Tax Type
Corporation Income Tax
Description
Corporate Returns
Topic
Returns and Payments
Date Issued
04-06-1999
April 6, 1999
Re: Request for Ruling: Corporate Income Tax
Dear****************
This will respond to your letter in which you requested that the department reconsider its determination of October 28, 1998, concerning the filing of combined returns for the taxable years ending December 31, 1993 through 1996 for (the "Taxpayer').
FACTS
The Taxpayer filed a consolidated Virginia corporation income tax return for 1995 which was dissolved on field audit because permission to change to the consolidated filing status was not obtained from the department. The Taxpayer requested that the department accept the 1995 return as filed and grant permission for the Taxpayer to amend the 1993 and 1994 returns using the consolidated filing method. The department denied this request, but granted permission for the Taxpayer to file using the combined filing status beginning with the taxable year ending December 31, 1997. The Taxpayer asks that the department reconsider this determination and allow the Taxpayer to file retroactive amended combined returns for the taxable years ending December 31, 1993 through 1996.
RULING
In our letter of October 28, 1998, permission to file on a consolidated basis was denied for the taxable year ending December 31, 1995. Your request to file amended consolidated returns on a retroactive basis for 1993 and 1994 was also denied. Permission was granted to file on a combined basis beginning with the taxable year ending December 31, 1997 and subsequent years. You are currently requesting to file retroactive amended returns on the combined basis for the taxable years ending December 31, 1993 through 1996.
Code of Virginia §58.1-442 permits affiliated corporations to file a combined return. Permission to change between separate and combined return filing methods will generally be granted because allocation and apportionment factors are not affected by changes between these two statuses. Further, Title 23 of the Virginia Administrative Code (VAC) 10-120-324 B.2., copy enclosed, states that permission to change will generally be granted only for returns filed on or after the date the request to change was filed. Permission to file a combined return on a retroactive basis is granted only in unusual circumstances. See Public Document (P.D.) 97-384 (9-24-97), copy enclosed. You have not shown that any unusual circumstances exist. Therefore, your request to filed combined returns on a retroactive basis must be denied.
The Taxpayer's updated bill for 1995 with interest accrued to date will be forthcoming in due course. If you have any questions regarding this ruing, please contact *************** of the Office of Tax Policy at *******************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/18516P
Rulings of the Tax Commissioner