Tax Type
Corporation Income Tax
Description
Permission to file combined return
Topic
Collection of Tax
Date Issued
04-14-1993
April 14, 1993
Re: Ruling Request - Corporation Income Taxes
Dear**************
This will reply to your letter dated April 14, 1992 in which you request permission for ***** (the "taxpayer") and affiliates to change to the combined method of filing Virginia income tax returns for the 1991 taxable year and thereafter.
FACTS
The taxpayer and affiliates elected a separate filing status for taxable years previous to 1991. During 1991, the taxpayer acquired two additional companies, which previously were included in a Virginia consolidated return for another unrelated affiliated corporate group.
DETERMINATION
In the first year two or more members of an affiliated group are subject to Virginia taxes, the group elects to file either a separate, combined, or consolidated Virginia return. See Virginia Regulation (VR) 630-3-442. Once the election is made, it can be changed only with the Department's approval.
It is well established that permission to change to or from consolidated return filing generally will 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 VR 630-3442.
In the instant case, the overriding consideration is that acquired corporations must adopt the separate filing method, as initially elected by the acquiring affiliated corporate group. However, taxpayers are generally permitted to change between the separate and combined filing methods, provided that the income from business done in Virginia is not distorted.
Accordingly, the taxpayer and affiliates are permitted to change to combined filing for the 1991 taxable year and thereafter. The taxpayer must continue to utilize combined filing after 1991 unless the Department grants permission to file otherwise.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6180G
Rulings of the Tax Commissioner