Tax Type
Individual Income Tax
Description
Protective claim; Pension income
Topic
Taxable Income
Date Issued
06-15-1994
June 15, 1994
Re: Protective Claim: Individual Income Tax
Dear ****
This will reply to your letter of March 2, 1994 in which you filed a protective claim for refund for taxable years 1990, 1991, and half of 1992. You assert that based upon Davis v. Michigan Department of Revenue, 489 U.S. 803 (1989), you are entitled to receive benefits equaling those benefits granted to the state retirees by the Virginia Retirement System.
The United States Supreme Court held in Davis v. Michigan, 489 U.S. 803 (1989) that state taxation of pension income of retired federal government employees, while exempting from taxation pension income of retired state government employees, violated the doctrine of intergovernmental tax immunity. The Court did not hold that states may not tax federal retirement income, only that taxation may not differentiate based on the source of the income. Nor did the Court hold that states must in any way equalize benefits paid to state and federal retirees. See Davis at 815 n. 4. As a result of Davis, the Virginia General Assembly in a special session held in April of 1989 repealed the state income tax exemption for state and local government retirees. Since that time, all retirees in Virginia have been taxed uniformly on their pension income, regardless of the source.
Accordingly, I must deny your protective claim for refund for 1990, 1991, and 1992 because there is no statutory authority or legal basis for such refund. Pursuant to Va. Code § 58.1-1824, you have one year from the date of this letter to seek redress of your claim from the circuit court under § 58.1-1825.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner