Tax Type
Corporation Income Tax
Description
Affiliated Group; Consolidated/Combined Return
Topic
Returns and Payments
Date Issued
09-25-1990
September 25, 1990
Re: Request for Ruling; Corporation Income Tax
§58.1-442 Permission to file a Consolidated Return
Dear ****
This is in response to your letter of October 25, 1989, in which you requested permission to file a consolidated Virginia corporate income tax return for the affiliated group for the calendar year ending December 31, 1989.
FACTS
The taxpayer has filed a separate return for each corporation since inception. The corporations are part of a controlled group currently filing a consolidated federal return.
DETERMINATION
Virginia Code §58.1-442 authorizes affiliated corporations to file separate, combined or consolidated income tax returns. once a return filing status is elected, all returns thereafter must be filed on the same basis unless permission to change is granted by the Department of Taxation. In this case, the taxpayer has elected to file a separate Virginia return for each corporation.
The policy for granting permission to change return filing status is explained in VR §630-3-442(E). That section states that permission to change to or from consolidated returns will generally not be granted. Such changes affect the allocation and apportionment factors and distort the business done in Virginia and the income arising from activity in Virginia.
The taxpayer has failed to demonstrate that good cause exists to grant permission for the affiliated group to switch from filing separate returns to filing a consolidated return. Accordingly permission to change to a consolidated Virginia return is denied.
Va. Code §58.1-442 permits affiliated corporations to file a combined return. A change from separate returns to a combined return does not affect the allocation and apportionment formulas for each corporation.
Permission is granted for the affiliated corporations to file a combined return for the taxable year ended December 31, 1989 and for taxable years thereafter if the combined return includes all affiliated corporations subject to Virginia income tax and if they use the same taxable year. See VR 630-3-442(D)(copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner