the responsibility of each nonresident shareholder for his share of the total tax and any statements made on his behalf. This statement will be signed by each nonresident shareholder.
A similar unified return will be filed and payments made for declaration of estimated tax if required.
Determination
Corporation may commence the unified filing effective for taxable years beginning on and after January l, 1985, subject to the above conditions. However, we reserve the right to withdraw or modify the foregoing authorization upon reasonable notice to Corporation.
If the above is not acceptable and the unified return is not filed, please note that each nonresident shareholder having taxable income must file a Virginia return for the taxable year, unless the individual meets the "$3,000.00 filing exception" described in Virginia Code Section 58.1-321. Failure to file an individual nonresident return would subject the nonresident shareholder to penalty and interest, which could not be mitigated by the fact that a unified filing had been made unless the unified filing was in accordance with the conditions set forth above.
Sincerely,
W. H. Forst
Tax Commissioner
RE: Ruling Request: Nonresident Shareholders
Individual Income Tax
Dear ****
This will reply to your letter of May 6, 1985 concerning the procedures for filing a single unified Virginia nonresident income tax return for the nonresident shareholders of ***** (hereinafter referred to as Corporation).
Facts & Proposal
Corporation is a non-Virginia corporation doing business in Virginia with a portion of its taxable income allocable to sources within Virginia. Effective March 15, 1985, Corporation elected S-corporation status under the provisions of Internal Revenue Code '§1361 et seq.
Corporation has three shareholders, each of whom is a nonresident of Virginia. Each shareholder is a calendar year taxpayer and has no income from Virginia sources other than his share of taxable income from Corporation attributable to Virginia sources.
Corporation requests permission to file a single unified nonresident individual income tax return on behalf of its Virginia nonresident shareholders for taxable years beginning on and after January 1, 1985, based on the following conditions:
l. All nonresident shareholders elect to join in the filing of such a return, and a statement to such effect will be included in the return.
2. The unified return will reflect only the income or loss attributable to Virginia nonresident shareholders who have no income from Virginia sources other than income attributable to Corporation.
3. A schedule will be provided containing the total income of Corporation and the amount attributable to Virginia under the applicable state apportionment formula.
4. The return will include each such nonresident shareholder's name, address, social security number and Virginia taxable income attributable to each nonresident shareholder.
5. The Virginia income tax will be computed at 5.75% of Corporation income attributable to the nonresident shareholders without benefit of itemized deductions, standard deductions, personal exemptions or credit for income taxes paid to states of residence.
6. The return will contain a statement indicating the responsibility of each nonresident shareholder for his share of the total tax and any statements made on his behalf. This statement will be signed by each nonresident shareholder.
A similar unified return will be filed and payments made for declaration of estimated tax if required.
Determination
Corporation may commence the unified filing effective for taxable years beginning on and after January l, 1985, subject to the above conditions. However, we reserve the right to withdraw or modify the foregoing authorization upon reasonable notice to Corporation.
If the above is not acceptable and the unified return is not filed, please note that each nonresident shareholder having taxable income must file a Virginia return for the taxable year, unless the individual meets the "$3,000.00 filing exception" described in Virginia Code Section 58.1-321. Failure to file an individual nonresident return would subject the nonresident shareholder to penalty and interest, which could not be mitigated by the fact that a unified filing had been made unless the unified filing was in accordance with the conditions set forth above.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner