Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Change in method of filing
Topic
Returns and Payments
Date Issued
08-26-1997
August 26, 1997
Re: Request for Ruling: Corporate Income Tax
Dear*******************
This will respond to your filing of an amended return for the taxable year ending March 31, 1993, for******** (the "Taxpayer") requesting permission to file consolidated Virginia corporation income tax returns.
FACTS
The Taxpayer and affiliates have filed using the separate return basis since becoming liable to Virginia income tax. Citing that the separate return filings do not fairly reflect the income from Virginia sources for the overall group, the Taxpayer filed an amended return on the consolidated basis for the taxable year ending March 31, 1993, requesting to change 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 Taxpayer was a member of an affiliated group of corporations within the meaning of Code of Virginia § 58.1-302 for the taxable year ending March 31, 1993. 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, the Taxpayer's amended return is denied and permission to change to a consolidated filing status cannot be granted.
If you have any questions regarding this ruling, please contact **** of the Office of Tax Policy at ******** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12610P
Rulings of the Tax Commissioner