Tax Type
Individual Income Tax
Description
Individual subject to Virginia Income tax
Topic
Persons Subject to Tax
Date Issued
04-10-2006
April 10, 2006
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****************:
This will reply to your letter concerning the Virginia individual income tax assessments issued to you (the "Taxpayer") for the taxable years 1999 through 2001 taxable years.
FACTS
The Taxpayer is a Virginia resident. The Department received information from the Internal Revenue Service ("IRS") indicating the Taxpayer had income for the 1999 through 2001 taxable years. The Department sent letters to the Taxpayer requesting that he file the proper Virginia individual income tax returns or provide an explanation concerning why the income is not taxable. When an adequate response was not received, the Department issued assessments based on the information available.
The Taxpayer contends that his income is not subject to federal or Virginia individual income tax. In support of that position, he contends that the 16th Amendment to the United States Constitution was never ratified; therefore, it cannot be lawful.
The Taxpayer requests that the assessments issued for the 1999, 2000, and 2001 taxable years be abated. The assessment for the 2000 taxable year has been paid, and the Taxpayer requests a refund.
DETERMINATION
Article X of the Constitution of Virginia grants the constitutional authority for the Commonwealth of Virginia to levy the taxes set forth in Title 58.1 of the Code of Virginia. 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 unless a different meaning is clearly required. Virginia "conforms" to federal law because it starts the computation of Virginia taxable income with federal adjusted gross income ("FAGI"). To the extent that income is included in FAGI, it is also subject to taxation by Virginia. Section 61(a)(1) of the Internal Revenue Code ("IRC") clearly sets forth that certain types of income, such as wages, salaries, professional fees, tips and compensation for personal services, are included in determining gross income.
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 reports income on the Virginia return, the Department is authorized by IRC § 6103(d), to obtain information from the Internal Revenue Service that will help in determining the resident's correct tax liability. 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 still required to file a Virginia income tax return pursuant to Va. Code § 58.1-341.
Your statement concerning the ratification of the 16th Amendment to the Constitution of the United States is without merit. After the enactment of the 16th Amendment, the constitutionality of federal income tax laws has been upheld judicially on repeated occasions. See Bobby J. Bernhardt v. United States of America and Donald C. Alexander, Commissioner of Internal Revenue, 38 AFTR2d 76-5674; Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916); Phillips v. Commissioner, 283 U.S. 589 (1931); Acker v. Commissioner, 258 F.2d 568 (6th Cir. 1958), affirmed, 361 U.S. 87 (1959); Swallow v. United States, 325 F.2d 97 (10th Cir. 1963); Hartman v. Switzer, 376 F.Supp 486 (W.D. Pa. 1974).
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. Accordingly, the assessments for the 1999 through 2001 taxable years are correct. Payment of the outstanding assessments, as shown on the enclosed schedule, should be sent to: Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****.
In addition, you are hereby requested to file any other delinquent Virginia individual income tax returns within 30 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 imposition of a 100% fraud penalty and other legal actions to collect the proper tax. Delinquent income tax returns should be sent to ***** at the address shown above.
The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this letter, you may contact ***** at *****.
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- Sincerely,
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Kenneth W. Thorson
Tax Commissioner
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AR/55040E
Rulings of the Tax Commissioner