Tax Type
Corporation Income Tax
Description
Request by financial institution to file consolidated return
Topic
Returns and Payments
Date Issued
10-09-1990
October 9, 1990
Re: Request for Ruling; Corporation Income Tax
§58.1-442 Consolidated Return
Dear ****
This is in response to your letter of December 27, 1989 in which you requested permission for the taxpayer to file a Virginia consolidated corporation income tax return.
Facts
The taxpayer is a financial institution holding company. The taxpayer requests permission to file a Virginia consolidated return which includes its subsidiary financial institution, a national bank.
Discussion
The requirements for filing a Virginia consolidated corporation income tax return can be found in VR §630-3-442. One of the requirements to be eligible to be included in a consolidated return is that a corporation must be subject to Virginia income tax under Va. Code §58.1-401. Among those corporations exempt from Virginia income tax under Va. Code §58.1-401 are banks, banking associations and trust companies which pay an annual franchise tax imposed by Chapter 12 of Title 58.1 (the Bank Franchise Tax).
A review of our records indicates that the bank which the taxpayer seeks to include in its Virginia consolidated income tax return files a bank franchise tax return, pursuant to Chapter 12 of Title 58.1, and does not file a Virginia corporation income tax return. See VR §63O-3-401(D)(1) and Va. Code §58.1-1202 (copies enclosed). Because the bank is subject to the bank franchise tax. it is exempt from Virginia income tax and is not eligible to be included in a Virginia consolidated corporation income tax return.
In your letter you also assert that the taxpayer is exempt from income tax because its only transactions and investments are as a financial institution holding company. Only banks chartered as such under Virginia or federal law are subject to the bank franchise tax. Holding companies and other types of financial institutions are subject to Virginia income tax and an income tax return must be filed. A bank may not be included in a consolidated income tax return, and a holding company may not file, or be included in, a bank franchise tax return.
Determination
Accordingly, permission for the taxpayer to file a Virginia consolidated corporation income tax return is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner