Tax Type
Individual Income Tax
Withholding Taxes
Description
Individual income tax is imposed on nonresidents
Topic
Withholding of Tax
Date Issued
12-02-1982
December 2, 1982
Re: Request for Ruling/Individual Income & Withholding
Dear *************
This is in response to your letter of October 12, 1982 requesting a ruling on tax computations for employees of your client, ******** who perform services in Virginia.
Facts
******** (hereinafter referred to as ****) is a chartered ******** cable television company, with offices in ******* and subscribers in both ******* and ******* Virginia ******* has approximately 21,000 subscribers, 500 of whom live in ***********. Employees, who are residents of ***** work part of the time in Virginia. ****** requests a ruling on the manner of computing the tax.
Determination
The Virginia individual income tax is imposed on nonresidents to the extent that they acquire income from Virginia sources and is determined according to § 58-151.013(f) of the Code of Virginia. Inasmuch as the employees in question perform services with this State, they do become liable for the income tax.
In addition, Virginia Code § 58-151.1(3) defines "employee" as an "individual, whether a resident or a nonresident of this State, who performs or performed any service in this State for wages". "Employer" is defined in Code § 58-151.1(4) "whether a resident or a nonresident of this State" as a person, agency or instrumentality for whom an individual performs or performed any service as an employee". Code § 58-151.2 requires employers to withhold from wages of an employee who performs services in this State an amount equal to the employee's income tax liability.
The proper method of determining the amount of income subject to Virginia individual income tax is to allocate the amount of time spent performing services in Virginia for each employee in proportion to the total amount of time spent on the job for each employee. For example, if the employees are paid by the hour, keep track of the hours each spends performing services in Virginia. Computation of time spent by employees in Virginia is the most accurate reflection of actual Virginia source income since even though only 2.4% of all subscribers live in Virginia, 95% of the service calls could come from Virginia. This method should be used for determining the income tax liability of each employee and the withholding liability of ******************.
Those employees who perform services in Virginia should immediately file nonresident returns if they have not done so already.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner