Tax Type
Individual Income Tax
Description
Individual subject to Virginia Income tax
Topic
Persons Subject to Tax
Taxable Income
Date Issued
11-19-2004
November 19, 2004
Re: § 58.1-1821 Application: Individual Income Tax
Dear ********:
This will reply to your letters concerning the Virginia individual income tax assessments issued to you for the 1995 and 2000 taxable years. Your letter is being treated as an application for correction pursuant to Va. Code § 58.1-1821.
FACTS
You are a Virginia resident who received income from employment. The Department received information from the Internal Revenue Service ("IRS") indicating that you had income for the 1995 and 2000 taxable years. Letters were sent 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 for the 1995 and 2000 taxable years. You state you do not have any obligation to declare any wages as income.
RULING
1995 Taxable Year
The assessment for the 1995 taxable year was issued January 28, 1998. Pursuant to Va. Code § 58.1-1821, any person who is assessed a tax may apply for relief from the Tax Commissioner within 90 days of the notice of assessment. Further, under Va. Code § 58.1-1825, any Taxpayer may petition the courts for correction of an assessment. The application must be filed with the court within three years from the date of assessment or one year from the Tax Commissioner's determination, whichever is later.
Your application for correction of the assessment for the 1995 taxable year was filed with the Department on October 15, 2003, well beyond the 90-day limitations period for filing such an appeal. Accordingly, the Department has no authority to address your appeal, and the assessment for the 1995 taxable year remains due and payable. You should also note that the three-year limitations period for filing an application to the circuit court for correction of an erroneous assessment expired on January 28, 2001.
2000 Taxable Year
Virginia Code § 58.1-301 provides that terminology and references used in Title 58.1 of the Code of Virginia 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. 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 income is not subject to Virginia taxation has no basis in fact or Virginia law. Further, a person who fails to file income tax returns or files income tax returns reflecting no income, based solely on claims such as yours, 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. Virginia Code § 58.1-312 provides that tax may be assessed at any time if a false or fraudulent return is filed with intent to evade tax.
Additionally, anyone who files an application for correction pursuant to Va. Code § 58.1-1821 based solely on claims such as yours 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 2000 taxable year and any other delinquent income tax returns within 30 days from the date of this letter. Any income tax returns filed on which the income was intentionally underreported must also be amended within 30 days.
Conclusion
Returns and payments for any delinquent individual income tax returns, along with the balance due for the 1995 taxable year, should be sent to: Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23218-7203, Attention: *****. A schedule of assessments is enclosed for your reference.
Further action in your case will be held in abeyance for 30 days awaiting the filing of the requested returns along with payment of the balance due. Refusal to file the requested returns or any future returns in accordance with Virginia law by continuing to make the claims stated in your letter would justify the 100% fraud penalty and other legal actions to collect the proper tax.
The Code of Virginia sections cited and other reference documents are available online in the Tax Policy Library section of the Department's web site located at www.tax.state.va.us. If you have any questions regarding this determination, please contact ***** at *****.
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- Sincerely,
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- Kenneth W. Thorson
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- Tax Commissioner
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- Kenneth W. Thorson
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AR/50259E
Rulings of the Tax Commissioner