Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations;combined filing status
Topic
Returns and Payments
Date Issued
09-24-1997
September 24, 1997
Re: Request for Ruling: Corporate Income Tax
Dear*********
This will respond to your letter in which you request permission for***********(the designated "Lead" corporation of the affiliated group) to change from filing separate Virginia corporation income tax returns to a combined return for the affiliated group retroactively to the taxable year ending December 31, 1995.
FACTS
The Lead corporation and certain affiliated corporations have filed separate returns in Virginia for a number of years. The group is affiliated within the meaning of Code of Virginia § 58.1-302 and files using the same taxable year. The Lead corporation and its affiliates request to change to the combined filing status on a retroactive basis to the taxable year ending December 31, 1995.
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 filings are generally allowed because allocation and apportionment among members of the affiliated group are unaffected by either filing method. However, permission to change will generally be effective only for returns filed on or after the date the permission to change was filed. Permission to file a combined return on a retroactive basis is granted only in unusual circumstances. As a result, l must deny your request for a retroactive change. The reasons you cite for allowing retroactive filing are not sufficient based on our longstanding policy in this area.
In the instant case, the department finds that the Lead and its affiliates meet the requirements to file a combined return. Because the request to change was filed on a timely basis, permission is granted for the Lead and affiliates to file a combined Virginia corporation income tax return prospectively for the taxable year ending December 31, 1996. Any new affiliates becoming subject to Virginia tax in 1996 and thereafter must conform to the combined filing status. The return should be filed using the name and identification number of the Lead corporation.
If you have any questions regarding this ruling, please contact ********* of the Office of Tax Policy at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12897P
Rulings of the Tax Commissioner