Tax Type
Individual Income Tax
Description
Virginia resident claiming not required to file individual return
Topic
Basis of Tax
Persons Subject to Tax
Date Issued
12-20-2001
December 20, 2001
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****
This will reply to your letter concerning the department's Virginia individual income tax assessments issued to you for the taxable years 1997 and 1998. Your letter has been treated as an application for correction of an erroneous assessment pursuant to Code of Virginia § 58.1-1821. 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 are not required to file a Virginia individual income tax return. The department, however, received information from the Internal Revenue Service ("IRS") indicating that you had income from the taxable years 1997 and 1998. Letters were sent to you requesting that you file the proper Virginia individual income tax return or provide an explanation concerning why your income was not taxable. When an adequate response was not received, the department issued an assessment based on the information provided by the IRS. You request that the department provide you with information concerning its authorization.
DETERMINATION
Code of Virginia § 58.1-301 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 because 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.
Code of Virginia § 58.1-341 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. Code of Virginia § 58.1-302 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. 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, Internal Revenue Code § 6103(d) authorizes the department to obtain information from the Internal Revenue Service that will help in determining the resident's tax liability.
You have provided no documentation to show that you were not subject to income tax as a Virginia resident for the 1997 or 1998 taxable years. 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 is subject to a 100% fraud penalty pursuant to Code of Virginia § 58.1-308, copy enclosed. Further, 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 provided, there is no basis to abate the Virginia individual income tax assessments for the taxable years 1997 or 1998. As a Virginia resident, you are subject to Virginia taxation and must file a Virginia income tax return for both of these taxable years and for any taxable year, including years prior to or subsequent, for which the proper Virginia income tax returns have not been filed. Further action in your case will be held in abeyance for 60 days awaiting the filing of your 1997 and 1998 Virginia income tax returns.
Please submit your Virginia individual income tax returns along with the payment of any liability within 60 days from the date of this letter 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 the returns are not received within the time allowed, the assessments for taxable years 1997 and 1998 will become immediately due and payable, and collection action will resume.
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 later. The assessments, however, must be paid or the appropriate bond posted before the court application is deemed filed.
If you have any questions regarding this matter, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/333691E
TO WHOM IT MAY CONCERN
Under the authority of Section 58.1-1 of the Code of Virginia, I hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner