Document Number
Tax Type
Corporation Income Tax
Request for Change of Filing Status
Filing Status
Date Issued

October 17, 2017

Re:    Corporate Income Tax:  Request for Filing Status Change

Dear *****:

This will respond to your letter in which you request permission for ***** (the “Taxpayer”) to include ***** (“Corporation A”) in its consolidated return for the 2015 taxable year.


The Taxpayer historically filed Virginia corporate income tax returns on a consolidated basis.  In 2014, the Taxpayer acquired Corporation A and included it in the consolidated filing for the taxable year ended December 31, 2015.

Prior to the acquisition, Corporation A filed its Virginia corporate income tax return on a separate basis.  When a separate 2015 return was not filed, the Department issued a nonfiler assessment to Corporation A.  The Taxpayer contacted the Department about the assessment and was advised that permission was required to include Corporation A in the consolidated filing because Corporation A previously filed under the separate method.  In response, the Taxpayer submitted a request to include Corporation A in its consolidated return.


Virginia Code § 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities regardless of how the corporations file their federal income tax returns.  Title 23 of the Virginia Administrative Code (VAC) 10-120-320 provides that in the first full taxable year, two or more members of a group of corporations affiliated pursuant to Va. Code § 58.1-302 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 10-120-324 C provides that filing methods are deemed to be made by the affiliated group as a whole. Changes in the membership of an affiliated group do not affect the original election by the affiliated group.  If a new corporation becomes a member of the affiliated group, the new corporation must follow the filling method previously elected by the group. See also Public Document (P.D.) 01-209 (12/10/2001), and P.D. 13-241 (12/31/2013).

Based on Virginia's policy, Corporation A was required to be included in the consolidated return with the Taxpayer and other affiliates.  Accordingly, no permission was required in order to include Corporation A.  Pursuant to this determination, the Department will adjust Corporation A's registration to reflect its proper filing status.

The Taxpayer, however, failed to notify the Department of Corporation A's change in filing status resulting in a nonfiler notice.  The Taxpayer should be advised that if it acquires additional entities in the future, it should send information concerning the change in filing status to the Department's Registration Unit, Post Office Box 1114, Richmond, VA 23218-1114.

The Code of Virginia section, regulation, and public document 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 ruling, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.



Craig M. Burns
Tax Commissioner




Last Updated 10/27/2017 13:10