Tax Type
Individual Income Tax
Description
Insufficient documentation to demonstrate income was not taxable by Virginia
Topic
Appeals
Persons Subject to Tax
Date Issued
08-17-2007
August 17, 2007
Re: Individual Income Tax
Taxable Year 2003
Dear *****:
This will reply to your letter in which you seek correction of the Virginia individual income tax assessment issued for the taxable year ended December 31, 2003.
The Department received information from the Internal Revenue Service (I.R.S.) indicating that you had income for the 2003 taxable year. A letter was sent to you requesting that you file the proper Virginia 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.
You state that you were not liable for income tax in Virginia in 2003 and, therefore, do not owe any money. You have provided a copy of your 2003 federal individual income tax return and a federal transcript of that tax return. The transcript shows that income was not reported on the 2003 federal income tax return. The transcript only confirms that the federal tax return was filed. It does not reflect a determination by the I.R.S. that the income in question was not subject to federal or Virginia individual income taxation.
Pursuant to Va. Code § 58.1-111, the Department has the authority to estimate the amount of taxes due when a taxpayer fails to file a valid state tax return. Virginia Code § 58.1-312 further provides that an assessment can be issued at any time if a return is not filed. Finally, Va. Code § 58.1-205 provides that any assessment of a tax by the Department shall be deemed prima facie correct. The Taxpayer has not shown that the assessment issued by the Department or the information provided by the I.R.S.
is incorrect.
The Tax Commissioner's letters of April 8, 2002 and September 4, 2002, with respect to the taxable years 1996 through 2000, determined that the Taxpayer's income from employment was subject to income taxation by Virginia and clearly explained the Department's authority for the assessments. A review of the information at hand shows that, while you contend that you are not liable for income tax in Virginia for the 2003 taxable year, you continue to have wage income from a Virginia employer.
I have carefully reconsidered your situation, but again, must respectfully disagree with your conclusions of law. You have not provided sufficient documentation to demonstrate that your income for the taxable year at issue was not taxable by Virginia. While I recognize your continuing disagreement with the validity of these assessments, the Tax Commissioner's letter of September 4, 2002, constitutes the Department's final determination on this issue. The outstanding assessment remains due and payable.
In conformity with Va. Code § 58.1-311, if the Taxpayer's 2003 taxable year federal income tax return is changed or corrected by the I.R.S., the Taxpayer may file an amended Virginia income tax return within one year of the final determination by the I.R.S. Such amended return must include a complete copy of the I.R.S. review or audit, along with supporting documentation from the I.R.S. detailing each item of the Taxpayer's income and the amount included in federal adjusted gross income. As noted above, however, collection activity will not be suspended in the interim.
The Code of Virginia and other reference documents 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 response, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-1239596648E
Rulings of the Tax Commissioner