Tax Type
Individual Income Tax
Description
Individual subject to Virginia Income tax
Topic
Constitutional Provisions
Persons Subject to Tax
Date Issued
10-31-2001
October 31, 2001
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****
This will reply to your letter concerning your Virginia individual income tax assessments. Your letter is being handled as an application pursuant to Code of Virginia § 58.1-1821, copy enclosed. I apologize for the delay in the department's response.
FACTS
You are a Virginia resident who received wages from employment. You state that you filed a Declaration of Expatriation with President Clinton in 1998, expatriating yourself from the corporate United States and returning to the Republic of the several States. You further stated that you "are no longer a juristic person under [Virginia's] statutes," and that "any or all wages, commissions, salaries, etc., are received by me without prejudice."
Based on information received from the Internal Revenue Service for taxable years 1995 and 1996, the department determined that you may have been liable for additional Virginia income tax for taxable years 1995, 1996 and 1998. A review of our records indicated that you had not filed a Virginia income tax return for taxable year 1998. As you did not provide Virginia income tax returns or other information showing that the information provided by the Internal Revenue Service was incorrect, assessments were issued based on the available information as set forth in the department's letters.
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 Internal Revenue Service that will help in determining the resident's tax liability.
Your Declaration of Expatriation has no basis in fact or Virginia law that would exempt your wages from Virginia taxation. 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 (copy enclosed) 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 the assessments issued or for you to be exempted from Virginia individual income tax. You must file the appropriate Virginia tax returns within 60 days from the date of this letter. Additionally, any Virginia income tax returns that have not been filed based on these claims should be filed within the next 60 days. 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.
Returns and tax payments should be sent to the attention of ***** Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions regarding this matter, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/29599E
Rulings of the Tax Commissioner