Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
07-19-1999
July 19, 1999
Re: § 58.1-1821 Application: Individual Income Tax
Dear***
This will reply to your letters in which you seek correction of your Virginia individual income tax assessments for the taxable years 1993, 1994, and 1995. I apologize for the delay in responding to your letters.
FACTS
The department received information from the Internal Revenue Service (IRS) indicating that your federal returns were adjusted. You, however, did not file Virginia individual income tax returns for the taxable years 1993, 1994, and 1995. The department issued an assessment for each year. When payment of the assessments was not received, the department sent the assessments to an outside collection agency for collection action. You are contesting these assessments by requesting information on the department's authority to request your federal tax information from the IRS. In addition, you requested information on the authority of the outside collection agency to collect the amounts assessed on behalf of the department. Lastly, you requested the department to "affirm' your citizenship and residency status with Virginia.
DETERMINATION
The citizenship of an individual is typically not relevant in determining residency. Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his or her place of abode within Virginia. A person living in Virginia would typically be considered a domiciliary resident, and the income would be subject to Virginia taxation. The burden of proof rests with the individual to demonstrate that Virginia, as a domiciliary residence, has been abandoned. It appears you lived in Virginia for the taxable years 1993 through 1995. Consequently, you are considered a domiciliary resident of Virginia whose income is subject to Virginia taxation.
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. 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. When a resident does not file a Virginia return, Internal Revenue Code (IRC) 6103 (d), copy enclosed, authorizes the department to obtain information from the IRS that will help in determining the resident's Virginia income tax liability. The Agreement on Coordination of Tax Administration, an exchange agreement between the IRS and Tax Commissioner of the department, governs the exchange of tax information between the IRS and the department. To implement the exchange agreement, the IRS is authorized to periodically transmit to the department reports indicating the federal audits or examinations that have been conducted. The information received from the IRS by the department on your account was obtained in this manner. Therefore, a separate written request for your tax information was not required.
For the taxable years 1993, 1994, and 1995, the department received information from the IRS indicating that they adjusted your federal tax return. For each year, separate letters dated February 10, 1998, were sent by the department notifying you of this fact and requesting that proper returns be filed or explanations be provided concerning why you were not required to file a return. When a sufficient response was not received, assessments were issued. Code of Virginia § 58.1-312, copy enclosed, provides that an assessment can be issued at any time if a taxpayer fails to file a Virginia return or 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 will be deemed prima facie correct.
Code of Virginia § 58.1-1803(B), copy enclosed, provides in pertinent part that, "[t]he Department of Taxation may appoint collectors or contract with collection agencies to collect delinquent state taxes ....' The department, therefore, is authorized to contract with collection agencies to collect delinquent income taxes from taxpayers on behalf of the department. A collection agency appointed by the department was authorized to contact you concerning your delinquent tax assessments.
You have not provided information or documentation to demonstrate that you are a nonresident of Virginia or that your income is not subject to Virginia taxation for the taxable years 1993, 1994, and 1995. A person who continuously refuses to file income tax returns without justification is intentionally understating his or her income tax liability with the intent to evade tax and can be subject to a 100% fraud penalty pursuant to Code of Virginia § 58.1-308, copy enclosed. Furthermore, such a person who files an application for correction pursuant to ***** Code of Virginia § 58.1-1821, copy enclosed, has no purpose other than to hinder and delay collection of the proper tax liability. Thus, collection activity need not be suspended while such application for correction is being considered.
Based on the information presented, your assessments were properly issued for the taxable years 1993, 1994, and 1995. A summary of these assessments, the total of which is ***** is enclosed for your information. Interest has been updated through the date of this letter. If the payment or returns are not received within the next 60 days, collection actions will resume. Additionally, a review of your account also indicates that you have not filed Virginia tax returns since the taxable year 1995. Your continued refusal to file these returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. Payments and/or returns should be sent to the attention of *****, Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, ***** may be contacted at *****.
Your letter has been handled pursuant to Code of Virginia § 58.1-1821. Judicial remedy may be pursued in accordance with Code of Virginia § 58.1-1825, copy enclosed. The application, however, should be filed within three years from the date of the assessments or within one year from the date of this determination letter, whichever is the later. Additionally, the assessments must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/17897N
Re: § 58.1-1821 Application: Individual Income Tax
Dear***
This will reply to your letters in which you seek correction of your Virginia individual income tax assessments for the taxable years 1993, 1994, and 1995. I apologize for the delay in responding to your letters.
