April 25, 2025
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to ***** and ***** (the “Taxpayers”) for the taxable year ended December 31, 2019.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers may have been required to file a Virginia income tax return for the 2019 taxable year. A review of the Department’s records showed that the Taxpayers had not filed a return. The Department requested additional information from the Taxpayers in order to determine if their income was taxable in Virginia. When a response was not received, the Department issued an assessment. The Taxpayers submitted an application for correction, contending they did not live or work in Virginia during 2019.
DETERMINATION
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 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 Chapter 3 of Title 58.1 of the Code of Virginia.
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of that person and the place to which that person intends to return even though they may be residing elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained their place of abode within Virginia. A Virginia domiciliary resident continues to be subject to Virginia taxation even if they work in another state or country. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days, is also subject to Virginia taxation.
The Taxpayers’ application merely stated that they did not live or work in Virginia in 2019. As stated above, however, if the Taxpayers had been domiciliary residents of Virginia that year, their income would have been subject to taxation even if they did not live or work in Virginia.
Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayers to show they were not subject to income tax in Virginia. Furthermore, Virginia Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to a taxpayer’s willful failure or refusal to provide the Department with necessary information as required by law.
By letters dated April 10, 2024, and October 16, 2024, the Department requested additional information to support the application, including a completed domicile questionnaire, so that the Department could make an informed decision concerning the Taxpayers’ Virginia income tax liability. To date, the Taxpayers have failed to respond with the requested information.
Because the Taxpayers have not furnished the requested information, the Department must uphold the assessment for the 2019 taxable year. The Department will, however, grant the Taxpayers a final opportunity to either file a 2019 Virginia resident return or provide a response to the information request, including a completed domicile questionnaire. The documentation or return must be provided within 30 days from the date of this letter. Please send the documentation or return to the Department’s Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. Upon receipt, the information will be reviewed and the assessment will be adjusted, as appropriate. If the return or documentation is not received within the allotted time, the assessment will be considered to be correct.
The Code of Virginia sections cited are available online at law.lis.virginia.gov. If you have any questions regarding this response, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4667.Y