Tax Type
Individual Income Tax
Description
Subtractions from federal adjusted gross income; Self-employment tax
Topic
Taxable Income
Date Issued
11-05-1996
November 5, 1996
Re: Request for Ruling: Individual Income Tax
Dear**************
This will reply to your letter in which you appeal the decision of the department denying your request for a refund of individual income taxes paid during taxable years 1991 through 1993. I apologize for the delayed response.
FACTS
You were a resident of Virginia for the taxable years 1990 through 1994. When filing tax returns for the taxable years 1990 through 1993, you added the self-employment tax deducted for federal income tax purposes to your federal adjusted gross income pursuant to Code of Virginia § 58.1-322(B)(8) and paid the appropriate Virginia tax. You claimed a subtraction on the 1994 Virginia return for self-employment tax additions reported on the 1990 return. As of 1995, however, you were no longer a Virginia resident, did not receive income from Virginia sources, and were not required to file a Virginia return. You wrote the department and requested a refund of the tax paid on the self-employment tax additions for the taxable years 1991 through 1993, however, your request was denied. You are requesting that this issue be reviewed again and that the refund be issued.
RULING
Code of Virginia § 58.1-322(B)(8), copy enclosed, provides that, for the taxable years 1990 through 1993, the self-employment tax used to adjust gross income under Internal Revenue Code (IRC) § 164(f) must be added to federal adjusted gross income when computing Virginia taxable income. Code of Virginia § 58.1-322(C)(16), copy enclosed, further provides that the self-employment tax added on the 1990 return shall be subtracted from the 1994 return, the tax added on the 1991 return shall be subtracted from the 1995 return, the tax added on the 1992 return shall be subtracted in the 1996 return, and the tax added on the 1993 return shall be subtracted on the 1997 return. This code section further provides that any portion of the self-employment addition not subtracted in previous taxable years shall also be subtracted on the 1997 return. A subtraction, therefore, may also be claimed on the 1997 return for the outstanding balance of self-employment tax additions when the taxpayer can demonstrate that the entire outstanding balance of the self-employment tax addition has not been recovered by 1994 through 1996 self-employment tax subtractions.
In order to claim a subtraction, a taxpayer must have income from Virginia sources and be required to file a Virginia return in the years the subtraction is allowed. In the instant case, you have been a nonresident of Virginia since 1995, have not received income from Virginia sources, and are not required to file a Virginia individual income tax return.
Although I am sympathetic with your situation, I do not have the statutory authority to authorize a refund of the taxes paid on the self-employment tax additions reported on the income tax returns for the taxable years 1991 through 1993. If additional information is needed, please contact******at ******* .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11346N
Rulings of the Tax Commissioner