Tax Type
Individual Income Tax
Description
Gross income; ,requirement to file a Virginia income tax return
Topic
Basis of Tax
Persons Subject to Tax
Withholding of Tax
Date Issued
04-12-2002
April 12, 2002
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter regarding your Virginia individual income tax return for the 1998 taxable year. Based on the circumstances involved, your letter has been treated as an appeal pursuant to Code of Virginia § 58.1-1821. I apologize for the delay in responding to your letter.
FACTS
You are a Virginia resident who received wages from employment. You contend that your wages are not "gross income" as defined in the Internal Revenue Code. Consequently, you believe that you are not subject to federal or Virginia income tax on your wages and are not required to file federal or Virginia income tax returns. You are requesting that all monies withheld for Virginia tax purposes be refunded.
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 ("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.
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. 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) authorizes the department to obtain information from the Internal Revenue Service that will help in determining the resident's tax liability.
Your claim that your wages are not considered "gross income" has no basis in fact or Virginia law. 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 § 58.1308. 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 refund taxes withheld from your wages for the 1998 taxable year. Additionally, any Virginia income tax returns that have not been filed subsequent to the 1997 taxable year must be filed within the next 60 days. Your continued refusal to file the appropriate income tax returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. Tax returns should be sent to the attention of ***** Office of Policy and Administration, Appeals and Rulings, Post Office Box 1880, Richmond, Virginia 23218-1880.
Copies of the Code of Virginia, regulations and public documents cited are included for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you have further questions, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/24230P
Rulings of the Tax Commissioner