Tax Type
Corporation Income Tax
Description
Consolidated return
Topic
Returns/Payments/Records
Date Issued
04-29-1994
April 29, 1994
Re: Ruling Request: Corporation Income Tax
Dear**********
This will reply to your letters of October 15, 1991 and August 21, 1992 in which you apply for permission for ************(the "Taxpayer") to file a consolidated Virginia return beginning with the 1990 taxable year. I apologize for the inexcusable delay in responding to your requested ruling.
FACTS
The Taxpayer and subsidiaries have been filing Virginia income tax returns on a combined basis. The Taxpayer and its subsidiaries constitute an affiliated group as defined by Va. Code §58.1-302. One affiliate is required by the Code of Virginia to use a single factor apportionment formula. The remaining affiliates use the statutory three factor apportionment formula. The Taxpayer and subsidiaries wish to file a consolidated Virginia tax return.
RULING
Permission to change to or from the consolidated filing method is generally not granted by the department, because this change can affect the apportionment factors and possibly distort the reporting of the portion of business done in Virginia.
Effective for taxable years beginning on or after January 1, 1990, Chapter 619 of the 1990 Acts of Assembly (HB 159) allows affiliated corporations utilizing different apportionment factors to be included in a Virginia consolidated return.
The Taxpayer has been filing on a combined basis and cannot file a consolidated return for the group unless permission is granted. Although permission to change to or from consolidated filing is rarely granted, HB 159 was intended to apply to affiliated groups previously denied Virginia consolidated filing status solely due to mixed apportionment factors between members.
Pursuant to its order of January 19, 1993 adopting VR 630-3-442, the department indicated that it would grant a timely request to change to consolidated filing by a group including corporations required to use different apportionment factors, retroactive to taxable years beginning on and after January 1, 1990. For this purpose, a request is considered timely if it is filed within one year of March 10, 1993, the effective date of the regulation.
Because of the legislative intent, and the facts and circumstances of this case, the Taxpayer and subsidiaries are hereby granted permission to file a consolidated return for the 1990 taxable year and thereafter.
The consolidated apportionment factor for affiliates required to use different factors shall be determined in accordance with Public Document 91-244 (10/7/91), copy attached, for taxable years beginning on or after January 1, 1990, but before January 1, 1993. The consolidated apportionment factor for affiliates required to use different factors shall be determined in accordance with § 7 of VR 630-3-442, copy attached, for taxable years beginning on or after January 1, 1993.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/6378L
Rulings of the Tax Commissioner