Tax Type
Individual Income Tax
Description
Nonresident requests refund of tax paid in prior years
Topic
Payment and Refund
Date Issued
03-05-1993
.
Re: §58.1-1821 Application: Individual Income Tax
Dear*************
This will reply to your letter of August 11, 1992 in which you requested a refund for taxes paid in prior years based upon Internal Revenue Code ("IRC") §1341. Based on the circumstances involved in this case, it is best to handle your request as an appeal for the correction of an assessment pursuant to Va. Code §58.1-1821.
FACTS
In 1978 and 1980 your wife, a nonresident of Virginia, received royalty income from Virginia sources upon which she paid Virginia taxes. In 1991, a court ordered your wife to pay back the amounts she had received. You and your wife are not currently residents of Virginia, nor were you in 1991.
You elected to claim a credit on your 1991 federal tax return under IRC §1341 (Claim of Right) for the income taxes your wife paid on the royalty income that she was ordered to repay. Neither you or your wife earned income from Virginia sources in 1991.
You have requested a refund of the income taxes your wife paid to the Commonwealth in 1978 and 1980 pursuant to the claim of right doctrine.
DETERMINATION
Virginia allows individuals to fully follow the provisions of IRC §1341 for Virginia income tax purposes. See P.D. 87-190 (August 5, 1987, copy enclosed). Because Virginia is a conformity state, the method elected for federal income tax purposes under IRC §1341 will determine the method that must be used for Virginia purposes.
You elected to claim a credit for taxes paid in earlier years on your 1991 federal return. You are entitled to take the same position on your Virginia return. Therefore, you did not have Virginia source income in 1991 and were not required to file a Virginia return. Therefore, you may not claim the refund on your 1991 Virginia return.
There is no other provision in the Virginia Code that would entitle you to the requested refund. I do not, therefore, have the statutory authority to allow you a refund.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/63650
March 5, 1993
Re: §58.1-1821 Application: Individual Income Tax
Dear*************
This will reply to your letter of August 11, 1992 in which you requested a refund for taxes paid in prior years based upon Internal Revenue Code ("IRC") §1341. Based on the circumstances involved in this case, it is best to handle your request as an appeal for the correction of an assessment pursuant to Va. Code §58.1-1821.
FACTS
In 1978 and 1980 your wife, a nonresident of Virginia, received royalty income from Virginia sources upon which she paid Virginia taxes. In 1991, a court ordered your wife to pay back the amounts she had received. You and your wife are not currently residents of Virginia, nor were you in 1991.
You elected to claim a credit on your 1991 federal tax return under IRC §1341 (Claim of Right) for the income taxes your wife paid on the royalty income that she was ordered to repay. Neither you or your wife earned income from Virginia sources in 1991.
You have requested a refund of the income taxes your wife paid to the Commonwealth in 1978 and 1980 pursuant to the claim of right doctrine.
DETERMINATION
Virginia allows individuals to fully follow the provisions of IRC §1341 for Virginia income tax purposes. See P.D. 87-190 (August 5, 1987, copy enclosed). Because Virginia is a conformity state, the method elected for federal income tax purposes under IRC §1341 will determine the method that must be used for Virginia purposes.
You elected to claim a credit for taxes paid in earlier years on your 1991 federal return. You are entitled to take the same position on your Virginia return. Therefore, you did not have Virginia source income in 1991 and were not required to file a Virginia return. Therefore, you may not claim the refund on your 1991 Virginia return.
There is no other provision in the Virginia Code that would entitle you to the requested refund. I do not, therefore, have the statutory authority to allow you a refund.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/63650
Rulings of the Tax Commissioner