Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
06-22-1999
June 22, 1999
Re: Request for Ruling: Individual Income Tax
Dear***
This will reply to your letter requesting a ruling as to whether a citizen (the "Taxpayer') of a country other than the United States ("U.S.') is subject to Virginia individual income tax. I apologize for the delay in responding.
FACTS
The Taxpayer will be working for a limited time in the U.S. for a company located in a foreign country acting on behalf of the foreign government. Because of this arrangement, the Taxpayer was issued an A-2 visa. Individuals holding an A-2 visa can qualify for an exemption from U.S. income tax pursuant to Internal Revenue Code (IRC) Sec.893.
You state that the foreign government grants a waiver from paying their income tax for income taxed in the U.S. According to you letter, this waiver extends to cases where a taxpayer pays state income tax in the U.S. but no federal income tax. You request that the department permit you to pay the Virginia individual income tax even though you are not subject to federal income taxes.
RULING
Code of Virginia Sec. 58.1-301 provides that Virginia individual income taxation conforms with that of the IRC. As a "conformity' state, Virginia bases its tax on federal adjusted gross income (FAGI) for individuals. Therefore, income received that is exempt from federal taxation is also exempt from Virginia taxation.
Because your income is exempt from U.S. income taxation, you will not have any FAGI on which to compute Virginia taxable income. Also, Virginia law provides no addition to FAGI that would allow the Taxpayer to include the earnings from the foreign company on a Virginia return. As such, the Commonwealth of Virginia cannot impose tax on your income earned from the foreign company.
I trust this will answer your question. However, if you have any questions, please contact ***** in our Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21396G
Re: Request for Ruling: Individual Income Tax
Dear***
This will reply to your letter requesting a ruling as to whether a citizen (the "Taxpayer') of a country other than the United States ("U.S.') is subject to Virginia individual income tax. I apologize for the delay in responding.
FACTS
The Taxpayer will be working for a limited time in the U.S. for a company located in a foreign country acting on behalf of the foreign government. Because of this arrangement, the Taxpayer was issued an A-2 visa. Individuals holding an A-2 visa can qualify for an exemption from U.S. income tax pursuant to Internal Revenue Code (IRC) Sec.893.
You state that the foreign government grants a waiver from paying their income tax for income taxed in the U.S. According to you letter, this waiver extends to cases where a taxpayer pays state income tax in the U.S. but no federal income tax. You request that the department permit you to pay the Virginia individual income tax even though you are not subject to federal income taxes.
RULING
Code of Virginia Sec. 58.1-301 provides that Virginia individual income taxation conforms with that of the IRC. As a "conformity' state, Virginia bases its tax on federal adjusted gross income (FAGI) for individuals. Therefore, income received that is exempt from federal taxation is also exempt from Virginia taxation.
Because your income is exempt from U.S. income taxation, you will not have any FAGI on which to compute Virginia taxable income. Also, Virginia law provides no addition to FAGI that would allow the Taxpayer to include the earnings from the foreign company on a Virginia return. As such, the Commonwealth of Virginia cannot impose tax on your income earned from the foreign company.
I trust this will answer your question. However, if you have any questions, please contact ***** in our Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21396G
Rulings of the Tax Commissioner