Tax Type
Individual Income Tax
Description
Failure to file income tax returns.
Topic
Federal Conformity
Statute of Limitations
Date Issued
02-28-2011
February 28, 2011
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter concerning the Virginia individual income tax assessments issued to ***** (the "Taxpayer") for the taxable years ended December 31, 2002 through 2006.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating the Taxpayer had income for the taxable years at issue. The Taxpayer did not file a federal or Virginia individual income tax return for those taxable years. The Department requested that the Taxpayer file the proper Virginia income tax returns or provide an explanation concerning why her income was not taxable. When an adequate response was not received, the Department issued the assessments.
On behalf of the Taxpayer, you contend that there is no federal statute that requires payment of a direct un-apportioned tax on the Taxpayer's wages and that the United States Constitution strictly forbids a capitation tax. Further, because the Taxpayer did not file a federal income tax return, you maintain that the Taxpayer had no federal adjusted gross income. As such, you assert that the assessments for the 2002 through 2007 taxable years are illegal and should be abated.
DETERMINATION
Virginia Code § 58.1-1821 provides that "[a]ny person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of assessment, apply for relief to the Tax Commissioner." Title 23 of the Virginia Administrative Code (VAC) 10-20-165 provides additional requirements regarding the timely filing of administrative appeals. This regulation provides information to taxpayers about the process for appealing tax assessments, including how to file a complete and timely administrative appeal.
You filed an appeal on behalf of the Taxpayer with the Department by letter dated February 23, 2010. The most recent assessment for the taxable years at issue is dated July 1, 2009. The statutory period for filing an appeal under Va. Code § 58.1-1821 for the taxable years at issue expired well before the appeal was filed. As such, the Taxpayer's administrative appeal is barred by the statute of limitations.
Regardless of the timeliness of the appeal, the claim that the Taxpayer's income is not subject to Virginia taxation has no basis in fact or Virginia law. A person who fails to file income tax returns based solely on such a claim has intentionally understated his or her income tax liability with the intent to evade tax and is subject to a 100% fraud penalty pursuant to Va. Code § 58.1-308. See Public Document (P.D.) 05-68 (4/26/2005).
Accordingly, the Virginia individual income tax assessments for the 2002 through 2006 taxable years are correct and remain due and payable. Payment of the outstanding assessments, as shown on the enclosed schedule, should be made within 30 days from the date of this letter. Payment should be sent to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. If payment is not received within the allotted time, penalty will be assessed, additional interest will accrue, and collection action will resume on the outstanding balance.
The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department of Taxation's web site. If you have any questions about this determination, please contact ***** at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4262537370.E
Rulings of the Tax Commissioner