Tax Type
Corporation Income Tax
Description
Request permission to file consolidated return
Topic
Returns/Payments/Records
Date Issued
01-06-1993
January 6, 1993
Re: Ruling Request: Permission to File Consolidated Return
Dear**************
This will reply to your letter dated March 4, 1992, in which you request permission for ******* (the "Taxpayer") and subsidiaries to change from the separate to consolidated filing method for the taxable year ended December 31, 1991.
FACTS
The Taxpayer has filed on a separate and consolidated return basis for Virginia and federal purposes, respectively. Based on previously filed Virginia Corporation Income Tax Returns, the Taxpayer and its subsidiaries apportion income using the three factor formula under Virginia Code §58.1-408.
RULING
Virginia Code §58.1-442 allows corporations to elect to file returns on the basis of one of three (3) 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 activities in Virginia. Virginia Regulation ("VR") 630-3-442(E) (copy enclosed).
Based on the facts as presented, I find no extraordinary circumstance to warrant the granting of permission for the affiliated group to change to filing on a consolidated basis. Accordingly, permission is denied.
Virginia 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, 1991 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
OTP/6062L
Rulings of the Tax Commissioner