Tax Type
Individual Income Tax
Description
Income from employment is not subject to Virginia taxation
Topic
Persons Subject to Tax
Date Issued
10-01-2004
October 1, 2004
Re: § 58.1-1821 Application: Individual Income Tax
Dear *************:
This will reply to your letter contesting the Virginia individual income tax assessments issued to ***** (the "Taxpayer") for the taxable years ended December 31, 1991 through 1995. I apologize for the delay in responding to your letter.
FACTS
Information obtained from the Internal Revenue Service ("IRS") indicated that the Taxpayer, a Virginia resident, received taxable income for the 1991 through 1995 taxable years. A review of the Department's records indicated the Taxpayer had not filed Virginia individual income tax returns for these taxable years. The Taxpayer did not provide Virginia income tax returns or other information showing that the information provided by the IRS was incorrect; therefore, assessments were issued based on the available information. The Taxpayer asserts that the Department cannot make assessments of Virginia income tax liability because the IRS has not responded to his assertions that there are "problems" with its records.
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 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. When a resident does not file a Virginia return, IRC § 6103(d) authorizes the Department to obtain information from the IRS that will enable the Department to determine the resident's tax liability. Additionally, even if a resident is not required to file a federal return but has sufficient Virginia adjusted gross income that exceeds the filing threshold, the resident is required to file a Virginia income tax return pursuant to Va. Code § 58.1-341.
The Tax Commissioner previously addressed the Taxpayer's liability with respect to the 1991 taxable year in Public Document ("P.D.") 95-180 (7/7/95). In its appeal, the Taxpayer claimed to be a nonresident alien, a "Judicial Power State Citizen (sovereign) of the Union of States of the United States of America," while the Department's information and his own documents clearly indicate he resided in Virginia. The Tax Commissioner determined that the Taxpayer had not provided adequate documentation to indicate that he was not subject to tax as a Virginia resident or that the assessment was incorrect.
In the appeal at hand, the Taxpayer included a statement that all of his "earnings and other forms of income have been from private enterprise in Virginia and/or other States of the Union." The Taxpayer further asserts that the Department's assessments are based on inaccurate federal records. The Taxpayer, however, has provided no information to show that the Department's assessments in question are incorrect.
In 1998, the U.S. District Court, Eastern District of Virginia, found that the Taxpayer had failed to file federal individual income tax returns for the 1991 through 1995 taxable years. Further, the assessments for the 1992 through 1995 taxable years were issued after the Taxpayer failed to file income tax returns as directed by the Tax Commissioner in P.D. 95-180.
The Department received information from the IRS indicating the Taxpayer received income while residing in Virginia. By various letters, the Department notified the Taxpayer of this fact and requested that he file Virginia individual income tax returns. Pursuant to Va. Code § 58.1-111, the Department has the authority to estimate tax liability when a taxpayer does not file a valid return. Furthermore, Va. Code § 58.1-205 provides that any assessment shall be deemed prima facie correct. Additionally, Va. Code § 58.1-312 provides that an assessment can be issued at any time if a return is not filed.
The Taxpayer has failed to file Virginia income tax returns or provide objective evidence as to the correct liability for the taxable years at issue. Accordingly, based on the information presented and for the reasons stated in my previous letter and the clear provisions of state law, there is no alternative but to uphold the assessments as issued. Please contact ***** in the Collections Unit at ***** to determine the current balance due for the taxable years 1991 through 1995 and to arrange a payment plan, if needed. Payment should be made to the Virginia Department of Taxation, 3600 West Broad Street, Suite 160, Richmond, Virginia 23230, Attention: *****.
Copies of the Code of Virginia sections and the public document cited are enclosed for reference purposes. These and other reference documents are also 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 any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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Kenneth W. Thorson
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- Tax Commissioner
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AR/46683E
Rulings of the Tax Commissioner