Could a couple defeat a 1999 Virginia assessment by asserting that they had filed a return when the Department had no record of it?

Plain-English summary

Virginia found no basis to remove the assessment because it had no record of the couple's 1999 Virginia return. The Department received IRS information about the wife's wages, requested information, reviewed the couple's federal transcript and Forms W-2, and issued an assessment.

Virginia residents required to file federal returns generally also had to file Virginia returns unless an exception applied. The couple said they had timely filed jointly, but the Department's records did not show a state return.

Virginia nevertheless gave them one final 30-day opportunity to prove that the 1999 Virginia tax liability had been paid. If they did not provide that evidence, the assessment would stand and collection would resume.

Common questions

Q: Did a federal return prove that the Virginia return was filed?
A: No. Virginia acknowledged the federal filing but had no record of a state return.

Q: Was the assessment immediately final?
A: The ruling allowed 30 days to submit evidence of payment before collection resumed.

Citations and references

• Va. Code §§ 58.1-301, 58.1-321, 58.1-322, and 58.1-341.

Subject

Department has no record of a Virginia income tax return for the year in question.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-15

Original ruling text

March 2, 2012

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 Taxpayers) for the taxable year ended December 31, 1999. I apologize for the delay in responding to your letter.

FACTS

The Taxpayers, a husband and wife, are residents of Virginia. The Department received information from the Internal Revenue Service (IRS) that the wife received wages that may be subject to Virginia income tax. The Department requested information from the wife to determine her Virginia taxable income. The Taxpayers provided a copy of their joint federal transcript and federal Forms W-2. Based on the information provided, the Department issued an assessment. The Taxpayers appeal the assessment, contending they timely filed a joint Virginia income tax return for the 1999 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 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 FAGI. Income 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.

Pursuant to Va. Code § 58.1-341, 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. The Taxpayers assert that they filed an income tax return for the 1999 taxable year. While the Department does not dispute that the Taxpayers filed their federal income tax return, the Department has no record of a Virginia income tax return for the year in question. As such, I find no basis on which to abate this assessment.

Notwithstanding the above, I will allow the Taxpayers an additional 30 days to provide evidence that they paid the tax liability for 1999. Such evidence should be submitted to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *. If the evidence is not provided within the time prescribed, the assessment will be upheld and collection actions will resume.

The Code of Virginia and regulation sections 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 * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4794014701.D