Tax Type
Individual Income Tax
Description
Taxes Paid by Residents to Other States
Topic
Credits
Date Issued
10-20-1998
October 20, 1998
Re: Sec. 58.1-1821 Application: Individual Income Tax
Dear *****
This will respond to your letter in which you protest the disallowance of out-of-state tax credits claimed on the 1995 and 1996 Virginia individual income tax returns filed by you and your wife (the ``Taxpayers'). I apologize for the delay in responding.
FACTS
The Taxpayers are Virginia residents who won the Maryland lottery and receive yearly installment payments. They are required by Maryland law to file a nonresident Maryland return and pay tax on their gambling winnings. The Taxpayers filed their 1995 and 1996 Virginia individual income tax returns and claimed credits for the taxes paid to Maryland. The Virginia returns were subsequently audited and the credits were disallowed, resulting in assessments. The Taxpayers protest the assessments and question Virginia's treatment of such income and how it relates to the out-of-state tax credit.
DETERMINATION
Code of Virginia Sec. 58.1-332(A) provides individuals a credit for income tax paid to another state:
Furthermore, without a specific provision in Virginia law, the department has no statutory authority to allow an out-of-state tax credit on income other than that provided in Code of Virginia Sec. 58.1-332. Therefore, the department believes that its ***** determination to be consistent with the intent of the Virginia General Assembly. During its 1996 session, the General Assembly considered legislation addressing this issue. The General Assembly proposed amending Code of Virginia Sec. 58.1-332 to provide relief in such situations, see House Bills 784 and 1536, copies enclosed. The fact that neither bill was enacted leads to the conclusion that the General Assembly is aware that lottery winnings of other states do not qualify for the credit but has chosen not to alleviate this situation.
While I am sympathetic with your situation, the department must administer Virginia's tax laws as mandated by the General Assembly. If you have any further questions regarding this matter, please contact ***** of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16827P
Re: Sec. 58.1-1821 Application: Individual Income Tax
Dear *****
This will respond to your letter in which you protest the disallowance of out-of-state tax credits claimed on the 1995 and 1996 Virginia individual income tax returns filed by you and your wife (the ``Taxpayers'). I apologize for the delay in responding.
FACTS
The Taxpayers are Virginia residents who won the Maryland lottery and receive yearly installment payments. They are required by Maryland law to file a nonresident Maryland return and pay tax on their gambling winnings. The Taxpayers filed their 1995 and 1996 Virginia individual income tax returns and claimed credits for the taxes paid to Maryland. The Virginia returns were subsequently audited and the credits were disallowed, resulting in assessments. The Taxpayers protest the assessments and question Virginia's treatment of such income and how it relates to the out-of-state tax credit.
DETERMINATION
Code of Virginia Sec. 58.1-332(A) provides individuals a credit for income tax paid to another state:
-
- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for the taxable year...(Emphasis added)
- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for the taxable year...(Emphasis added)
Furthermore, without a specific provision in Virginia law, the department has no statutory authority to allow an out-of-state tax credit on income other than that provided in Code of Virginia Sec. 58.1-332. Therefore, the department believes that its ***** determination to be consistent with the intent of the Virginia General Assembly. During its 1996 session, the General Assembly considered legislation addressing this issue. The General Assembly proposed amending Code of Virginia Sec. 58.1-332 to provide relief in such situations, see House Bills 784 and 1536, copies enclosed. The fact that neither bill was enacted leads to the conclusion that the General Assembly is aware that lottery winnings of other states do not qualify for the credit but has chosen not to alleviate this situation.
While I am sympathetic with your situation, the department must administer Virginia's tax laws as mandated by the General Assembly. If you have any further questions regarding this matter, please contact ***** of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16827P
Rulings of the Tax Commissioner