Tax Type
Individual Income Tax
Description
Taxpayer avers that she is not a domiciliary resident of Virginia.
Topic
Domicile
Federal Conformity
Records/Returns/Payments
Residency
Date Issued
09-27-2011
This PD Superseded by PD 14-11
September 27, 2011
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessments issued to you ***** (the "Taxpayer") for the taxable years ended December 31, 2007 through 2009.
The Taxpayer filed nonresident income tax returns for the 2007 through 2009 taxable years. Under audit, the Department determined that: the Taxpayer, was an actual resident of Virginia and expanded the scope of the audit. The Department requested that the Taxpayer substantiate the itemized deductions claimed. When the Taxpayer failed to provide documentation to substantiate the deductions, the Department denied the deductions and issued assessments for all taxable years in question.
The Taxpayer appeals the assessment, contending she is temporarily employed in ***** (State A), her job assignment is renewed on an annual basis, and she resides in Virginia for the convenience of commuting to her place of employment. The Taxpayer avers that she is not a domiciliary resident of Virginia and the Department does not have the authority to create a resident return on her behalf. Further, the Taxpayer asserts that the unreimbursed business expense deductions were for temporary housing costs incurred while employed away from her domicile.
Actual Residency
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. The domiciliary residence of a person means that the permanent place of residence of a taxpayer is Virginia and the place to which he intends to return is Virginia 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 place of abode within Virginia. A person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.
A taxpayer can be an actual resident of Virginia without establishing domicile. See Public Document (P.D.) 00-167 (9/8/2000). In this case, the Taxpayer maintained a permanent place of abode in Virginia for a time period exceeding 183 days. Therefore, the Taxpayer is an actual resident of Virginia and the Department's adjustment is correct.
Unreimbursed Employee Expenses
Virginia Code § 58.1-301 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 (IRC) unless a different meaning is clearly required. For individual income tax purposes, Virginia conforms to federal law, in that it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI).
As a general rule, the Department relies on the accuracy of information and computations reflected on the federal income tax return when reviewing Virginia individual income tax returns. If the information provided on the federal return looks reasonable, there is generally no reason to look behind those computations. Virginia Code § 58.1-219 grants the Department the authority to adjust FAGI where there is clear evidence that the amounts reported on the federal or Virginia income tax return are not consistent with the IRC.
Virginia Code § 58.1-322 D 1 provides a subtraction from the Virginia adjusted gross income for the amount allowed for itemized deductions for federal income tax purposes. The Taxpayer claimed a deduction for temporary housing costs incurred while employed away from her tax home. IRC § 162 provides a deduction for the cost of meals and lodging at a temporary job or assignment away from a taxpayer's home. However, unless limited exceptions apply, a taxpayer will not be considered to be temporarily away from home when a period of employment exceeds one year. The Taxpayer has been employed in State A and residing in Virginia since 2006. Because none of the exceptions under IRC §162 apply, the Taxpayer cannot be considered temporarily assigned to Virginia during the 2007 through 2009 taxable years.
Itemized Deductions
When calculating the Taxpayer's Virginia taxable income, the Department used the standard deduction because it was greater than the substantiated itemized deduction claimed by the Taxpayer.
Under IRC § 63, an individual may make an election to claim an itemized deduction and any change of such election must be sought by the Taxpayer in writing and agreed upon with the IRS. Virginia Code § 58.1-322 D 1 allows the standard deduction when the taxpayer has not itemized deductions for the taxable year. Title 23 Virginia Administrative Code (VAC) 10-110-143 provides that any taxpayer who itemizes deductions on the federal income tax return must also itemize deductions in the computation of Virginia taxable income.
The Taxpayer may have additional information that more accurately reflects her taxable income. As such, the Taxpayer should file amended returns as a resident of Virginia, and remit appropriate payment within 30 days from the date of this letter. The returns should be mailed to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. If the amended returns are not filed within the time prescribed, the assessments will be adjusted based on the information provided.
The Code of Virginia sections cited are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Craig M. Burns
Tax Commissioner
AR/1-4697116173.D
September 27, 2011
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessments issued to you ***** (the "Taxpayer") for the taxable years ended December 31, 2007 through 2009.
FACTS
The Taxpayer filed nonresident income tax returns for the 2007 through 2009 taxable years. Under audit, the Department determined that: the Taxpayer, was an actual resident of Virginia and expanded the scope of the audit. The Department requested that the Taxpayer substantiate the itemized deductions claimed. When the Taxpayer failed to provide documentation to substantiate the deductions, the Department denied the deductions and issued assessments for all taxable years in question.
The Taxpayer appeals the assessment, contending she is temporarily employed in ***** (State A), her job assignment is renewed on an annual basis, and she resides in Virginia for the convenience of commuting to her place of employment. The Taxpayer avers that she is not a domiciliary resident of Virginia and the Department does not have the authority to create a resident return on her behalf. Further, the Taxpayer asserts that the unreimbursed business expense deductions were for temporary housing costs incurred while employed away from her domicile.
DETERMINATION
Actual Residency
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. The domiciliary residence of a person means that the permanent place of residence of a taxpayer is Virginia and the place to which he intends to return is Virginia 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 place of abode within Virginia. A person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.
A taxpayer can be an actual resident of Virginia without establishing domicile. See Public Document (P.D.) 00-167 (9/8/2000). In this case, the Taxpayer maintained a permanent place of abode in Virginia for a time period exceeding 183 days. Therefore, the Taxpayer is an actual resident of Virginia and the Department's adjustment is correct.
Unreimbursed Employee Expenses
Virginia Code § 58.1-301 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 (IRC) unless a different meaning is clearly required. For individual income tax purposes, Virginia conforms to federal law, in that it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI).
As a general rule, the Department relies on the accuracy of information and computations reflected on the federal income tax return when reviewing Virginia individual income tax returns. If the information provided on the federal return looks reasonable, there is generally no reason to look behind those computations. Virginia Code § 58.1-219 grants the Department the authority to adjust FAGI where there is clear evidence that the amounts reported on the federal or Virginia income tax return are not consistent with the IRC.
Virginia Code § 58.1-322 D 1 provides a subtraction from the Virginia adjusted gross income for the amount allowed for itemized deductions for federal income tax purposes. The Taxpayer claimed a deduction for temporary housing costs incurred while employed away from her tax home. IRC § 162 provides a deduction for the cost of meals and lodging at a temporary job or assignment away from a taxpayer's home. However, unless limited exceptions apply, a taxpayer will not be considered to be temporarily away from home when a period of employment exceeds one year. The Taxpayer has been employed in State A and residing in Virginia since 2006. Because none of the exceptions under IRC §162 apply, the Taxpayer cannot be considered temporarily assigned to Virginia during the 2007 through 2009 taxable years.
Itemized Deductions
When calculating the Taxpayer's Virginia taxable income, the Department used the standard deduction because it was greater than the substantiated itemized deduction claimed by the Taxpayer.
Under IRC § 63, an individual may make an election to claim an itemized deduction and any change of such election must be sought by the Taxpayer in writing and agreed upon with the IRS. Virginia Code § 58.1-322 D 1 allows the standard deduction when the taxpayer has not itemized deductions for the taxable year. Title 23 Virginia Administrative Code (VAC) 10-110-143 provides that any taxpayer who itemizes deductions on the federal income tax return must also itemize deductions in the computation of Virginia taxable income.
The Taxpayer may have additional information that more accurately reflects her taxable income. As such, the Taxpayer should file amended returns as a resident of Virginia, and remit appropriate payment within 30 days from the date of this letter. The returns should be mailed to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. If the amended returns are not filed within the time prescribed, the assessments will be adjusted based on the information provided.
The Code of Virginia sections cited are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-4697116173.D
Related Documents
Rulings of the Tax Commissioner