Tax Type
Corporation Income Tax
Description
Consolidated election; Affiliated corporations
Topic
Returns/Payments/Records
Date Issued
08-24-1992
August 24, 1992
Re: Va. Code §58.1-1821 Application
Dear****************.
This will reply to your letter dated August 9, 1991 in which you request permission for******* (the "Taxpayer") and affiliates to file a Virginia consolidated income tax return.
FACTS
The taxpayer has filed tax returns using a calendar year for all applicable periods. In August, 1989, the taxpayer purchased 100% of a company. In 1990, 100% of an additional company was purchased. Previous to these purchases, the taxpayer operated as a sole company, and therefore filed on a separate Virginia return basis. The taxpayer first filed a federal consolidated return for the 1990 taxable year. The taxpayer has filed a 1990 Virginia consolidated return containing itself and its two affiliates. The department has employed the debt setoff program to collect taxes it deems to be due, pending approval of the change to the consolidated method for filing Virginia income tax returns.
RULING
In the first year two or more members of an affiliated group of corporations, as defined in Va. Code §58.1-302, are required to file Virginia returns, the group may elect to file consolidated returns. See Virginia Regulation (VR) 630-3-442. Once the election as to filing method is made, permission to change filing methods must be granted by the Department of Taxation.
The filing of the first return for a 12 month taxable year beginning on or after the date of organization or acquisition of a new corporation which creates the affiliated group will be deemed the filing which elects a return filing status. VR 630-3-442.
Based on the facts in this case, it appears that 1990 was the first 12 month taxable year after the acquisition of a new company by the taxpayer which created an affiliated group, as defined in Va. Code §58.1-302. Since the taxpayer filed a Virginia consolidated income tax return for this year, a consolidated filing election is deemed to have been made.
Accordingly, permission is granted to the taxpayer and affiliates to file on the consolidated basis for the taxable year 1990 and thereafter. This election may only be changed by requesting and receiving permission to change from the Department of Taxation.
I am sending this case to the appropriate Department personnel, so that the 1990 tax liability may be properly determined, and a refund may be issued, if appropriate.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner