Tax Type
Corporation Income Tax
Description
Consolidated filing method denied
Topic
Returns/Payments/Records
Date Issued
05-29-1992
May 29, 1992
Re: Ruling Request: Corporation Income Taxes
Dear ****
This will reply to your letter received September 26, 1991 in which you request permission for************ * * (the "Taxpayer") and subsidiary to change from the separate to consolidated filing method for the March 31, 1991 taxable year and thereafter.
FACTS
The taxpayer and subsidiary have filed Virginia separate returns since inception. The subsidiary has recently changed its tax year end to match that of the taxpayer. Both the taxpayer and subsidiary have 100% of their property, payroll, and sales factors in Virginia.
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.
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. Virginia Regulation (VR) 630-3-442(E) (copy enclosed).
Based on the facts as presented, I find no extraordinary circumstances to warrant the granting of permission for the taxpayer and subsidiary to change to filing on a consolidated basis. This reflects the previously enumerated department policy in this area contained in Public Document 91-36 (3/18/91), a copy of which I have enclosed. Accordingly, permission is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner