Tax Type
Corporation Income Tax
Description
Combined returns; Nexus in Virginia
Topic
Allocation and Apportionment
Collection of Tax
Date Issued
05-08-1995
May 8, 1995
Re: § 58.1-1821 Application: Corporation Income Tax
Dear**************
This will reply to your letter of November 3,1994, in which you seek correction of an additional assessment of corporation income tax to ***********(the "Taxpayer") .
FACTS
The Taxpayer filed combined Virginia corporation income tax returns for the taxable years ended December 31,1991 and 1992. On audit, it was determined that two of the corporations did not have nexus in Virginia, and were removed from the Virginia combined return. You protest this adjustment, maintaining that the corporations should remain in the combined return.
DETERMINATION
To be included in a Virginia combined income tax return a corporation must be subject to Virginia income tax if separate returns were to be filed. See Virginia Regulation (VR) 630-3-442. Generally, corporations organized under Virginia law and foreign corporations having income from Virginia sources are subject to Virginia tax. Generally a corporation will have income from Virginia sources if there is sufficient activity within Virginia to make any one or more of the applicable apportionment factors positive.
The subsidiaries in question are incorporated outside of Virginia, and therefore required to allocate and apportion income in accordance with Code of Virginia § 58.1 406. These corporations have no Virginia property or payroll, and no sales apportionable to Virginia in accordance with Code of Virginia §58.1 -416. Accordingly, these corporations do not have a positive property, payroll or sales factor. Therefore, the subsidiaries do not have income from Virginia sources and are not subject to Virginia income tax. These corporations are not eligible to be included in the Virginia combined return. The auditor properly removed these corporations from the Taxpayer's combined Virginia income tax return.
Accordingly, the assessment is upheld as provided herein and as reflected on the attached schedule. The balance due,*****should be paid within 30 days to prevent the accrual of additional interest. Your payment may be sent to*************c/o Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23282-1880.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/8622P
Rulings of the Tax Commissioner