Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
06-17-1999
June 17, 1999
Re: Protective Claim: Individual Income Tax
Dear***
This will reply to your request for a protective claim for the refunds claimed on the amended individual income tax for taxable years 1994 and 1995 made on behalf of your clients, ***** (the ``Taxpayers'). You requested that the disposition of these protective claims be deferred until the litigation previously filed by the Taxpayer for the taxable years 1991 through 1993 is finally concluded. I apologize for the delayed response.
The Taxpayer, a Virginia resident, is a partner in a partnership located in the District of Columbia. The partnership is engaged in the rental of real property. For the taxable years 1991 through 1993, the partnership paid Unincorporated Business Tax to the District of Columbia on rental income. The Taxpayer received income from this partnership, reported the income on Virginia tax returns, and paid Virginia taxes on this income. An out-of-state tax credit was not claimed on the original returns. Subsequently, amended returns were filed claiming out-of-state credits for payments of the Unincorporated Business Tax attributable to the Taxpayer. Refunds were also claimed for each year. The department disallowed the out-of-state tax credits and the refund requests. Currently, the out-of-state tax credits claimed on the 1994 and 1995 Virginia returns for payments of the Unincorporated Business Tax have also been disallowed.
Pursuant to Code of Virginia Sec. 58.1-1825, the Taxpayer filed suit against the department with the Circuit Court. The Taxpayer's position was that the Unincorporated Business Tax was an income tax; and therefore, an out-of-state tax credit was allowable pursuant to Code of Virginia Sec. 58.1-332(A). The department's position, ***** however, was that Code of Virginia Sec. 58.1-332(A) specifically excluded the Unincorporated Business Tax from the computation of the out-of-state tax credit.
The Fairfax Circuit Court issued a judgment in favor of the department. The Taxpayer appealed to the Virginia Supreme Court, and again, judgment was made in favor of the department for reasons different from those of the circuit court. The Taxpayer subsequently petitioned for a writ of certiorari to the United States Supreme Court. Certiorari, however. was denied.
Accordingly, the Taxpayers' protective claim for refund for the taxable years 1994 and 1995 must now be denied. Should you have any questions regarding this matter, please contact ***** of my Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12277N
Re: Protective Claim: Individual Income Tax
Dear***
This will reply to your request for a protective claim for the refunds claimed on the amended individual income tax for taxable years 1994 and 1995 made on behalf of your clients, ***** (the ``Taxpayers'). You requested that the disposition of these protective claims be deferred until the litigation previously filed by the Taxpayer for the taxable years 1991 through 1993 is finally concluded. I apologize for the delayed response.
The Taxpayer, a Virginia resident, is a partner in a partnership located in the District of Columbia. The partnership is engaged in the rental of real property. For the taxable years 1991 through 1993, the partnership paid Unincorporated Business Tax to the District of Columbia on rental income. The Taxpayer received income from this partnership, reported the income on Virginia tax returns, and paid Virginia taxes on this income. An out-of-state tax credit was not claimed on the original returns. Subsequently, amended returns were filed claiming out-of-state credits for payments of the Unincorporated Business Tax attributable to the Taxpayer. Refunds were also claimed for each year. The department disallowed the out-of-state tax credits and the refund requests. Currently, the out-of-state tax credits claimed on the 1994 and 1995 Virginia returns for payments of the Unincorporated Business Tax have also been disallowed.
Pursuant to Code of Virginia Sec. 58.1-1825, the Taxpayer filed suit against the department with the Circuit Court. The Taxpayer's position was that the Unincorporated Business Tax was an income tax; and therefore, an out-of-state tax credit was allowable pursuant to Code of Virginia Sec. 58.1-332(A). The department's position, ***** however, was that Code of Virginia Sec. 58.1-332(A) specifically excluded the Unincorporated Business Tax from the computation of the out-of-state tax credit.
The Fairfax Circuit Court issued a judgment in favor of the department. The Taxpayer appealed to the Virginia Supreme Court, and again, judgment was made in favor of the department for reasons different from those of the circuit court. The Taxpayer subsequently petitioned for a writ of certiorari to the United States Supreme Court. Certiorari, however. was denied.
Accordingly, the Taxpayers' protective claim for refund for the taxable years 1994 and 1995 must now be denied. Should you have any questions regarding this matter, please contact ***** of my Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12277N
Rulings of the Tax Commissioner