Tax Type
Corporation Income Tax
Description
Motor Carriers; Non-highway Mileage
Topic
Allocation and Apportionment
Date Issued
03-29-1991
March 29, 1991
Re: §58.1-1821 Application; Corporation Income Tax
Dear****************
This will reply to your letter of December 12, 1990, in which you seek a ruling regarding the appropriate apportionment method for a motor freight carrier which generates revenue by transporting goods by truck, railroad, and ship. Specifically, you request that the department review its denial of a refund based on an amended return filed by*************(the "Taxpayer"). Because the denial of a refund is involved, your letter has been treated as an application for correction of assessment under Va. Code §58.1-1821.
FACTS
The taxpayer, an out-of-state motor carrier licensed to use the highways of Virginia, filed an amended 1986 corporation income tax return claiming a refund. On the original return, only vehicle highway miles were included in the apportionment factor. on the amended return, the apportionment factor included highway, rail and ocean miles. The refund claim was denied because there is no provision in Virginia law to include rail and ocean miles in the apportionment factor for motor carriers. You contend that the apportionment factor for motor carriers is not limited to vehicle "highway miles."
DETERMINATION
Under Va. Code §58.1-417, motor carriers apportion income on the basis of vehicle miles traveled. The ratio used to apportion income is vehicle miles in Virginia to vehicle miles everywhere. The vehicle miles included in the apportionment factor are those traveled by all vehicles operated by the taxpayer.
Under Virginia Regulation (VR) 630-3-417, a motor carrier is defined as a corporation licensed by the Interstate Commerce Commission or the Virginia State Corporation Commission as motorcarriers of property or passengers which use the highways of Virginia. The vehicle miles included in the apportionment factor for motor carriers are the miles traveled by all vehicles operated by the taxpayer. The taxpayer does not operate the railroads and ships which carry its vehicles. Therefore, the miles traveled by the vehicles when "operated" by someone else cannot be included in the taxpayer's motor carrier mileage factor. §4.a. of VR 630-3-417 (copy enclosed).
A corporation subject to tax in more than one state rust use only one apportionment formula. The department has previously ruled that the applicable apportionment formula is determined by the majority of the business (measured by total revenue) conducted by the taxpayer. P.D. 90-128 (8/22/90) (copy enclosed). According to the information provided, a majority of the taxpayer's business consists of transporting goods by highway; for the year under review, more than 83% of transportation revenue was attributable to vehicles on the highways. Because a majority of the taxpayer's business is conducted as a motor carrier transporting goods over highway, the taxpayer is required to apportion income based on miles traveled by vehicles operated by the taxpayer on the highways.
Accordingly, the refund claim based on the taxpayer's 1986 amended corporation income tax return is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner