August 12, 2019
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessment issued to ***** (the “Taxpayer”) for the taxable year ended December 31, 2013.
FACTS
The Taxpayer filed a 2013 Virginia individual income tax return in April 2017, reporting income tax due but remitting no payment. Accordingly, the Department issued an assessment of tax, penalty and interest. The Taxpayer appeals, contending that the assessment should be abated because Virginia’s tax laws are discriminatory.
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 properly 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 Virginia Code § 58.1-322. A resident of Virginia includes any natural person domiciled in Virginia at any time during a taxable year or who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia.
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 Virginia Code § 58.1-321. The Taxpayer does not deny that he was a Virginia resident or that he had income during the taxable years at issue. Rather, he contends that Virginia’s income tax laws are discriminatory.
In People of State of New York ex rel. Cohn v. Graves, 300 U.S. 308, 57 S.Ct. 466 (1937), the United States Supreme Court explained “[t]hat the receipt of income by a resident of the territory of a taxing sovereignty is a taxable event is universally recognized.” See also Mary T. Ryan v. Commonwealth of Virginia, 169 Va. 414, 193 S.E. 534 (1937). Absent any objective evidence to the contrary, Virginia is well within its authority to impose its income tax on all of the income of a resident of the Commonwealth of Virginia.
While acknowledging this authority, the Taxpayer questions the nature of the assessment issued to him as a misuse of the General Assembly’s authority. Instead of using Virginia’s tax code for public wellbeing, the Taxpayer avers the Department by direct extension of the legislature is using taxation to maintain the status quo and, through policy initiatives, has deliberately created inequity to those who are marginalized within Virginia’s society making them vulnerable to the vicissitudes (unforeseen changes) of life. He further argues that the assessment represents a retrogressive (regressive) type of taxing policy that penalizes impoverished income earners while failing to pursue the tax obligations of the affluent in an equitable manner.
Article V, Section 9 of the Constitution of Virginia permits the General Assembly to statutorily prescribe the functions, powers, and duties of the administrative departments, divisions and agencies of the Commonwealth, including the Department. Virginia Code § 58.1-202 sets forth the general powers and duties of Tax Commissioner. Under Virginia Code § 58.1-202 1., the Tax Commissioner is responsible for supervising the administration of Virginia’s tax laws as they relate to taxpayers subject to Virginia tax and any assessments thereon, with an understanding that assessments should be equitable and avoid duplication of taxation. Thus, the Department is limited to ensuring its assessments are equitably made under the statutory system established by the General Assembly. Yet, the Taxpayer is asking the Department to disregard statutory authority based on unsubstantiated claims of discrimination. The Department is unable to do so.
Accordingly, the Taxpayer’s request for the abatement of the assessment for the 2013 taxable year cannot be granted. Collection action as permitted by law will continue.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1921.B