Tax Type
Individual Income Tax
Description
Nonfiler; Estimated tax liability based on I.R.S.information
Topic
Taxpayers
Date Issued
10-05-2000
October 5, 2000
Re: § 58.1-1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which you contest the assessment of income tax, penalty and interest against * * * (the "Taxpayer") for the 1994 taxable year. I apologize for the delay in response.
FACTS
The Taxpayer did not file a Virginia income tax return for the 1994 taxable year. The department estimated the Taxpayer's liability based on information provided by the Internal Revenue Service ("IRS"), and issued an assessment for tax, penalty and interest.
The Taxpayer contends that the department: 1) erred in its determination of his 1994 tax liability; 2) erred in its determination of his gross income; and 3) erred in disallowing the Taxpayer's personal and business exemptions. Further, the Taxpayer requests that the department provide him with all evidence upon which it bases its assessment, and copies of any administrative or procedural rules governing a protest of an assessment.
DETERMINATION
Code of Virginia § 58.1-341 (copy enclosed) provides that a Virginia resident who is required to file a federal income tax return is also required to file a Virginia income tax return, unless the resident is exempt from filing under Code of Virginia § 58.1-321. (copy enclosed). When a resident does not file a Virginia return, § 6103 (d) of the Internal Revenue Code ("IRC") (copy enclosed) authorizes the department to obtain information from the IRS that will help in determining the resident's tax liability. The Agreement on Coordination of Tax Administration (the "Exchange Agreement") (copy enclosed) governs the exchange of tax information between the IRS and the department. To implement the Exchange Agreement, the IRS is authorized to periodically transmit to the department reports indicating the federal audits or examinations that have been conducted. The department obtained information from the IRS on your account in this manner. A copy of this information has previously been provided to you.
You contend that the department erred in calculating your tax Virginia liability, gross income and personal and business exemptions. Our records indicate that you have not filed a 1994 Virginia income tax return despite the department's requests. Pursuant to Code of Virginia § 58.1-111 (copy enclosed) the department has the authority to estimate tax liability from any information that it possesses when a person fails or refuses to file a valid return. Code of Virginia § 58.1-205 (copy enclosed) states that in any proceeding relating to the interpretation of the tax laws of the Commonwealth of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer. Because the Taxpayer has not provided the requested information, the assessment of tax for the 1994 taxable year is based on information it received from the IRS and is presumed correct.
The procedure for appealing the department's assessment is contained in Code of Virginia § 58.1-1821 (copy enclosed). We have previously sent you a copy of the Virginia Taxpayer's Bill of Rights. This document further explains the procedure for taxpayers who contest assessments of Virginia tax. Pursuant to your request, I am enclosing another copy.
Accordingly, based on the information provided, the department must uphold the assessment of tax, penalty and interest against you for the 1994 taxable year. However, if you can provide evidence as to your actual liability, the assessment may be adjusted. Please provide such evidence to * * * RAP Unit, Office of Compliance, Virginia Department of Taxation, P.O. Box 5610, Richmond, Virginia 23220 or remit the amount on the enclosed schedule to * * * at Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880. If you do not provide the requested evidence or remit the amount on the enclosed schedule within 30 days, additional interest will accrue and collection action will commence. If you have any questions about this determination, you may contact * * * at * * *
Danny M. Payne
Tax Commissioner
Re: § 58.1-1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which you contest the assessment of income tax, penalty and interest against * * * (the "Taxpayer") for the 1994 taxable year. I apologize for the delay in response.
FACTS
The Taxpayer did not file a Virginia income tax return for the 1994 taxable year. The department estimated the Taxpayer's liability based on information provided by the Internal Revenue Service ("IRS"), and issued an assessment for tax, penalty and interest.
The Taxpayer contends that the department: 1) erred in its determination of his 1994 tax liability; 2) erred in its determination of his gross income; and 3) erred in disallowing the Taxpayer's personal and business exemptions. Further, the Taxpayer requests that the department provide him with all evidence upon which it bases its assessment, and copies of any administrative or procedural rules governing a protest of an assessment.
DETERMINATION
Code of Virginia § 58.1-341 (copy enclosed) provides that a Virginia resident who is required to file a federal income tax return is also required to file a Virginia income tax return, unless the resident is exempt from filing under Code of Virginia § 58.1-321. (copy enclosed). When a resident does not file a Virginia return, § 6103 (d) of the Internal Revenue Code ("IRC") (copy enclosed) authorizes the department to obtain information from the IRS that will help in determining the resident's tax liability. The Agreement on Coordination of Tax Administration (the "Exchange Agreement") (copy enclosed) governs the exchange of tax information between the IRS and the department. To implement the Exchange Agreement, the IRS is authorized to periodically transmit to the department reports indicating the federal audits or examinations that have been conducted. The department obtained information from the IRS on your account in this manner. A copy of this information has previously been provided to you.
You contend that the department erred in calculating your tax Virginia liability, gross income and personal and business exemptions. Our records indicate that you have not filed a 1994 Virginia income tax return despite the department's requests. Pursuant to Code of Virginia § 58.1-111 (copy enclosed) the department has the authority to estimate tax liability from any information that it possesses when a person fails or refuses to file a valid return. Code of Virginia § 58.1-205 (copy enclosed) states that in any proceeding relating to the interpretation of the tax laws of the Commonwealth of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer. Because the Taxpayer has not provided the requested information, the assessment of tax for the 1994 taxable year is based on information it received from the IRS and is presumed correct.
The procedure for appealing the department's assessment is contained in Code of Virginia § 58.1-1821 (copy enclosed). We have previously sent you a copy of the Virginia Taxpayer's Bill of Rights. This document further explains the procedure for taxpayers who contest assessments of Virginia tax. Pursuant to your request, I am enclosing another copy.
Accordingly, based on the information provided, the department must uphold the assessment of tax, penalty and interest against you for the 1994 taxable year. However, if you can provide evidence as to your actual liability, the assessment may be adjusted. Please provide such evidence to * * * RAP Unit, Office of Compliance, Virginia Department of Taxation, P.O. Box 5610, Richmond, Virginia 23220 or remit the amount on the enclosed schedule to * * * at Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880. If you do not provide the requested evidence or remit the amount on the enclosed schedule within 30 days, additional interest will accrue and collection action will commence. If you have any questions about this determination, you may contact * * * at * * *
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner