Tax Type
Employer Income Tax Withholding
Description
Failure to Withhold
Topic
Persons Subject to Tax
Withholding of Tax
Date Issued
10-22-1998
October 22, 1998
Re: Sec. 58.1-1821 Application: Withholding Tax
Dear *****
This will reply to your letters in which you protest the assessment of withholding tax against ***** (the ``Taxpayer') for the 1991 through 1994 taxable years. I apologize for the delay in responding.
FACTS
The Taxpayer is an out-of-state contractor who performs some contracting work in Virginia. It was subject to a field audit for 1991 through 1994 taxable years. The Taxpayer was assessed tax and interest for failing to withhold taxes for individuals who performed work in Virginia.
The Taxpayer contends that it was not responsible for withholding tax because no employee had Virginia wages in excess of the amount required to file a Virginia income tax return. The Taxpayer has subsequently stated that it is now complying with Virginia withholding, but requests that the assessments be abated since it lacked knowledge of Virginia withholding law.
DETERMINATION
Code of Virginia Sec. 58.1-461, copy enclosed, requires employees to withhold taxes from wages paid to its employees unless the employee provides a withholding exemption certificate to the employer. Specifically, this section states:
The starting point for computing Virginia adjusted gross income is federal adjusted gross income. The federal adjusted gross income of a Virginia resident, however, can be modified by the additions and subtractions specifically indicated in Code of Virginia Sec. 58.1-322, copy enclosed, when computing Virginia adjusted gross income. See also Code of Virginia Sec. 58.1-321, copy enclosed.
Virginia adjusted gross income is calculated the same way for nonresidents as it is for residents. Thus, an employee's federal adjusted gross income adjusted by the additions and subtractions specifically indicated in Code of Virginia Sec. 58.1-322, is used to calculate his Virginia adjusted gross income. Virginia adjusted gross income of a nonresident is not limited to those wages actually earned performing work in Virginia.
The Taxpayer has not provided any evidence that its employees' Virginia adjusted gross income was below the Code of Virginia Sec. 58.1-321 filing thresholds. Therefore, it was responsible for withholding income tax for the contended taxable years.
While I sympathize with the Taxpayer's situation, the assessment of tax and interest was proper. Accordingly, your request for relief is denied. Enclosed is a schedule of withholding tax due and interest. Please pay the assessment to *****, Office of Tax Policy, Virginia Department of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days to prevent the accrual of additional interest. If you have any questions about this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12629B
Re: Sec. 58.1-1821 Application: Withholding Tax
Dear *****
This will reply to your letters in which you protest the assessment of withholding tax against ***** (the ``Taxpayer') for the 1991 through 1994 taxable years. I apologize for the delay in responding.
FACTS
The Taxpayer is an out-of-state contractor who performs some contracting work in Virginia. It was subject to a field audit for 1991 through 1994 taxable years. The Taxpayer was assessed tax and interest for failing to withhold taxes for individuals who performed work in Virginia.
The Taxpayer contends that it was not responsible for withholding tax because no employee had Virginia wages in excess of the amount required to file a Virginia income tax return. The Taxpayer has subsequently stated that it is now complying with Virginia withholding, but requests that the assessments be abated since it lacked knowledge of Virginia withholding law.
DETERMINATION
Code of Virginia Sec. 58.1-461, copy enclosed, requires employees to withhold taxes from wages paid to its employees unless the employee provides a withholding exemption certificate to the employer. Specifically, this section states:
-
- Every employer making payment of wages shall deduct and withhold with respect to the wages of each employee for each ***** payroll period and amount ... which would aggregate or approximate the income tax liability of such employee under this chapter...
The starting point for computing Virginia adjusted gross income is federal adjusted gross income. The federal adjusted gross income of a Virginia resident, however, can be modified by the additions and subtractions specifically indicated in Code of Virginia Sec. 58.1-322, copy enclosed, when computing Virginia adjusted gross income. See also Code of Virginia Sec. 58.1-321, copy enclosed.
Virginia adjusted gross income is calculated the same way for nonresidents as it is for residents. Thus, an employee's federal adjusted gross income adjusted by the additions and subtractions specifically indicated in Code of Virginia Sec. 58.1-322, is used to calculate his Virginia adjusted gross income. Virginia adjusted gross income of a nonresident is not limited to those wages actually earned performing work in Virginia.
The Taxpayer has not provided any evidence that its employees' Virginia adjusted gross income was below the Code of Virginia Sec. 58.1-321 filing thresholds. Therefore, it was responsible for withholding income tax for the contended taxable years.
While I sympathize with the Taxpayer's situation, the assessment of tax and interest was proper. Accordingly, your request for relief is denied. Enclosed is a schedule of withholding tax due and interest. Please pay the assessment to *****, Office of Tax Policy, Virginia Department of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days to prevent the accrual of additional interest. If you have any questions about this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12629B
Rulings of the Tax Commissioner