Tax Type
Individual Income Tax
Description
Disallowance of credit on your amended individual income tax
Topic
Returns/Payments/Records
Date Issued
03-19-1982
March 19, 1982
Re: §58-1118 Application/Individual Income Tax
Dear ***********************
This will reply to your letter of December 29, 1981 in which you protest the assessment of additional individual income tax for taxable year 1980 and the disallowance of credit on your amended returns for taxable year 1979 and 1980.
On line 30 of your 1980 Virginia income tax return, you subtracted from federal adjusted gross income the amount of $ ********** which was identified by an attached schedule as tax withheld by a foreign country. The subtraction was disallowed and additional tax and interest was assessed on this amount. Subsequently, an amended return was filed claiming credit against your Virginia tag liability for this tax, which was disallowed.
A credit on line 42 of your 1979 amended income tax return representing tax in the amount of ***** paid to a foreign country was disallowed.
DETERMINATION
§58-151.015 of the Code of Virginia allows a credit against Virginia tax liability:
-
- Whenever a resident of this State has become liable for income tax to another state, an earned or business income, or any part thereof, for the taxable year, derived from sources without this State and subject to taxation under this chapter.
- Whenever a resident of this State has become liable for income tax to another state, an earned or business income, or any part thereof, for the taxable year, derived from sources without this State and subject to taxation under this chapter.
The department's administrative interpretation is based upon several factors. First, the operative language of §58-151.015, which is "resident of this state has become liable for income tax to another state," must be read as a whole. The use of the word "state" in the phrase "to another state" is parallel to the use of the phrase "this State," and consequently it must be assumed that "state" is intended to mean another entity comparable to "this State." Placing this construction upon the statute, the credit provisions would apply only when a person has become liable for tax to another state of the union.
The department's position has been implicitly upheld by the General Assembly, which when presented with legislation specifically allowing a credit for taxes paid to a foreign country, has failed to enact such a provision. This legislation was most recently introduced in the 1981 session (House Bill 1667).
Based upon the foregoing, your application for correction of the assessment of additional individual income tax for taxable year 1980 is denied and your claim for refund pursuant to your amended returns for taxable years 1979 and 1980 is similarly denied.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner