Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Permission to change filing status
Topic
Returns and Payments
Date Issued
09-23-1996
September 23, 1996
Re: Request for Ruling: Corporate Income Taxes
Dear**********
This will respond to the request that the department reconsider its ruling denying permission to******(the "Taxpayer") and Affiliates to file a combined Virginia corporate income tax return for the year ended December 31, 1994.
FACTS
The Taxpayer was incorporated during 1993. Later that year, the Taxpayer acquired all of the Affiliates which it now seeks to include in a combined return. The Affiliates all filed separate Virginia corporate income tax returns for the 1993 taxable year. For the 1994 taxable year, all of the Affiliates filed separate Virginia extensions. The Taxpayer did not file a Virginia extension. Two of the Affiliates then filed separate Virginia corporate income tax returns. Subsequently, prior to the extended due date, a combined Virginia return was filed which included the Taxpayer and all Affiliates. A request for permission to begin filing a combined Virginia corporate income tax return with the 1994 taxable year was enclosed with the filed combined return.
The department granted permission to file combined returns for the 1995 taxable year and thereafter, but denied permission for the 1994 taxable year. The Taxpayer requests that the department reconsider its ruling, stating that permission to change from separate to combined filing was properly requested.
RULING
Virginia Regulation (VR) 630-3-442 provides that changes between separate and combined filing are generally allowed because allocation and apportionment among members of the affiliated group are unaffected by either filing method. In Public Documents (P.D.s) 93-73, (3/18/93), and 91-271, (10/23/91), copies enclosed, the department granted permission to change filing methods commencing with a given taxable year when the request was made prior to that taxable year's extended due date.
In the instant case, the department finds that the Taxpayer and Affiliates complied, in all material respects, with the department's policy for requesting permission to change filing methods. The Taxpayer has represented that itself and the Affiliates are all members of an affiliated group, as defined in VR 630-3-302, and therefore eligible to file a combined return. The Taxpayer also indicated that itself and the Affiliates comprise all of the members of the affiliated group which are subject to Virginia income tax. Finally, the request was made prior to the extended due date for the 1994 taxable year, as evidenced by the valid extensions received by six of the seven members of the affiliated group.
Accordingly, the department will grant permission to the Taxpayer and Affiliates to file a combined Virginia corporate income tax return for the 1994 taxable year. The combined return previously filed by the Taxpayer and Affiliates will be processed as filed, and the two Affiliates' separately filed Virginia returns will be withdrawn. Any income tax paid by those Affiliates will be credited to the combined tax liability.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10658G
Rulings of the Tax Commissioner