Tax Type
Corporation Income Tax
Description
Change in method of filing; Consolidated or combined returns
Topic
Returns and Payments
Date Issued
06-24-1997
June 24, 1997
Re: Request for Ruling: Corporate Income Tax
Dear*********************
This will respond to your letter of April 1, 1997, in which you request permission for***********(the "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 December 31, 1996.
FACTS
The Affiliates have filed separate Virginia returns for the taxable year ended December 31, 1995, and prior years. The Affiliates request that they be allowed to change from separate Virginia filings to the consolidated filing status.
RULING
Code of Virginia § 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities regardless of how the corporations filed their federal income tax returns. Title 23 VAC 10-120-320 of the Virginia Administrative Code (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 combined return, or a consolidated return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the department. The department will generally not grant permission to change to a consolidated filing status absent extraordinary circumstances.
The Affiliates were members of an affiliated group of corporations within the meaning of Code of Virginia § 58.1-302 prior to the taxable year ending December 31, 1995. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VAC 10--120-320, 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 § 58.1-442 permits affiliated corporations to file a combined return. Permission to change between the separate and combined return filing methods generally will be granted on a prospective basis. You have requested permission to file a combined return 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 Affiliates to file a combined return for the taxable year ending December 31, 1996, and subsequent years.
If you have any questions regarding this ruling, you may contact ********* at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
Enclosure
OTP/12479P
Rulings of the Tax Commissioner