October 19, 2015
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2012.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia individual income tax return for the 2012 taxable year. The Department requested information to verify whether the Taxpayer was subject to Virginia income tax. When a response was not received, the Department issued an assessment based on the available information. The Taxpayer appealed the assessment, contending that he already paid income tax to ***** (State A) for the 2012 taxable year.
DETERMINATION
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). Income properly included in the FAGI of a Virginia resident is subject to taxation by Virginia, unless it is specifically exempt as a Virginia modification pursuant to Va. Code § 58.1-322.
Virginia Code § 58.1-341 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 Va. Code § 58.1-321. 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 individual income tax return. When a resident does not file a proper Virginia return, IRC § 6103(d) authorizes the Department to obtain information from the IRS that will enable the Department to determine the resident's tax liability.
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 the permanent place of residence of a taxpayer and the place to which he intends to return even though he may 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.
The Taxpayer had moved to Virginia from State A and lived and worked in Virginia the entire 2012 taxable year. The Taxpayer filed a State A tax return. He indicates that he filed in State A because his employer continued to withhold State A income tax.
The mere fact that the Taxpayer filed a State A income tax return and paid income tax to State A had no bearing on his requirement to file a Virginia income tax return as a Virginia resident. Further, it is a taxpayer's responsibility to inform their employer when there is a change to their withholding status. The Taxpayer should review State A's income tax laws to determine whether he mistakenly filed the State A return and request a refund of taxes erroneously paid to State A, if warranted.
The assessment at issue was based on information available to the Department pursuant to Va. Code § 58.1-111. The Taxpayer may have additional information that would more accurately reflect his Virginia taxable income. Accordingly, the Taxpayer should file a Virginia income tax return for the 2012 taxable year. The return should be submitted to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****, within 30 days from the date of this letter. Once the return is received, it will be reviewed and processed and the assessment adjusted accordingly. If the return is not received within the allotted time, the Department's assessment will be considered to be correct as issued and collection actions will resume.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-605544777.M