Tax Type
Corporation Income Tax
Description
Consolidated Returns
Topic
Returns/Payments/Records
Date Issued
12-06-1996
December 6, 1996
Re: Request for Ruling: Corporate Income Tax
Dear***********
This will respond to your letter of October 21, 1996, in which you requested permission for ***********(the "Taxpayer") and affiliates to change from filing separate Virginia income tax returns to filing a consolidated Virginia income tax return, or in the alternative, a combined return beginning with the taxable year ending September 30, 1996.
FACTS
The Taxpayer and two of its affiliates filed separate Virginia income tax returns for the taxable year ending September 30, 1995, and prior years. The Taxpayer requests that it be allowed to change from separate Virginia filings to the consolidated fling status.
RULING
Virginia Regulation (VR) 630-3442 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 September 30, 1996. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VR 630-3442 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.
Code of Virginia §58.1442 permits affiliated corporations to file a combined return. Permission to change between the separate and combined return filing methods generally will be granted, because allocation and apportionment formulas are not affected by changes between these two statuses. You have requested permission to file combined in the event that consolidated filing is denied.
Because your request to change was filed on a timely basis, permission is hereby granted for the Taxpayer and its affiliates to file a combined return for the taxable year ending September 30, 1996, and subsequent years.
If you have any questions regarding this ruling, please contact**********at*******.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner