Tax Type
Individual Income Tax
Description
Residency; Proceedings for the Collection of Tax
Topic
Collection of Tax
Residency
Taxable Income
Taxpayers' Remedies
Date Issued
08-23-2000
August 23, 2000
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letters concerning your Virginia individual income tax assessments for the taxable years 1987, 1988, 1989, and 1993. Your letters are being handled as an application pursuant to Code of Virginia § 58.1-1821, copy enclosed. I apologize for the delay in responding to your letters.
FACTS
You state that you have not been engaged in a taxable activity in Virginia or within a trade or business within the United States involving a taxable activity. Further, you contend that Title 58.1 of the Code of Virginia, which authorizes the Department of Taxation to administer and assess taxes, does not require Citizens of the Commonwealth of Virginia to file and pay income taxes. Additionally, while Article X of the Virginia Constitution does delegate the authority to impose taxes upon the residents of the Commonwealth, it does not impose authority to require its citizens to file and pay income taxes. As a result, you contend that at you are not liable for the Virginia individual income tax assessments issued for the taxable years 1987, 1988, 1989, and 1993.
DETERMINATION
Article X of the Constitution of Virginia grants the constitutional authority for the Commonwealth of Virginia to levy the taxes set forth in Title 58.1 of the Code of Virginia. Code of Virginia § 58.1-301, copy enclosed, provides that terminology and references used in Title 58.1 of the Code of Virginia will have the same meaning as provided in the Internal Revenue Code unless a different meaning is clearly required. The Virginia individual income tax "conforms" to federal law as it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI). To the extent that income is included in FAGI, it is also subject to taxation by Virginia.
The citizenship of an individual is typically not relevant in determining residency. Code of Virginia § 58.1-302, copy enclosed, specifically defines "resident" to include every person domiciled in Virginia and every person who maintains a place of abode in Virginia for an aggregate of more than 183 days of the taxable year. Code of Virginia § 58.1-341, copy enclosed, provides that a Virginia resident, who is required to file a federal income tax return, must file a Virginia income tax return, unless the resident is exempt from filing under Code of Virginia § 58.1-321, copy enclosed. Additionally, under Code of Virginia § 58.1-321, even if a resident is not required to file a federal income tax return, the resident is required to file a Virginia income tax return when the Virginia adjusted gross income exceeds the filing threshold. In the instance where a resident does not file a return, Code of Virginia § 58.1-312, copy enclosed, provides that income tax may be assessed at any time. As you are a Virginia resident, your income is subject to Virginia taxation. Consequently, you are required to file Virginia income tax returns and pay the proper tax.
The department received information from the Internal Revenue Service and determined that you may have been liable for Virginia income tax. A review of our records indicated that you had not filed Virginia income tax returns for the taxable years 1987, 1988, 1989, and 1993. At least seven letters were sent to you for those years, requesting that the proper Virginia income tax returns be filed or a explanation be given concerning the reasons why you were not required to file Virginia income tax returns. A letter dated October 15, 1993, for the taxable year 1987, indicated that a federal audit had been conducted and your income was subject to federal taxation. You were provided with a copy of the federal audit. When you did not provide an adequate response to any these letters, the federal information was used to issue assessments for tax, penalty, and interest.
You have not provided sufficient documentation to verify that you are not subject to tax as a Virginia resident for any of the taxable years mentioned. The explanations and claims you have made for not being liable for Virginia tax have no basis in fact or Virginia law. A person who refuses to file Virginia income tax returns, or who files improper Virginia income tax returns based solely on such claims has intentionally understated his income tax liability with the intent to evade tax, and would be subject to a 100% fraud penalty pursuant to Code of Virginia § 58.1-308, copy enclosed. Furthermore, one who files an application for correction of assessments pursuant to Code of Virginia § 58.1-1821, based solely on such claims has no purpose other than to hinder and delay collection of the proper tax liability. Consequently, collection activity need not be suspended while such applications for correction are being considered.
Based on the information provided, the department has properly applied the provisions of Title 58.1 of the Code of Virginia to your case, and there is no basis to abate your Virginia individual income tax assessment for the taxable years 1987, 1988, 1989, and 1993. You are subject to Virginia taxation and must file Virginia income tax returns for any taxable year, including years subsequent to 1993, for which the proper Virginia income tax returns have not been filed. Your continued refusal to comply with Virginia law in this matter will subject you to an assessment of tax, the 100% fraud penalty, late penalties, and applicable interest. Additionally, you would be subject to any legal actions necessary to collect the proper tax. Your case, however, will be held in abeyance for 60 days awaiting the filing of your Virginia income tax returns. Please submit your Virginia income tax returns along with the payment of any liability to the attention of *****, Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have questions, ***** may be contacted at *****.
If these Virginia income tax returns are not provided within 60 days, your administrative remedies with the department will be exhausted and collection action will resume. Your alternative would be to pursue a judicial remedy by applying to the circuit court for relief pursuant to Code of Virginia § 58.1-1825, copy enclosed. The application, however, must be filed within three years from the date the assessment was made or within one year from the date of this determination letter. Additionally, the assessment must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21557/N
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letters concerning your Virginia individual income tax assessments for the taxable years 1987, 1988, 1989, and 1993. Your letters are being handled as an application pursuant to Code of Virginia § 58.1-1821, copy enclosed. I apologize for the delay in responding to your letters.
FACTS
You state that you have not been engaged in a taxable activity in Virginia or within a trade or business within the United States involving a taxable activity. Further, you contend that Title 58.1 of the Code of Virginia, which authorizes the Department of Taxation to administer and assess taxes, does not require Citizens of the Commonwealth of Virginia to file and pay income taxes. Additionally, while Article X of the Virginia Constitution does delegate the authority to impose taxes upon the residents of the Commonwealth, it does not impose authority to require its citizens to file and pay income taxes. As a result, you contend that at you are not liable for the Virginia individual income tax assessments issued for the taxable years 1987, 1988, 1989, and 1993.
DETERMINATION
Article X of the Constitution of Virginia grants the constitutional authority for the Commonwealth of Virginia to levy the taxes set forth in Title 58.1 of the Code of Virginia. Code of Virginia § 58.1-301, copy enclosed, provides that terminology and references used in Title 58.1 of the Code of Virginia will have the same meaning as provided in the Internal Revenue Code unless a different meaning is clearly required. The Virginia individual income tax "conforms" to federal law as it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI). To the extent that income is included in FAGI, it is also subject to taxation by Virginia.
The citizenship of an individual is typically not relevant in determining residency. Code of Virginia § 58.1-302, copy enclosed, specifically defines "resident" to include every person domiciled in Virginia and every person who maintains a place of abode in Virginia for an aggregate of more than 183 days of the taxable year. Code of Virginia § 58.1-341, copy enclosed, provides that a Virginia resident, who is required to file a federal income tax return, must file a Virginia income tax return, unless the resident is exempt from filing under Code of Virginia § 58.1-321, copy enclosed. Additionally, under Code of Virginia § 58.1-321, even if a resident is not required to file a federal income tax return, the resident is required to file a Virginia income tax return when the Virginia adjusted gross income exceeds the filing threshold. In the instance where a resident does not file a return, Code of Virginia § 58.1-312, copy enclosed, provides that income tax may be assessed at any time. As you are a Virginia resident, your income is subject to Virginia taxation. Consequently, you are required to file Virginia income tax returns and pay the proper tax.
The department received information from the Internal Revenue Service and determined that you may have been liable for Virginia income tax. A review of our records indicated that you had not filed Virginia income tax returns for the taxable years 1987, 1988, 1989, and 1993. At least seven letters were sent to you for those years, requesting that the proper Virginia income tax returns be filed or a explanation be given concerning the reasons why you were not required to file Virginia income tax returns. A letter dated October 15, 1993, for the taxable year 1987, indicated that a federal audit had been conducted and your income was subject to federal taxation. You were provided with a copy of the federal audit. When you did not provide an adequate response to any these letters, the federal information was used to issue assessments for tax, penalty, and interest.
You have not provided sufficient documentation to verify that you are not subject to tax as a Virginia resident for any of the taxable years mentioned. The explanations and claims you have made for not being liable for Virginia tax have no basis in fact or Virginia law. A person who refuses to file Virginia income tax returns, or who files improper Virginia income tax returns based solely on such claims has intentionally understated his income tax liability with the intent to evade tax, and would be subject to a 100% fraud penalty pursuant to Code of Virginia § 58.1-308, copy enclosed. Furthermore, one who files an application for correction of assessments pursuant to Code of Virginia § 58.1-1821, based solely on such claims has no purpose other than to hinder and delay collection of the proper tax liability. Consequently, collection activity need not be suspended while such applications for correction are being considered.
Based on the information provided, the department has properly applied the provisions of Title 58.1 of the Code of Virginia to your case, and there is no basis to abate your Virginia individual income tax assessment for the taxable years 1987, 1988, 1989, and 1993. You are subject to Virginia taxation and must file Virginia income tax returns for any taxable year, including years subsequent to 1993, for which the proper Virginia income tax returns have not been filed. Your continued refusal to comply with Virginia law in this matter will subject you to an assessment of tax, the 100% fraud penalty, late penalties, and applicable interest. Additionally, you would be subject to any legal actions necessary to collect the proper tax. Your case, however, will be held in abeyance for 60 days awaiting the filing of your Virginia income tax returns. Please submit your Virginia income tax returns along with the payment of any liability to the attention of *****, Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have questions, ***** may be contacted at *****.
If these Virginia income tax returns are not provided within 60 days, your administrative remedies with the department will be exhausted and collection action will resume. Your alternative would be to pursue a judicial remedy by applying to the circuit court for relief pursuant to Code of Virginia § 58.1-1825, copy enclosed. The application, however, must be filed within three years from the date the assessment was made or within one year from the date of this determination letter. Additionally, the assessment must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21557/N
Rulings of the Tax Commissioner