Could a taxpayer overturn Virginia's 2012 nonfiler assessment without evidence that he was not a Virginia resident?

Subject

The Taxpayer has provided no objective evidence that he was not a resident of Virginia during the taxable year.

Plain-English summary

The IRS reported income for a taxpayer who had not filed a 2012 Virginia individual income-tax return. After the taxpayer did not adequately respond to the Department's request for a return or an explanation, Virginia estimated the liability and issued an assessment.

The taxpayer challenged the assessment but supplied no objective evidence that he was not a Virginia resident during 2012 or otherwise was not required to file. The Department noted that federal law allowed it to obtain IRS information and that Virginia law authorized an estimated assessment when a person refused to file a valid return.

Because the assessment was presumed correct and the taxpayer did not rebut it, the Department upheld the assessment. It also directed the taxpayer to pay the updated bill within 30 days to avoid more interest.

Citations and references

• IRC § 6103(d).
• Va. Code §§ 58.1-111 and 58.1-205.
• P.D. 12-121.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-157

Original ruling text

August 3, 2016

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 the Taxpayer had income for the taxable year at issue. The Department requested that the Taxpayer file the proper Virginia income tax return or provide an explanation concerning why his income was not taxable. When an adequate response was not received, the Department issued an assessment. The Taxpayer filed an appeal, stating he declines to make payment until he receives a proper explanation regarding the legal basis of the assessment and a list of the income sources used to create the assessment.

DETERMINATION

With regard to the arguments that the Taxpayer did not have any income subject to Virginia tax for the taxable year at issue, the Department has previously addressed the merits of these arguments directly to the Taxpayer in Public Document (P.D.) 12-­121 (7/26/2012). As explained in P.D. 12-121, when a Virginia resident does not file a Virginia income tax return, IRC § 6103(d) authorizes the Department to obtain information from the IRS in order to determine that resident's tax liability. In addition, Va. Code § 58.1-111 authorizes the Department to estimate a tax liability when a person refuses to file a valid return. Such assessment is deemed prima facie correct. See Va. Code § 58.1-205.

The Taxpayer has provided no objective evidence that he was not a resident of Virginia during the 2012 taxable year and was not required to file a Virginia income tax return. As such, the Department was well within its legal authority to issue an assessment for the 2012 taxable year as permitted under Va. Code § 58.1-111.

While I recognize your continuing disagreement with the validity of the assessment, P. D. 12-121 clearly explains the Department's authority for its assessment. Accordingly, the assessment for the 2012 taxable year is upheld.

The Taxpayer will receive an updated bill, which will include accrued interest. The bill should be paid within 30 days of the bill date in order to avoid the accrual of additional interest.

The Code of Virginia sections and public document 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/1-6245896469.D