Tax Type
Corporation Income Tax
Description
Consolidated election; Insurance companies
Topic
Returns/Payments/Records
Date Issued
09-10-1992
September 10, 1992
Re: Ruling Request: Corporation Income Tax
Dear***************
This will reply to your letter dated January 14, 1992 in which you request permission for************* (the "Taxpayer") to participate in the consolidated Virginia income tax return with its other affiliates having Virginia nexus.
FACTS
The taxpayer is an insurance company, which participates in a Life-Non-Life consolidated federal income tax return with its parent, and affiliates of its parent. All other affiliates having Virginia nexus participate in a Virginia consolidated income tax return. Due to a change in federal filing status, the taxpayer recently adopted the same taxable year end as that of its other affiliates. Because of the different taxable years involved, you have not preciously requested permission for the taxpayer to become a member of the existing Virginia consolidated group.
DETERMINATION
Income Tax Status of Insurance Companies: Insurance companies registered to do business in Virginia as such are subject to a license tax, as required under Va. Code §58.1-2500, et. seq. This tax is levied upon "direct gross premium income", which is the "gross amount of all premiums, assessments, dues and fees collected, received or derived, or obligations taken therefor, from business" in Virginia. The license tax is levied upon any insurance company issuing policies for any type of insurance defined in Va. Code §§38.1-102 through 38.1-134. See Va. Code §58.1-2501.
Insurance companies not registered to do business in Virginia as such are subject to the Virginia income tax, using the rules under Va. Code §58.1-400 et. seq., and the rule of apportionment contained in Virginia Regulation (VR) 630-3-418.
The taxpayer is not registered with the Virginia State Corporation Commission as an insurance company doing business as such. Therefore, its Virginia taxable income is determined pursuant to the previous paragraph.
Virginia Consolidated Return Filing: An affiliated group elects its Virginia filing status by filing its first full twelve month Virginia income tax return using the method preferred. Changes from the original method must be approved by the Tax Commissioner. Other affiliated group members becoming subject to Virginia tax in years subsequent to the initial election must conform to this election. Also, affiliated group members filing a Virginia consolidated return must use the same taxable year end. See VR 630-3-442.
When the taxpayer's affiliates initially elected consolidated filing for Virginia purposes, the Internal Revenue Code did not permit life insurance and nonlife companies to be included in the same consolidated return. Similarly, the taxpayer not includible in the Virginia consolidated return. Because of the change in federal rules, coupled with the change in taxable year to join in the federal consolidated return, the taxpayer is permitted to join in the affiliated group's existing Virginia consolidated return. In computing the consolidated apportionment factor for this group, the rule entitled "Mixed apportionment factors" contained in P.D. 91-244 (10/7/91) (copy enclosed) should be utilized.
Sincerely.
W. H. Forst
Tax Commissioner
TPD/5929G
Rulings of the Tax Commissioner