Virginia says IRS data shows I should have filed a return, but I think I lived in another state. What happens if I don't respond to the Department's questions?

Plain-English summary

The Department received IRS information suggesting this taxpayer should have filed a 2020 Virginia income tax return. He hadn't filed one, and when the Department asked for information to determine whether his income was taxable in Virginia, he didn't respond. He then appealed the resulting assessment with a single assertion — that he was a resident of another state ("State A") in 2020. The Tax Commissioner upheld the assessment, but gave him one final 30-day chance to fix it.

Why "I lived in another state" wasn't enough. Virginia taxes two kinds of residents: a domiciliary resident (Virginia is your permanent home, the place you intend to return to, even if you're living elsewhere) and an actual resident (more than 183 days of physical presence in Virginia), under Va. Code § 58.1-302. Critically, a Virginia domiciliary owes Virginia tax even while living or working in another state or country. So simply saying "I was a resident of State A" doesn't answer the question — the issue is whether he ever abandoned his Virginia domicile, and he offered nothing to show it.

The burden is on the taxpayer. A Department assessment is prima facie correct, and the taxpayer carries the burden of proving it wrong (Va. Code § 58.1-205). On top of that, Va. Code § 58.1-1826 bars a court from granting relief where an erroneous assessment is caused by the taxpayer's own willful failure or refusal to provide required information. The Department had asked twice — by letters dated November 15, 2024 and February 19, 2025 — for supporting information including a completed domicile questionnaire, and got no response.

The result, and the lifeline. Because the taxpayer didn't furnish the requested information, the Department upheld the 2020 assessment. But the Commissioner granted a final opportunity: within 30 days, either file a 2020 Virginia resident return or provide the requested information (including the domicile questionnaire). If nothing arrives in time, the assessment is treated as correct.

What this means for you

People who get a Virginia assessment from an IRS data match

Virginia routinely receives federal return data and will assess you if it shows a Virginia connection and no Virginia return on file. Ignoring the Department's follow-up letters is the worst move: the assessment is presumed correct, and staying silent can even cut off your right to relief in court (§ 58.1-1826). Respond with the domicile questionnaire and documentation rather than just asserting you lived elsewhere.

If you believe you were a nonresident

Saying you were "a resident of another state" doesn't win by itself, because a Virginia domiciliary is taxed even while living out of state. You have to show you abandoned your Virginia domicile and established a new one — with the day-count, driver's license, registrations, and living arrangements that prove it (the domicile questionnaire asks for exactly these). See the companion ruling P.D. 25-83, where a taxpayer who did document a genuine move abroad had his assessments abated.

Tax preparers

When a client gets a nonfiler assessment, calendar the response deadlines in the Department's letters and get the domicile questionnaire completed. A timely, documented response is what converts "assessment upheld for lack of proof" into a residency determination on the merits.

Common questions

Q: Virginia is taxing me based on IRS data, but I don't think I owe. Can I just tell them I lived in another state?
A: Not effectively. A bare assertion won't overcome the assessment, which is presumed correct (§ 58.1-205). And because a Virginia domiciliary owes Virginia tax even while living elsewhere, you have to actually document that you abandoned Virginia domicile — typically via the domicile questionnaire the Department requests.

Q: What happens if I ignore the Department's information requests?
A: The assessment stands, and § 58.1-1826 can bar a court from later granting you relief if the erroneous assessment resulted from your willful failure to provide required information. Here the taxpayer's non-response is exactly why he lost.

Q: Is there any second chance after the assessment is upheld?
A: The Commissioner gave this taxpayer 30 days to either file a 2020 resident return or submit the requested information, including the domicile questionnaire. That's a discretionary lifeline, not a guarantee — respond promptly.

Q: What's the difference between a "domiciliary resident" and an "actual resident"?
A: A domiciliary resident treats Virginia as their permanent home and is taxed here even while living elsewhere. An actual resident is someone who spends more than 183 days in Virginia during the year. Either status makes your income subject to Virginia tax (§ 58.1-302).

Citations and references

Statutes:

• Va. Code § 58.1-301 — Virginia conforms to federal income tax terminology (Virginia taxable income starts from federal adjusted gross income)
• Va. Code § 58.1-302 — domiciliary resident vs. actual (183-day) resident
• Va. Code § 58.1-205 — a Department assessment is prima facie correct; the burden of proof is on the taxpayer
• Va. Code § 58.1-1826 — no court relief for an erroneous assessment caused by the taxpayer's willful failure to provide required information

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-80

Original ruling text

June 20, 2025

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond 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, 2020.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2020 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. When a response was not received, the Department issued an assessment. The Taxpayer submitted an application for correction, contending he was a resident of * (State A) during 2020.

DETERMINATION

Virginia Code § 58.1-301 provides, with certain exceptions, that the 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. Conformity does not extend to terms, concepts, or principles not specifically provided in the Code of Virginia . For individual income tax purposes, Virginia conforms to federal law, in that it starts the computation of Virginia taxable income (VTI) 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 Chapter 3 of Title 58.1 of the Code of Virginia .

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of that person and the place to which that person intends to return even though they may be residing elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained their place of abode within Virginia. A Virginia domiciliary resident continues to be subject to Virginia taxation even if they work in another state or country. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days, is also subject to Virginia taxation.

The Taxpayer’s application merely stated that he was a resident of State A in 2020. As stated above, however, if the Taxpayer had been a domiciliary resident of Virginia that year, his income would have been subject to taxation even if he did not live or work in Virginia.

Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show they were not subject to income tax in Virginia. Furthermore, Virginia Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to a taxpayer’s willful failure or refusal to provide the Department with necessary information as required by law.

By letters dated November 15, 2024, and February 19, 2025, the Department requested additional information to support the application, including a completed domicile questionnaire, so that the Department could make an informed decision concerning the Taxpayer’s Virginia income tax liability. To date, the Taxpayer has failed to respond with the requested information.

Because the Taxpayer has not furnished the requested information, the Department must uphold the assessment for the 2020 taxable year. The Department will, however, grant the Taxpayer a final opportunity to either file a 2020 Virginia resident return or provide a response to the information request, including a completed domicile questionnaire. The documentation or return must be provided within 30 days from the date of this letter. Please send the documentation or return to the Department’s Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *. Upon receipt, the information will be reviewed and the assessment may be adjusted, as appropriate. If the return or documentation is not received within the allotted time, the assessment will be considered to be correct.

The Code of Virginia sections cited are available online at law.lis.virginia.gov. If you have any questions regarding this response, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4815.Y