Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Combined filing permission.
Topic
Returns and Payments
Date Issued
12-12-1997
December 12, 1997
Re: Request for Ruling: Corporate Income Tax
Dear****************
This will respond to your letter of September 11, 1997, in which you request that the department accept a combined return for******** (the "Taxpayer") for the taxable year ending May 31, 1996, or allow combined filing status prospectively for the taxable year ending May 31, 1997.
FACTS
The Taxpayer and its affiliate have filed separate returns in Virginia for a number of years. Beginning with the taxable year ending May 31, 1996, the Taxpayer filed a combined Virginia return without first requesting permission from the department to change filing status. The Taxpayer requests that the department accept the return as filed, or alternatively, allow the Taxpayer and the affiliate to commence filing on the combined method beginning with the taxable year ending May 31, 1997.
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 Taxpayer and its affiliates filed a combined return for the taxable year ended May 31, 1996, without first requesting permission to change its filing status. You now ask the department to accept the combined filing. The acceptance by the department of the Taxpayer's combined filing would constitute granting the Taxpayer retroactive permission to change its filing status.
The department will generally grant permission to change to a combined filing if permission to change is requested on a timely basis. 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. You have shown no such circumstances.
You have requested permission to file a combined return prospectively beginning with the taxable year ending May 31, 1997, in the event that retroactive filing was denied. Because this request was filed on a timely basis, permission for the Taxpayer and the affiliate to file combined is granted. Any new affiliates becoming subject to Virginia tax after this change in filing status must conform to the combined filing basis.
If you have any questions regarding this ruling, please contact******* of the Office of Tax Policy at *******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13144P
Rulings of the Tax Commissioner