Tax Type
Corporation Income Tax
Description
Consolidated return filing request
Topic
Returns/Payments/Records
Date Issued
04-27-1992
April 27, 1992
Re: Ruling Request, Consolidated Return Filing
Dear ****
This will reply to your letter dated December 16, 1991 in which you request permission for * * * * * (the "Taxpayer") and subsidiaries to file a Virginia consolidated return.
FACTS
The taxpayer has been filing a federal consolidated return, and a separate return in Virginia. The taxpayer requests permission to change to the consolidated basis in Virginia to develop filing uniformity at the federal and state levels, to insure more accuracy in preparing workpapers, and to allow for more efficient auditing by various governmental authorities.
RULING
Va. Code § 58.1-442 allows corporations to elect to file returns on the basis of one of three filing statuses (separate, combined, or consolidated) regardless of how the corporations filed their federal income tax return. Once an affiliated group has made an election, 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. See Virginia Regulation (VR) 630-3-442.E.
However, Chapter 619 of the 1990 Acts of Assembly (HB 159) permits a mixed apportionment factor affiliated group to file a Virginia consolidated return. Public Document (PD) 91-244 (10/7/91) (copy enclosed) sets out the methodology for filing mixed apportionment factor Virginia consolidated returns.
An inspection of the taxpayer's 1990 Virginia income tax returns shows that the affiliated group contains members using the three factor and financial corporation apportionment factors. Therefore, permission is granted for the taxpayer and subsidiaries to file on a Virginia consolidated return basis for taxable years 1992 and thereafter, using the attachment to PD 91-244 entitled "Mixed Apportionment Factors" to compute the consolidated apportionment factor.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner