Tax Type
Individual Income Tax
Description
Limited liability companies; Unified nonresident tax returns
Topic
Partnerships
Date Issued
08-27-1997
August 27, 1997
Re: Request for Ruling: Individual income tax
Dear**************
This will reply to a letter from********* (the "Taxpayer"), who is requesting permission to file a unified nonresident individual income tax return on behalf of their nonresident members. The Taxpayer has asked the department to respond directly to your attention. We apologize for the delayed response.
FACTS
The Taxpayer, a Delaware limited liability company, is transacting business in Virginia. All members of the Taxpayer are individuals who are nonresidents of Virginia and have no other income from Virginia sources. In order to relieve the Taxpayer's members from the responsibility of filing Virginia nonresident individual income tax returns, you request the department grant permission to the Taxpayer to file a unified nonresident individual income tax return on behalf of the members for the taxable year 1996.
RULING
Title 23 of the Virginia Administrative Code (VAC)10-130-20 C 2 provides that the Tax Commissioner may grant permission to partnerships to file a statement of combined partnership income attributable to nonresident partners. The permission is also granted based upon such terms as the parties may agree. This provision of the VAC relieves the nonresident partners from the responsibility of having to file Virginia nonresident individual income tax returns. Similarly, the department may grant permission to a nonresident limited liability company to file unified nonresident individual income tax returns.
If the limited liability company determines it can comply with all of the following conditions, it may file a unified return on behalf of the nonresident members ultimately receiving a share of the limited liability company's income from Virginia sources.
1. A schedule must be provided containing the total income of the limited liability company and the amount attributable to Virginia under either the applicable state apportionment formula, as provided in Code of Virginia §§ 58.1-408 through 58.1-421, or by using an approved alternative method.
2. The unified return must reflect only the income or loss attributable to Virginia nonresident members who have no income from Virginia sources other than income attributable to the limited liability company.
3. All nonresident members without other income from Virginia sources must elect to join in the filing of such a return and a statement to such effect will be included in the return.
4. The return will include each nonresident member's name, address, social security number and Virginia taxable income attributable to each nonresident member.
5. The Virginia income tax will be computed at the rates specified under Code of Virginia § 58.1-320 on the limited liability company's income attributable to the nonresident members without benefit of itemized deductions, standard deductions, personal exemptions, or credit for income taxes paid to states of residence.
6. The return will contain a statement indicating the responsibility of each nonresident member for his share of the total tax and any statements made on his behalf. The statement will be signed by each nonresident member.
7. A similar unified return will be filed and payment made for the declaration of estimated tax, if required. Payment of the estimated tax will be made in the name of the limited liability company and will use the limited liability company's identification number. Estimated income tax payments will be made using Form 760ES, Virginia Estimated Income Tax Payments for Individuals, Estates, and Trusts.
8. A copy of the letter from the Tax Commissioner authorizing the filing of a unified nonresident income tax return must be attached to the unified return when it is filed. The unified nonresident income tax return is to be filed using Form 763, Virginia Nonresident Individual Income Tax Return.
If the aforementioned conditions are acceptable, the Taxpayer may commence the unified filing under the above conditions effective for the taxable year of 1996. The department, however, reserves the right to withdraw or modify the forgoing authorization upon reasonable notice to the Taxpayer.
If the conditions are not acceptable, please note that each nonresident member having taxable income for a taxable year must file a Virginia nonresident return, unless the individual meets the filing exceptions described in Code of Virginia § 58.1-321. Failure to file an individual nonresident return would subject the nonresident member to penalty and interest which could not be mitigated by the fact that a unified filing had been made unless the unified filing was in accordance with the conditions set forth.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12856N
Rulings of the Tax Commissioner