Document Number
03-34
Tax Type
Individual Income Tax
Description
Individual subject to Virginia Income tax
Topic
Returns and Payments
Taxable Income
Date Issued
04-11-2003

April 11, 2003


Re: § 58.1-1821 Application: Individual Income Tax


Dear *******************:

This will reply to your letter concerning the Department's request for filing a 1999 taxable year Virginia individual income tax return. Your letter is being treated as an application for correction pursuant to Va. Code § 58.1-1821.
FACTS

You are or were a Virginia resident who received income from employment during 1999. You state that you did not file a 1999 taxable year federal income tax return because (1) the Internal Revenue Code ("IRC") states that income tax has to be paid on the basis of a return, but does not establish an income tax liability, and (2) the Privacy Act Notice does not require you to file. You further state that you had no income for 1999 because the word "income" is not defined in the IRC.

The Department has received information from the Internal Revenue Service ("IRS") indicating that you had income for the 1999 taxable year. Letters were sent to you requesting that you file the proper Virginia income tax returns or provide an explanation concerning why your income was not taxable. One letter identified both income sources and amounts. When an adequate response was not received, the Department issued an assessment.
RULING

Va. Code § 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 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 Va. Code § 58.1-322.

Va. Code § 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 Va. Code § 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 you had no income 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 Va. Code § 58.1-308.

Additionally, anyone who files an application for correction pursuant to Va. Code § 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 applicable law cited above and the information presented, there is no basis to find that you are not subject to Virginia income taxation on your income. You are hereby requested to file an individual income tax return for the 1999 taxable year and any other delinquent income tax returns within 45 days from the date of this letter. Refusal to file the requested returns or any future returns in accordance with Virginia law by continuing to make the claims you have stated in your letter would justify the 100% fraud penalty and other legal actions to collect the proper tax.

Returns or payments may be sent to the attention of *************** in the Department's Office of Policy and Administration, Appeals and Rulings, Post Office Box 1880, Richmond, Virginia 23218-1880. Copies of the Code of Virginia sections cited are enclosed for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have further questions, *************** may be contacted at ***************************.
                • Sincerely,


                • Kenneth W. Thorson
                  Tax Commissioner



AR/43442E

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46