Tax Type
Individual Income Tax
Description
Combat pay
Topic
Taxable Income
Date Issued
11-08-1994
November 8, 1994
Re: §58.1-1821 Application: Individual Income Tax
Dear***********
This is in reply to your letter concerning the disallowance of a subtraction claimed on the 1991 Virginia Individual Income Tax Return for wages received as a member of the Maryland National Guard while on active duty during Operation Desert Shield and Desert Storm.
FACTS
In 1991, you were a resident of Virginia and a civilian employee of the federal government. In addition, you were a member or the Maryland Air National Guard. In 1991, you were ordered to active duty for Desert Shield/Desert Storm and were assigned to the************ in Delaware. Based on your understanding of the Virginia income tax instructions, members of the reserve forces who were activated by order of the President of the United States for Desert Shield/Desert Storm could deduct their active duty wages from the Virginia taxes. Therefore, you claimed a subtraction on the 1991 Virginia income tax return for your active duty wages. Through the department's compliance program, the subtraction was disallowed and an assessment was issued. You are requesting that the assessment be abated.
DETERMINATION
Emergency legislation was enacted by the 1991 General Assembly to provide
Virginia tax benefits to persons serving in Operation Desert Shield/Desert Storm.
Accordingly, Code of Virginia, §58.1-322, copy enclosed, was amended to allow
combat pay received by certain members of the Armed Forces of the United States to be excluded from Virginia taxation to the extent it was excluded from taxation by the Internal Revenue Service. In that your Air National Guard income did not result from service in a combat zone during the operations of Desert Shield/Desert Storm, it was subject to taxation for federal and Virginia income tax purposes.
As a member of the Maryland Air National Guard, Virginia law allowed the additional extension of time for filing the Virginia income and estimated tax returns; however, it did not provide any deductions from taxable income. A detailed explanation of these benefits is provided in the enclosed booklet issued by the department entitled Guidelines for Individuals Affected by Operations Desert Shield and Desert Storm and the Virginia Tax Bulletin 91-3 issued on April 1, 1991 entitled Operation Desert Storm.
While I can empathize with your situation, there is no basis for relieving the assessment that has been issued. If other assistance is needed, please feel free to contact the department.
Danny M. Payne
Tax Commissioner
OTP/8168N
Rulings of the Tax Commissioner