Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Consolidated returns
Topic
Returns and Payments
Date Issued
11-15-1996
November 15, 1996
Re: Request for Ruling: Corporate Income Tax
Dear**************
This will respond to your letter requesting permission for*******(the "Taxpayer") and its affiliates to change from filing separate returns to a Virginia consolidated income tax return for the taxable year ending June 30, 1995. apologize for the delay in responding to your letter.
FACTS
The Taxpayer and its affiliated companies filed separate Virginia income tax returns for their taxable year ended June 30, 1994. Beginning with the taxable year ended June 30, 1995, the Taxpayer and its affiliates changed their filing status to a Virginia consolidated return without first requesting permission to change from the department. The Taxpayer requests that they be allowed to file on a consolidated basis.
RULING
Virginia Regulation (VR) 630-3-442 1.B, copy enclosed, provides that in the first year two or more members of an affiliated group of corporations are required to file Virginia returns, the group may elect to file separate returns, a consolidated return, or a combined return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the department. Absent extraordinary circumstances, permission to change to or from the consolidated filing method is generally not granted by the department, because this change can affect the allocation and apportionment factors and possibly distort the reporting of the portion of business conducted in Virginia.
The Taxpayer was a member of an affiliated group of corporations within the meaning of VR 630-3-302 prior to the taxable year ending June 30, 1995. These corporations filed their Virginia returns on a separate basis, thereby electing the separate fling status for all subsequent years. In accordance with VR 630-3-442 5, the members of the group must follow the filing method previously elected by the group.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change to filing on a consolidated basis. Accordingly, permission to file a consolidated return cannot be granted.
The department has adjusted its records to indicate the Taxpayer and its affiliates will be required to file separate corporate income tax returns for their taxable year ended June 30, 1995, and thereafter. The department will agree to waive any late filing penalties for the taxable year ended June 30, 1995, provided the Taxpayer and its affiliates file the proper Virginia corporate income tax returns within the next 30 days. Please forward these returns to **********Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11397P
Rulings of the Tax Commissioner