Tax Type
Individual Income Tax
Description
Individual subject to Virginia Income tax
Topic
Basis of Tax
Persons Subject to Tax
Date Issued
09-09-2004
September 9, 2004
Re: § 58.1-1821 Application: Individual Income Tax
Dear ******:
This will reply to your letter regarding your Virginia individual income tax assessment for the taxable year 2000. I apologize for the delay in responding to your letter.
FACTS
The Department received information from the Internal Revenue Service ("IRS") indicating that you had income for the taxable year 2000. A letter was 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 for the taxable year 2000.
You are a Virginia resident who received income from employment. You state that you exchanged your personal labor in taxable year 2000 for earned revenue. You contend that your income is not "constitutional" income, you have no federal adjusted gross income ("FAGI"), and, therefore, you owe no Virginia income tax for the taxable year 2000.
DETERMINATION
Virginia 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 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 Va. Code § 58.1-322.
Virginia Code § 58.1-341 provides that a Virginia resident, who is required to file a federal individual income tax return, is also required to file a Virginia individual 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 individual 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 income from employment is 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 is subject to a 100% fraud penalty pursuant to Va. Code § 58.1-308.
Additionally, one 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. You are requested to file a Virginia individual income tax return for the 2000 taxable year and for any other delinquent income tax returns within 60 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: ***** Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203.
The Code of Virginia sections cited in this letter, along with other reference documents, are available on-line 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, please contact ***** at *****.
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- Sincerely,
- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/49539E
COMMONWEALTH o f VIRGINIA
Department of Taxation
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- TO WHOM IT MAY CONCERN:
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Under the authority of §§ 58.1-1 and 58.1-110 of the Code of Virginia, I hereby delegate to Gerald Gwaltney, Deputy Tax Commissioner, the authority to sign for me, in my absence, 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 Treasury Board.
This authority shall become effective January 10, 2003, and shall remain in effect until revoked.
Done at Richmond, Virginia, this 13th day of January 2003.
Kenneth W. Thorson
Tax Commissioner
Acknowledgement: Date:
Done this 13th day of January 2003 in the City of Richmond, State of Virginia. My
commission expires 9-30-2003.
Sylvia J. Wesson
Notary Public Notary Seal:
Rulings of the Tax Commissioner