FACTS
The department received information from the Internal Revenue Service (IRS) indicating that your federal returns were adjusted. You, however, did not file Virginia individual income tax returns for the taxable years 1993, 1994, and 1995. The department issued an assessment for each year. When payment of the assessments was not received, the department sent the assessments to an outside collection agency for collection action. You are contesting these assessments by requesting information on the department's authority to request your federal tax information from the IRS. In addition, you requested information on the authority of the outside collection agency to collect the amounts assessed on behalf of the department. Lastly, you requested the department to "affirm' your citizenship and residency status with Virginia.
DETERMINATION
The citizenship of an individual is typically not relevant in determining residency. Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his or her place of abode within Virginia. A person living in Virginia would typically be considered a domiciliary resident, and the income would be subject to Virginia taxation. The burden of proof rests with the individual to demonstrate that Virginia, as a domiciliary residence, has been abandoned. It appears you lived in Virginia for the taxable years 1993 through 1995. Consequently, you are considered a domiciliary resident of Virginia whose income is subject to Virginia taxation.
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. 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. When a resident does not file a Virginia return, Internal Revenue Code (IRC) 6103 (d), copy enclosed, authorizes the department to obtain information from the IRS that will help in determining the resident's Virginia income tax liability. The Agreement on Coordination of Tax Administration, an exchange agreement between the IRS and Tax Commissioner of the department, governs the exchange of tax information between the IRS and the department. To implement the exchange agreement, the IRS is authorized to periodically transmit to the department reports indicating the federal audits or examinations that have been conducted. The information received from the IRS by the department on your account was obtained in this manner. Therefore, a separate written request for your tax information was not required.
For the taxable years 1993, 1994, and 1995, the department received information from the IRS indicating that they adjusted your federal tax return. For each year, separate letters dated February 10, 1998, were sent by the department notifying you of this fact and requesting that proper returns be filed or explanations be provided concerning why you were not required to file a return. When a sufficient response was not received, assessments were issued. Code of Virginia § 58.1-312, copy enclosed, provides that an assessment can be issued at any time if a taxpayer fails to file a Virginia return or 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 will be deemed prima facie correct.
Code of Virginia § 58.1-1803(B), copy enclosed, provides in pertinent part that, "[t]he Department of Taxation may appoint collectors or contract with collection agencies to collect delinquent state taxes ....' The department, therefore, is authorized to contract with collection agencies to collect delinquent income taxes from taxpayers on behalf of the department. A collection agency appointed by the department was authorized to contact you concerning your delinquent tax assessments.
You have not provided information or documentation to demonstrate that you are a nonresident of Virginia or that your income is not subject to Virginia taxation for the taxable years 1993, 1994, and 1995. A person who continuously refuses to file income tax returns without justification is intentionally understating his or her income tax liability with the intent to evade tax and can be subject to a 100% fraud penalty pursuant to Code of Virginia § 58.1-308, copy enclosed. Furthermore, such a person who files an application for correction pursuant to ***** Code of Virginia § 58.1-1821, copy enclosed, has no purpose other than to hinder and delay collection of the proper tax liability. Thus, collection activity need not be suspended while such application for correction is being considered.
Based on the information presented, your assessments were properly issued for the taxable years 1993, 1994, and 1995. A summary of these assessments, the total of which is ***** is enclosed for your information. Interest has been updated through the date of this letter. If the payment or returns are not received within the next 60 days, collection actions will resume. Additionally, a review of your account also indicates that you have not filed Virginia tax returns since the taxable year 1995. Your continued refusal to file these returns in accordance with Virginia law will justify the 100% fraud penalty and other legal actions to collect the proper tax. Payments and/or returns should be sent to the attention of *****, Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, ***** may be contacted at *****.
Your letter has been handled pursuant to Code of Virginia § 58.1-1821. Judicial remedy may be pursued in accordance with Code of Virginia § 58.1-1825, copy enclosed. The application, however, should be filed within three years from the date of the assessments or within one year from the date of this determination letter, whichever is the later. Additionally, the assessments must be paid or the appropriate bond posted before the court application is deemed filed.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/17897N
Rulings of the Tax Commissioner