Tax Type
Individual Income Tax
Description
Taxes paid by residents to other states; Lottery winnings
Topic
Credits
Date Issued
06-23-1995
June 23, 1995
Re: §58.1-1821 Application: Individual Income Tax
Dear***********
This will reply to your letter of May 4, 1995, in which you protest the disallowance of an out-of-state tax credit claimed by*********** (the "Taxpayer"), for the taxable year 1992.
FACTS
The Taxpayer is a Virginia resident who won the Maryland lottery and receives yearly installment payments. He is required by Maryland law to file a nonresident Maryland return and pay tax on his gambling winnings. The Taxpayer filed his 1992 Virginia individual income tax return and claimed a credit for the taxes paid to Maryland. The 1992 Virginia return was subsequently audited and the credit was disallowed, resulting in an assessment. The Taxpayer protests the assessment and seeks relief therefrom.
DETERMINATION
Code of Virginia §58.1 -332(A) provides individuals a credit for income tax paid to another state:
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- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for taxable year... (Emphasis added)
- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for taxable year... (Emphasis added)
The issue raised in your appeal is identical to that addressed in the prior ruling. In both instances, the credit was denied on the basis that gambling winnings were neither earned or business income. Therefore, although I am sympathetic to your situation, for the same reasons set forth more fully in P.D. 95-152, the department has no choice but to deny your application for relief.
Accordingly, the assessment as reflected on the attached schedule is correct. The balance due,********* should be paid within 30 days to prevent the accrual of additional interest. Please forward your payment to the Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23282-1880. If you have any questions regarding this ruling, you may contact**************.
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Sincerely,
Danny M. Payne
Tax Commissioner
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OTP/9718P
Rulings of the Tax Commissioner