Tax Type
Individual Income Tax
Description
Out-of - state tax credit
Topic
Credits
Date Issued
12-20-1982
December 20, 1982
Re: § 58-1118 Application/1981 Individual Income Tax
Dear ********
This is in response-to your letter of September 10, 1982, applying on behalf of your clients,******** and *********** for relief from an assessment of 1981 individual income tax of $ ******* plus interest to date. You contest our disallowance of a credit for New Hampshire tax paid for 1981.
FACTS
The taxpayers became residents of Virginia on August 15, 1981, and filed Virginia income tax Form 760PY. They owned business property in New Hampshire on which they paid a "Business Profits Tax" of $****** based on rental income from the property during 1981. On their Virginia return, the taxpayers subtracted from their total tax due an out-of - state tax credit based on the tax paid to New Hampshire. The Department has disallowed the credit.
DETERMINATION
First of all, § 58-151.015 of the Code of Virginia is in Article 7.2 concerning individuals only, so it follows that the allowable credit for another state's taxes paid ought to be for individual income taxes paid. The Business Profits Tax of New Hampshire is not an individual income tax but a tax "upon the taxable business profits of every business organization." [NH Revised Statutes Annotated 77-A:2]
Secondly, there are currently nine states that do not have individual income tax laws, although many of them have laws, such as New Hampshire's, that impose other taxes using various types of income as their measure, e.g., profits from business, dividends, interest, rents and royalties. The Department has for many years held that none of these states, including New Hampshire, imposes an "individual income tax" for which Virginia can allow a credit under § 58-151.015. We are not persuaded to change our position in this matter.
Your application for relief from the assessment is hereby denied. Full payment of the liability is due.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner