Tax Type
Individual Income Tax
Description
Court Case: Pauley vs. Department of Taxation
Topic
Computation of Income
Subtractions and Exclusions
Date Issued
06-01-2001
VIRGINIA:
IN THE CIRCUIT COURT OF THE CITY OF RICHMOND
John Marshall Courts Building
John Marshall Courts Building
STANLEY F. and
DOROTHY A. PAULEY,
Applicants,
v. Law No. LF-2597-4 / 01-1447
VIRGINIA DEPARTMENT OF TAXATION,
Defendant.
ORDER
This matter came to be heard before this Court on the 2nd day of April 2001. After hearing arguments and reviewing the stipulations and memoranda filed by counsel, the Court issued a letter opinion dated May 1, 2001, the content of which is hereby incorporated by reference.
Upon consideration of the evidence and the arguments of counsel, it is the ruling of this Court that the Application For Refund be denied and it is therefore,
ADJUDGED, ORDERED AND DECREED that Applicants' Application For Refund be, and the same hereby is, denied.
And it further appearing to this Court that the parties have stipulated that the Applicants claimed a credit for tax paid to Utah on their 1996 Virginia income tax return and that the Applicants are not entitled to such credit, and that as a result the Applicants have assessed themselves on their 1996 Virginia income tax return less than the proper amount of tax and have paid less than the proper amount of tax, it is the ruling of this Court that the Applicants pay the proper amount of Virginia income tax for the taxable year 1996 and it is therefore,
ADJUDGED, ORDERED AND DECREED that the Applicants pay to the Defendant the sum of $4,951 tax plus interest at the rates mandated by § 58.1-15 from May 1, 1997, through May 1, 2001, in the amount of $2,062.34 for a total of $7,013.34.
A copy of this ORDER shall be certified by the Clerk of this Court to all counsel of record.
6/1/2001
ENTER:
Judge
DATE:
I ASK FOR THIS:
p.q.
John P. Josephs, Jr. (VSB No. 17890)
Assistant Attorney General
900 East Main Street
Richmond, Virginia 23219
(804) 786-3238
(Fax) (804) 786-0781
Counsel for Defendant
P.D. 01-86
SEEN AND OBJECTED TO
For the reasons stated in the record and below:
Objections include, but are not limited to, the following:
1. The court's decision erroneously holds that the state franchise and/or excise taxes paid by the Pauleys to the states of California, Michigan, New York, Tennessee, Texas, and Utah, directly or on their behalf by their corporation, Carpenter & Co., do not qualify for the Virginia Code § 58.1-332 tax credit for taxes paid to other states.
2. The court's holding violates the Commerce Clause of the United States Constitution (Art. 1, § 8, cl.3) as it permits Virginia to unconstitutionally discriminate against interstate commerce resulting in Virginia resident shareholders paying a higher level of tax than nonresident shareholders on the same interstate commerce income or transaction. See Boston Stock Exchange v. State Tax Commission, 429 U.S. 318 (1977).
3. The court erroneously concluded that the taxes paid by the Pauleys, directly or on their behalf by their corporation, to the states of California, Michigan, New York, Tennessee, Texas, and Utah were not income taxes.
p.q.
Craig D. Bell (VSB No. 30909)
McGuire, Woods, Battle & Boothe LLP
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
804/775-1179
804/698-2160 (facsimile)
Counsel for Applicants
Rulings of the Tax Commissioner