Tax Type
Corporation Income Tax
Description
Consolidated return; Change in filing method
Topic
Returns and Payments
Date Issued
08-30-1990
August 30, 1990
Re: Ruling Request; Corporation Income Tax
§58.1-442 Consolidated Return
Dear *************
This is in response to your letter of June 15, 1990, in which you requested permission to file a Virginia consolidated income tax return for the taxpayers.
Facts
The taxpayers join in a consolidated federal income tax return. The affiliated group has formed over several years, and all Virginia income tax returns for all corporations, since inception, have been filed on a separate basis.
Discussion
Under Va. Code §58.1-942, once an affiliated group has made an election to file on a separate, consolidated, or combined basis, the group may not change its filing status unless permission is granted by the Department of Taxation. It is well established that permission to change to or from consolidated returns will generally not be granted, as the change affects the allocation and apportionment factors and distorts business done in Virginia and the income arising from activity in Virginia. See VR §630-3-492(E)(copy enclosed).
Based on the facts as presented, I find no extraordinary circumstances to warrant the granting of permission for the taxpayer and its subsidiaries to change to filing on a consolidated basis. Accordingly, permission is denied.
Va. Code §58.1-442 permits affiliated corporations to file a combined return. A change from separate returns to a combined return does not affect the allocation and apportionment formulas for each corporation.
Permission is granted for the taxpayer and its subsidiaries to file a combined return for the taxable year ending June 30, 1990 and for taxable years thereafter if the combined return includes all affiliated corporations subject to Virginia income tax and if they use the same taxable year. The return should be filed using the name and identification number of the parent.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner