Tax Type
Individual Income Tax
Description
Request for Abatement; Claims of No Authority to Tax
Topic
Basis of Tax
Computation of Tax
Constitutional Provisions
Persons Subject to Tax
Date Issued
09-11-2001
September 11, 2001
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****
This will reply to your letter regarding your Virginia individual income tax returns for the taxable years 1988 and 1996. Because of the circumstances involved, I am handling your case as an appeal pursuant to Code of Virginia § 58.1-1821 (copy enclosed). I apologize for the delay in responding to your letter.
FACTS
You are a Virginia resident who received wages from employment. You state, however, that your wages are not subject to federal or Virginia income tax. Consequently, you state that you are not required to file federal or Virginia income tax returns for the taxable years 1988 and 1996. The department has issued assessments for both of those years because you have not filed Virginia income tax returns.
DETERMINATION
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 (IRC) unless a different meaning is clearly required. For individual income tax purposes, Virginia "conforms" to federal law, in that it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI). Income included in the FAGI of a Virginia resident is subject to taxation by Virginia, unless it is specifically exempt as a Virginia modification pursuant to Code of Virginia § 58.1-322 (copy enclosed).
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). Additionally, even if a resident is not required to file a federal return but has Virginia adjusted gross income that exceeds the filing threshold, the resident is required to file a Virginia income tax return. When a resident does not file a proper Virginia return, IRC 6103 (d) (copy enclosed) authorizes the department to obtain information from the IRS that will help in determining the resident's tax liability.
Your claim that your wages are not subject to Virginia taxation has no basis in fact or Virginia law. Further, a person 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 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 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 on outstanding assessments while such applications for correction are being considered.
Based on the information presented, there is no basis to abate your assessments for the taxable years 1988 and 1996. A summary of your assessments is shown on the enclosed schedule. You must pay the balance due on your assessments or file the appropriate Virginia tax returns. If the payment for the assessments or the tax returns is not received within 60 days, collection actions will resume. Additionally, any Virginia income tax returns that have not been filed for any other taxable years must be filed within the next 60 days. Your continued refusal to file any of your returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. Tax payments and returns should be sent to the attention of ***** office of Policy Development, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, ***** may be contacted at *****.
If you wish to appeal this matter further, there is a judicial remedy under Code of Virginia § 58.1-1825 (copy enclosed). The court application must be filed within three years from the date of the assessments or one year from the date of this letter, whichever is the later. The assessments, however, must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner