March 10, 2020
Re: Request for Ruling: Individual Income Tax
Dear *****:
This will respond to your letter in which ***** (the “Taxpayers”) request a ruling on whether health care insurance premiums may be deductible.
FACTS
The Taxpayers paid premiums for both healthcare and long-term care insurance for taxable years prior to, and including 2018. They determined that the premiums they paid for the long-term care insurance could be claimed as a deduction. The Taxpayers request a ruling as to whether the premiums they paid for their healthcare insurance may also be claimed as a deduction.
RULING
Virginia Code § 58.1-301 provides, with certain exceptions, that the 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. Conformity does not extend to terms, concepts, or principles not specifically provided in the Code of Virginia. For individual income tax purposes, Virginia “conforms” to federal law, in that it starts the computation of Virginia taxable income (VTI) 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 Chapter 3 of Title 58.1 of the Code of Virginia.
By reason of their character as legislative grants, statutes relating to deductions and subtractions allowable in computing income and credits allowed against a tax liability must be strictly construed against the Taxpayer and in favor of the taxing authority. See Howell’s Motor Freight, Inc., et al. v. Virginia Dep’t of Taxation, Circuit Court of the City of Roanoke, Law No. 82-0846 (10/27/1983).
Virginia Code § 58.1-322.03 10 provides a deduction for “the amount an individual pays annually in premiums for long-term health care insurance, provided the individual has not claimed a deduction for federal income tax purposes, or … a credit under [Virginia Code] § 58.1-339.11.” The Taxpayers contend that the inclusion of the word “health” allows them to claim a deduction for general medical insurance premiums that have been paid over the years.
In Lawrence Carr, Jr. v. W.H. Forst, Tax Commissioner of the Commonwealth of Virginia, 249 Va. 66, 453 S.E. 2d 274 (1995), the Virginia Supreme Court stated that if a statute is clear and unambiguous, a court must accept its plain meaning and not resort to extrinsic evidence or rules of construction. When there is ambiguity as to the meaning of a statute, however, it is appropriate to apply the rules of statutory construction to determine the legislative intent. “Language is considered ambiguous when it may be understood in more than one way, or simultaneously refers to two or more things.” Lee-Warren v. School Board, 241 Va. 442, 445, 403 S.E.2d 691, 692 (1991). In this case, the legislative history of the long-term health care deduction appears to use the terms “long-term care insurance” and “long-term health care insurance” interchangeably.
The fiscal impact statement (FIS) accompanying House Bill 1546 (1999 Acts of the General Assembly, Chapter 298) clarifies that the deduction is for premiums paid on insurance for long-term care that is generally not covered by traditional health insurance plans. Long-term care insurance provides coverage for the costs of nursing home care and in-home care that can last over extended periods of time. Accordingly, the Taxpayers cannot claim a deduction for premiums paid for general health care insurance.
The Department has previously explained the relationship between the federal deduction, Virginia deduction, and Virginia credit available for this type of insurance premium. See Public Document (P.D.) 07-211 (12/5/2007).
The Code of Virginia sections and public document 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 ruling, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/2084-C