Document Number
Tax Type
Individual Income Tax
Request to File a Unified Nonresident Individual Income Tax Return
Date Issued

September 13, 2017

Re:     Request to File a Unified Nonresident Individual Income Tax Return

Dear *****:

This will reply to your letter submitted on behalf of your client, ***** (LLC1), in which you request permission to file a unified income tax return for the taxable year ending December 31, 2015.


LLC1, a foreign limited liability company, is treated as a partnership for federal income tax purposes. LLC1's members include 22 nonresident individuals and 16 nonresident grantor trusts.  The trusts are treated as disregarded entities for federal income tax purposes, and all income passes to the nonresident beneficiaries.  In 2015, LLC1 acquired a membership interest in ***** (LLC2).  Prior to this purchase, LLC1 had no Virginia source income.  LLC2 receives income from a real estate investment located in Virginia.  As a result of income and factor attributes flowing through from LLC2, LLC1 is not required to file a Virginia return.  LLC1 requests permission to file a unified nonresident income tax return on behalf of its nonresident members.


Virginia Code § 58.1-395 provides the Tax Commissioner the authority to grant permission to file a statement of combined pass through entity income attributable to nonresident owners and thereby relieve nonresident owners from filing nonresident individual income tax returns.  In Public Document (P.D.) 07-150 (9/21/2007), the Department agreed to accept composite returns filed on behalf of multiple nonresident individuals and pass-through entities when certain conditions are met.  Such conditions were superseded by P.D. 15-240 (12/22/2015).

For taxable years prior to 2014, a pass-through entity was required to obtain the consent of each nonresident owner in order to file a composite return.  Effective for taxable years beginning on or after January 1, 2015, a pass through entity may file a composite return for only a portion of its qualified nonresident owners, provided that the pass-through entity pays the pass-through entity withholding tax for any qualified nonresident owners who are not included in the composite return.  Participation in the composite return will be considered as consent to pay Virginia income tax.  To file a composite return, a pass through entity must meet the following requirements:

  1. The pass-through entity must provide a completed copy of Schedule VK-1 to each qualified nonresident owner included in the composite return
  2. The Virginia income tax on the composite return must be computed using the highest rate specified under Va. Code § 58.1-320 on the partnership's income attributable to the qualified nonresident owners included on the composite return without the benefit of itemized deductions, standard deductions, personal exemptions, credits for income taxes paid to states of residence, any tax credit carryover amounts, or any other tax credits that are not attributable to the pass-through entity.
  3. The pass-through entity must obtain a signed consent form from each participating qualified nonresident owner indicating the owner's consent to inclusion in the composite return.
  4. The composite return must be signed by an owner, officer, or employee of the pass-through entity who is authorized to act on behalf of the pass-through entity in tax matters. By signing the composite return, the signer is declaring that he or she is an authorized representative of the pass-through entity and that each participant has signed a consent form authorizing the pass-through entity to act on the participant's behalf in the matter of composite returns and acknowledging the participant's understanding and acceptance of all of the terms and conditions of participation in a composite return.
  5. The pass-through entity must make estimated payments on behalf of the qualified nonresident owners included on a composite return.

A qualified nonresident owner's participation in the composite return will indicate his or her consent to be taxed by the Commonwealth.  The consent form obtained by the pass-through entity must include the qualified nonresident owner's name, address, and Social Security number. The pass-through entity must maintain such forms and provide them to the Department upon request.

If the aforementioned conditions are acceptable, then LLC1 may submit a 2015 unified return.  The Department, however, reserves the right to withdraw or modify any authorization upon reasonable notice.  If the conditions are not acceptable, please note that each nonresident individual and trust having income from Virginia sources for the taxable year must file a Virginia nonresident individual or fiduciary income tax return, unless they meet the filing exceptions described in Va. Code § 58.1-441.

The Code of Virginia sections and public documents cited are available on-line at in the Laws, Rules & Decisions section of the Department's web site.  If you have any questions regarding this response, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.



Craig M. Burns
Tax Commissioner




Last Updated 10/03/2017 11:19