Tax Type
Individual Income Tax
Description
Residency; Conformity to federal
Topic
Returns/Payments/Records
Date Issued
11-21-1996
November 21, 1996
Re: § 58.1-1821 Application: Individual Income Tax
Dear**************
This will reply to your letter in which you seek correction of your Virginia individual income tax assessments for the taxable years 1992 and 1995. I apologize for the delayed response.
FACTS
You claim to be a "[N]atural born Citizen of the Virginia Republic .... one of the 50 Republic sovereign states and not a territory over which the sovereignty of the United States extends." As a domicile of the Sovereign Virginia Republic, you claim to have received no income from Virginia. Your further claim that you are not citizens of the United States of America and are not subject to its jurisdiction. As state income tax laws must comply with federal tax laws, you contend that you are not subject to Virginia taxation; and therefore, the 1992 and 1995 assessments should be abated and the corresponding refunds should be issued.
DETERMINATION
It appears that you have misunderstood the principal of conformity of Virginia income taxation with the Internal Revenue Code. Code of Virginia § 58.1-301, copy enclosed, provides that terminology and references used in Title 58.1 of the Code of Virginia will have the same meaning as provided in the Internal Revenue Code unless a different meaning is clearly required.
Virginia "conforms" to federal law because it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI). To the extent that income is included in FAGI, it is also subject to taxation by Virginia.
The citizenship of an individual is typically not relevant in determining residency. Code of Virginia §58.1-302, copy enclosed, specifically defines "resident" to include persons domiciled in Virginia as well as anyone physically present in Virginia. You admit to being physically present in Virginia.
Code of Virginia §58.1-341, copy enclosed, provides that a Virginia resident who is required to file a federal income tax return is also required to file a Virginia income tax return, unless the resident is exempt from filing under Code of Virginia §58.1-321, copy enclosed. When a resident does not file a Virginia return, Internal Revenue Code 6103 (d), copy enclosed, authorizes the department to obtain information from the Internal Revenue Service that will help in determining the resident's tax liability. Additionally, even if a resident is not required to file a federal return but has Virginia adjusted gross income that exceeds the filing threshold, the resident is required to file a Virginia income tax return pursuant to Code of Virginia §58.1-341.
For the taxable year 1992, the department received information from the Internal Revenue Service indicating that income was not reported on your federal return. By letter dated November 1, 1995, the department notified you of this fact, adjusted your Virginia return, and issued an assessment. Code of Virginia §58.1-312, copy enclosed, provides that an assessment can be issued at any time if a taxpayer fails to report on the Virginia return a federal change or correction that increases federal taxable income. Code of Virginia §58.1-205, copy enclosed, provides that any assessment issued by the department shall be deemed prima facie correct.
For the taxable year 1995, you filed a Virginia return, excluded all of your wage income, and requested a refund of your Virginia withholding taxes. Your return indicated a Virginia address and the Wage and Tax Statements (W-2 forms) indicated that your employers were located in Virginia. As your wages were subject to taxation by Virginia, your return was adjusted and an assessment was issued for the balance due.
You have not provided sufficient documentation to verify that you are not subject to tax as a Virginia resident. Although you claim to be a nonresident of Virginia, a review of the department's records and the documents you provided clearly shows that you are a resident of Virginia. Your claims of being a nonresident of Virginia have no basis in fact or Virginia law and have no purpose other than tax evasion. A person who files income tax returns based solely on such claims has intentionally understated his income tax liability with the intent to evade tax, and would be subject to a 100% fraud penalty pursuant to Code of Virginia §58.1-308, copy enclosed. Furthermore, one who files an application for correction pursuant to Code of Virginia §58.1-1821, copy enclosed, based solely on such claims has no purpose other than to hinder and delay collection of the proper tax liability. Consequently, collection activity need not be suspended while such applications for correction are being considered.
Based on the information presented, you have not demonstrated that the assessments for the taxable years 1992 and 1995 are incorrect. A summary of these assessments is enclosed for your information. Interest has been updated through the date of this letter. The balance due of these assessments must be paid within 30 days from the date of this letter. After this period, all actions to collect your assessments will resume. Your continued refusal to file returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. The total payment of ********should be remitted to*******Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880. If you have further questions, he may also be contacted at**************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10565N
Rulings of the Tax Commissioner