Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 120 - Corporation Income Tax › Section 23VAC10-120-83 - Minimum tax on telecommunications companies

Current through Register Vol. 40, No. 24, July 15, 2024
A. Generally. Effective for any taxable year
				that includes January 1, 1989, or begins after January 1, 1989, a
				telecommunications company may be subject to a minimum tax. The minimum tax
				will be applicable when such tax exceeds the corporate income tax imposed under
				§ 58.1-400 of the Code of Virginia.
B. Determination of gross receipts. For each
				taxable year, the minimum tax of a telecommunications company is computed on
				the gross receipts of such company for the calendar year which ends during the
				taxable year.
If a company files an income tax return for a period of less
				  than 12 months, the minimum tax is computed on the gross receipts for the
				  calendar year which ends during the taxable period. If no calendar year ends
				  during the taxable period, the minimum tax is computed on the gross receipts of
				  the most recent calendar year which ended before the taxable period.
For taxable years that begin before January 1, 1989, include
				  January 1, 1989, and end before December 31, 1989, the minimum tax is computed
				  on the gross receipts received during calendar year 1988. The minimum tax rate
				  applicable to calendar year 1989 shall be used.
EXAMPLE 1: If Company A's taxable year begins on April 1,
				  1990, and ends March 30, 1991, the minimum tax would be computed on the gross
				  receipts for calendar year 1990.
EXAMPLE 2: Company B, a calendar year filer, goes out of
				  business on April 30, 1992. For income tax purposes, its taxable year begins on
				  January 1, 1992, and ends on April 30, 1992. Its minimum tax would be computed
				  on the gross receipts for calendar year 1991.
C. Minimum tax rate. In computing the minimum
				tax, a telecommunications company will use the minimum tax rate applicable to
				the calendar year as determined in subsection B above. The applicable minimum
				tax rate for each calendar year will be phased down in accordance with the rate
				schedule set forth in § 58.1-400.1 of the Code of Virginia, as follows:
Gross Receipts Earned During Minimum
Calender Year Tax Rate
1989 1.2% of gross receipts
1990 1.2% of gross receipts
1991 1.0% of gross receipts
1992 0.9% of gross receipts
1993 0.8% of gross receipts
1994 0.7% of gross receipts
1995 0.6% of gross receipts
1996 and years 0.5% of gross receipts
thereafter
D. Computation of minimum tax.
1. Generally. For each taxable year, the
				minimum tax liability of a telecommunications company is computed by
				multiplying the gross receipts for the calendar year specified in subsection B
				by the minimum tax rate specified in subsection C.
EXAMPLE: For taxable year 1991, Telecommunications Company
				  (TC) files its federal and Virginia income tax return on a fiscal year basis
				  for the year beginning July 1, 1991, and ending June 30, 1992. For taxable year
				  1991, TC bases its minimum tax liability on its gross receipts earned during
				  calendar year 1991, which is multiplied by the minimum tax rate for calendar
				  1991 (1.0%) to compute its minimum tax liability.
2. Short taxable periods. If the income tax
				return is filed for a taxable period of less than 12 months, the minimum tax
				should be computed as follows:
a. Compute the
				minimum tax as set forth in subsection D 1 above.
b. Prorate the tax by multiplying the minimum
				tax by the number of months in the short taxable period divided by 12.
EXAMPLE: The same facts as in the example above, except that
				  TC goes out of business on December 31, 1991, and files a short taxable period
				  return for the period beginning July 1, 1991, and ending December 31, 1991. TC
				  bases its minimum tax liability on its gross receipts earned during calendar
				  year 1991. The amount of gross receipts earned during calendar year 1991 is
				  multiplied by the minimum tax rate for calendar year 1991 (1.0%) and the result
				  is multiplied by 6/12 (the number of months in the short taxable period divided
				  by 12) to compute its minimum tax liability.