Tax Type
Corporation Income Tax
Description
Affiliates; Permission to file combined returns
Topic
Returns/Payments/Records
Date Issued
04-02-1993
April 2, 1993
Re: Ruling Request: Permission to File Combined Return
Dear ****************
This will reply to your letter dated June 1, 1992, in which you request permission for********** (the "Taxpayer") and subsidiaries to change from the separate to combined filing method beginning with the taxable year ended September 30, 1991.
FACTS
The Taxpayer has filed on a separate return basis for Virginia purposes. Based on previously filed Virginia Corporation Income Tax Returns, the Taxpayer and its subsidiaries use the same apportionment factor under Virginia Code §58.1-408 and have the same taxable year
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.
Permission to change to or from consolidated returns is generally not granted because the change affects the allocation and apportionment factors and distorts business done in Virginia and income arising from activities in Virginia. However, since a change to combined returns does not affect the allocation and apportionment formulas for each corporation, permission is granted to taxpayers to change to combined returns. However, the combined return must include all affiliated corporations subject to Virginia income tax and the affiliated corporations must have the same taxable year.
Provided all affiliated corporations subject to Virginia income tax are included, permission is granted to the Taxpayer and its subsidiaries to file a combined return beginning with the taxable year ending September 30, 1991. The return should be filed using the name and identification number of the common parent.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6209L
Rulings of the Tax Commissioner