Tax Type
Corporation Income Tax
Description
Consolidated and combined returns
Topic
Returns/Payments/Records
Date Issued
07-29-1991
July 29, 1991
Re: Request for Ruling: Corporation Income Tax
Dear**************
This will reply to your letters of July 9. 1991, and January 14, 1991, in which you request permission to file a consolidated or combined Virginia corporation income tax return for*************(the "Taxpayer") and its subsidiaries for the taxable year ended December 31, 1990.
FACTS
The taxpayer and its subsidiaries file a single consolidated federal income tax return and a combined or consolidated return in 18 states. The corporations all have the same taxable year and have filed separate Virginia income tax returns in the past.
RULING
Under Va. Code § 58.1-442, once an affiliated group has made an election to file on a separate, consolidated or combined basis, the group may not change its filing status unless permission is granted by the Department of Taxation. It is well established that permission to change to or from consolidated returns will generally not be granted, as the change affects the allocation and apportionment factors and distorts business done in Virginia and income arising from activity in Virginia.
Based on the facts as presented, I find no extraordinary circumstances to warrant the granting of permission for the taxpayer and its subsidiaries to change to filing on a consolidated basis. Accordingly, permission 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 taxpayer and its subsidiaries to file a combined return for the taxable year ended December 31, 1990, 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. The return should be filed using the name and identification number of the parent.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner