Tax Type
Individual Income Tax
Description
Residency; Domicile and physical presence; Collection of tax; Penalties; Fraud
Topic
Taxpayers' Remedies
Date Issued
06-09-1997
June 9, 1997
Re: § 58.1-1821 Application: Individual Income Tax
Dear****************
This will reply to your letter concerning the filing of amended Virginia individual income tax returns for the taxable years 1993 through 1995. Additionally, you seek correction of your Virginia individual income tax assessment for the taxable year 1994. I apologize for the delay in responding to your letter.
FACTS
You claim to be a domicile of the sovereign Virginia Republic and domiciled in the City of Virginia Beach, Virginia. You claim to have received no income from Virginia sources. You further claim that you are not citizens of the United States of America and are not subject to its jurisdiction. You state that you are not liable for a franchise tax. You contend, further that you are not subject to Virginia taxation because you are not liable for federal income tax. As a result, you have filed amended Virginia individual income tax returns for the taxable years 1993 through 1995 and requested refunds. Additionally, you wish to have your 1994 assessment abated.
DETERMINATION
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. The Virginia individual income tax is not a franchise tax. Instead, it is an income tax that "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 and persons who maintain a place of abode in Virginia for an aggregate for more than 183 days. You admit being domiciled as well as physically present in Virginia. You are, therefore, a resident of Virginia. Code of Virginia § 58.1-341, copy enclosed, provides that a Virginia resident, who is required to file a federal income tax return, must file a Virginia income tax return, unless the resident is exempt under Code of Virginia § 58.1-321, from filing copy enclosed. Additionally, under Code of Virginia § 58.1-321, even if a resident is not required to file a federal return, the resident is required to file a Virginia income tax return when the Virginia adjusted gross income exceeds the filing threshold.
A review of our records indicates that you filed Virginia returns for the taxable years 1993 through 1995 showing income, which resulted from the filing of federal income tax returns. The type of income that you received, such as earned income, was subject to federal and Virginia taxation. Additionally, as the amount of your income for each year exceeded the filing thresholds, you were correct to file these Virginia returns.
The 1994 return was filed late and the tax due was not remitted with the return. As a result, an assessment was issued for tax, late penalties, and interest. Your 1995 overpayment was applied against this assessment and an outstanding balance remains.
The amended returns that you filed for the taxable years 1993 through 1995 show no income and refunds have been requested for each respective year. As previously indicated, however, you are a resident of Virginia and your income was subject to Virginia tax. You, therefore, filed these amended returns in error.
You have not provided sufficient documentation to verify that you are not subject to tax as a Virginia resident. A review of the department's records and the documents you provided clearly shows that you are a resident of Virginia whose income is subject to the Virginia tax. Your claims of not being a resident 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, there is no basis to allow the filing of your amended returns for the taxable years 1993 through 1995 or to abate your assessment for the taxable year 1994. The balance of your 1994 assessment amounts to including tax of **** , penalties of***** and interest of **** updated through the date of this letter. This balance due must be paid within the next 30 days to avoid further collection activity. Your refusal to file future returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. Please remit your payment to**********, Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, he may also be contacted at *************.
Your case is currently being handled as an appeal pursuant to Code of Virginia § 58.1-1821. If you are not satisfied with the determination, you may apply to a circuit court for relief pursuant to Code of Virginia § 58.1-1825, copy enclosed. The application, however, should be filed within three years from the date the assessment was made. Additionally, the assessment must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12380N
Rulings of the Tax Commissioner