Tax Type
Individual Income Tax
Description
Virginia resident is subject to taxation by Virginia
Topic
Basis of Tax
Collection of Delinquent Tax
Persons Subject to Tax
Date Issued
04-29-2002
April 29, 2002
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letters regarding your Virginia individual income tax assessments for the taxable years 1996 and 1997. I apologize for the delay in responding to your letters.
FACTS
You are a Virginia resident who received wages from employment. You contend that your wages are not "gross income" according to the Internal Revenue Code, that you had no federal adjusted gross income and, therefore, you are not subject to Virginia tax on your wages. The department, however, received information from the Internal Revenue Service "IRS" indicating that you had income for the taxable years 1996 and 1997. Letters were sent to you requesting that you file the proper Virginia returns or provide an explanation concerning why your income was not taxable. When an adequate response was not received, the department issued assessments.
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 IRS that will help in determining the resident's tax liability.
Your claim that your wages are not "gross income" and 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. 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 while such applications for correction are being considered.
Based on the information presented, there is no basis to exempt your income from Virginia income tax. If payments of the assessments for the taxable years 1996 and 1997 are not received within 60 days, collection actions will resume. Payment of the assessments should be sent to the attention of ***** Policy Development, Office of Policy and Administration, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. A summary of your outstanding assessments is enclosed. In the future, any Virginia income tax return subsequent to the taxable year 1997 that you refuse to file because of claims similar to those you have currently made will not be acceptable. Such refusal to file your returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax.
Copies of the Code of Virginia, regulations and public documents are 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, contact ***** at *****.
Your letter has been handled pursuant to Code of Virginia § 58.1-1821. If you wish to appeal this matter further, there is a judicial remedy under Code of Virginia § 58.1-1825. 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
PD/23379N
Rulings of the Tax Commissioner