Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Filing status change request
Topic
Returns and Payments
Date Issued
09-11-1997
September 11, 1997
Re: Request for Ruling: Corporate Income Tax
Dear***************
This will respond to your letter of July 31, 1997, in which you request permission for******** (the "Taxpayer") and affiliates to change from filing separate Virginia corporation income tax returns to filing a combined return beginning with the
taxable year ending October 25, 1996.
FACTS
The Taxpayer and its affiliates have filed separate returns in Virginia for a number of years. For the taxable year ending October 25, 1996, the group filed separate extensions of time to file their respective returns. On July 31, 1997, the Taxpayer filed a request with the department to change from filing separate returns to a combined filing status. Subsequently, prior to the extended due dates, several of the affiliates filed separate returns when the department did not respond to the July 31, 1997, request. Since the request to change filing status was timely filed within the extended due date of the returns in question, the department will address the request.
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.
Title 23 VAC 12-120- 324 (copy enclosed) 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 complied with the department's policy for requesting permission to change filing methods. The request was made prior to the extended due date for the October 25, 1996, taxable year, since valid extensions were on file with the department. Accordingly, permission is granted for the Taxpayer and affiliates to file a combined Virginia Corporation income tax return for the taxable year ending October 25, 1996.
If you have any questions regarding this ruling, please contact *****of the Office of Tax Policy at****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12840P
Rulings of the Tax Commissioner