Tax Type
Individual Income Tax
Description
Taxpayers assert that they are not subject to tax by any government agency.
Topic
Federal Conformity
Persons Subject to Tax
Taxable Income
Date Issued
07-18-2014
July 18, 2014
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessments issued to ***** (the "Taxpayers") for the taxable years ended December 31, 2006, 2007, 2008, 2009, 2010 and 2012.
FACTS
The Taxpayers filed their Virginia individual income tax returns for the taxable years ended December 31, 2006 through 2010 and 2012, but did not pay any income tax due. The Department reviewed the returns and issued assessments based on information from the Internal Revenue Service (IRS). The assessment for the 2007 taxable year has been satisfied in full.
The Taxpayers filed an appeal, contending that they were not subject to Virginia income tax because the tax may only be levied against government employees and seamen. The Taxpayers also assert that they are not subject to tax because neither the United States nor Virginia Constitution provides for the formation of a government agency to collect tax.
DETERMINATION
Time for Filing an Appeal
Virginia Code § 58.1-1821 provides that "any person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner." [Emphasis added.] Title 23 of the Virginia Administrative Code (VAC) 10-20-165 provides additional requirements regarding the timely filing of administrative appeals. This regulation provides information to taxpayers about the process for appealing tax assessments, including how to file a complete and timely administrative appeal.
The Taxpayers filed an appeal for the taxable years at issue with the Department by letter dated January 27, 2014. Accordingly, the Department only has jurisdiction to address the appeal of the assessments issued on and after October 29, 2013. The assessments for the taxable years ended December 31, 2006, 2008, 2009, 2010 and 2012 were all issued between June 9, 2008 and July 25, 2013, well outside the 90-day period in which to file an appeal.
Protective Claim for Refund
Pursuant to Va. Code § 58.1-1824, any person who has paid an assessment of taxes administered by the Department of Taxation may preserve his judicial remedies by filing a claim for refund with the Tax Commissioner within three years of the date such tax was assessed. The Department issued the assessment for the 2007 taxable year on June 9, 2008. As such, the Taxpayers were required to file a claim for refund by June 9, 2011. The Taxpayer's claim was not filed until January 27, 2014, well beyond the three year period allowed by Va. Code § 58.1-1824.
CONCLUSION
The Taxpayer's application for correction was filed beyond the statutory period under which the Department is able to act on such appeal. Accordingly, the assessments for the for the taxable years ended December 31, 2006, 2008, 2009, 2010 and 2012 are correct and remain due and payable. Updated bills will be issued shortly, which will include accrued interest. Payment of the assessments should be made within 30 days of the bill date in order to avoid the accrual of additional interest. In addition, the Taxpayers' request for a refund of tax paid for the 2007 taxable year is denied.
Notwithstanding the jurisdictional issues, the Taxpayers' claim that their income is not subject to Virginia taxation has no basis in fact or Virginia law. An individual who fails to file income tax returns based solely on such a claim has intentionally understated his or her income tax liability with the intent to evade tax and is subject to a 100% fraud penalty pursuant to Va. Code § 58.1-308.
The Code of Virginia and regulation sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5617686074.B
Rulings of the Tax Commissioner