Tax Type
Corporation Income Tax
Description
Returns of Affiliated Corporations
Topic
Returns and Payments
Date Issued
07-23-1999
July 23, 1999
Re: Request for Ruling: Corporate Income Tax
Dear***
This will respond to your letter in which you request permission for ***** ***** (the "Taxpayer') and its affiliated corporations to change from filing separate Virginia corporation income tax returns to a consolidated return effective for the taxable year ending December 31, 1998.
FACTS
The Taxpayer and its affiliated corporations have filed separate returns in Virginia for a number of years. You have represented that the group is affiliated within the meaning of Code of Virginia Sec. 58.1-302 and files using the same taxable year. The Taxpayer and its affiliates request permission to change to the consolidated filing status effective for the taxable year ending December 31, 1998.
RULING
Code of Virginia Sec. 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities regardless of how the corporations filed their federal income tax returns. Title 23 of the Virginia Administrative Code ("VAC') 10-120-320 (copy enclosed) provides that in the first year two or more members of an affiliated group of corporations 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. The department will generally not grant permission to change to a consolidated filing status absent extraordinary circumstances.
The affiliates were members of an affiliated group of corporations within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending December 31, 1998. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change to filing on a consolidated basis. Accordingly, permission to file a consolidated return cannot be granted.
Code of Virginia Sec. 58.1-442 permits affiliated corporations to file a combined return. Permission to change between the separate and combined return filing methods generally will be granted, because the allocation and apportionment formulas are not affected by changes between these two statuses. Such permission is only granted if the request is made before the due date or extended due date for the taxable year for which the request is made. Because your request to change to a consolidated filing status was timely filed, the department will allow a change to the combined filing method beginning with the taxable year ending December 31, 1998 in lieu of the separate filing if you so desire.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21741P
Re: Request for Ruling: Corporate Income Tax
Dear***
This will respond to your letter in which you request permission for ***** ***** (the "Taxpayer') and its affiliated corporations to change from filing separate Virginia corporation income tax returns to a consolidated return effective for the taxable year ending December 31, 1998.
FACTS
The Taxpayer and its affiliated corporations have filed separate returns in Virginia for a number of years. You have represented that the group is affiliated within the meaning of Code of Virginia Sec. 58.1-302 and files using the same taxable year. The Taxpayer and its affiliates request permission to change to the consolidated filing status effective for the taxable year ending December 31, 1998.
RULING
Code of Virginia Sec. 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities regardless of how the corporations filed their federal income tax returns. Title 23 of the Virginia Administrative Code ("VAC') 10-120-320 (copy enclosed) provides that in the first year two or more members of an affiliated group of corporations 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. The department will generally not grant permission to change to a consolidated filing status absent extraordinary circumstances.
The affiliates were members of an affiliated group of corporations within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending December 31, 1998. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change to filing on a consolidated basis. Accordingly, permission to file a consolidated return cannot be granted.
Code of Virginia Sec. 58.1-442 permits affiliated corporations to file a combined return. Permission to change between the separate and combined return filing methods generally will be granted, because the allocation and apportionment formulas are not affected by changes between these two statuses. Such permission is only granted if the request is made before the due date or extended due date for the taxable year for which the request is made. Because your request to change to a consolidated filing status was timely filed, the department will allow a change to the combined filing method beginning with the taxable year ending December 31, 1998 in lieu of the separate filing if you so desire.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21741P
Rulings of the Tax Commissioner