PERSONAL INCOME TAX—STATE’S DISALLOWANCE OF THE STANDARD OR ITEMIZED DEDUCTION UPHELD--Petitioner's argument in the form of advice as to what the State Tax Department should or should not do does not rise to the level of proof necessary under W. Va. Code § 11-10-9 to show that the assessment is incorrect and contrary to law, in whole or in part.

In March 29 and July, 1993, the Internal Auditing Division issued personal income tax assessments against Petitioners.

The 1988 assessment was against Petitioner A for tax, additions to tax, and interest.

The 1989 assessment was against both Petitioners for tax, additions to tax, and interest.

The 1990 assessment was against Petitioner A for tax, additions to tax, and interest.

Petitioner timely filed petitions for reassessment. In the petitions the Petitioner requested a small claim hearing pursuant to W. Va. Code § 11-10-9a. The amount in dispute (excluding the amount of interest) does not exceed $10,000 for any one tax or taxable year, and the Petitioner's request for discretionary small claim hearing was granted. The matters were consolidated for hearing purposes.

Subsequently, a notice of small claim hearing on the petitions was furnished to the Petitioner.

At the August, 1993 status conference, Petitioner asked the administrative law judge to convert the small claim hearing to a regular hearing and to address the 1990 assessment although the same had not been addressed in the petition for reassessment.

After discussion, it was decided that the small claim hearing would be so converted and that the 1990 assessment would be included. It was further decided that, in the absence of opposing counsel, the hearing would be treated as a status conference with a ninety (90)-day continuance before any hearing would be set, so that Petitioner could pursue the early determination process.

The case file does not reflect that the Petitioner ever reached an accord with the State Tax Department, nor did Petitioner ever report back to the Office of Hearings and Appeals about whether a hearing was necessary.

All three (3) assessments arose because of federal income changes or corrections. In each case the Division advised Petitioner by letter as follows:

Due to the changes made in the West Virginia income tax laws beginning in 1987, a standard deduction or itemized deduction is not allowed on Petitioner's state return. Therefore, the modification to income of . . . on line 29 of the attached Schedule M is not allowable. . . .

In their petitions for reassessment Petitioner stated "Schedule M amounts were disallowed by the Department of Tax and Revenue because these amounts appear on Schedule A of Internal Revenue Service form 1040, not because these amounts may be taxable under West Virginia income tax laws. . . .Petitioner questioned such a narrow interpretation of the law and that the Tax Department should base state tax liability or lack thereof upon specific exemptions and not where items appear on federal returns.

West Virginia Code § 11-10-9 requires that the Petitioner prove that the assessment is incorrect and contrary to law, in whole or in part.

It is uncontroverted that, beginning in 1987, in accordance with changes in state statutory tax law, the West Virginia State Tax Department began disallowing the taking of the standard deduction or itemized deductions from the adjusted gross income figure appearing on taxpayers' federal income tax returns.

Petitioner's argument that what the State Tax Department ought to do is to ignore what appears and where on the federal return and opt instead for equity-based exemptions, credits, etc., falls into the category of advice and little else.

Petitioner's failure to explain why the assessment(s) are incorrect and contrary to law mandates that the assessments be upheld.

It is further determined that based upon the specious argument put forth by Petitioner to explain why the tax assessments should not be upheld no reasonable cause exists for waiver of additions to tax. W. Va. Code § 11-10-18(a)(1)-(2).

WHEREFORE, it is the DECISION of the State Tax Department that the personal income tax assessment issued against the Petitioners, for the year 1988 for tax, additions to tax, and interest, updated through February 28, 1994, should be and is hereby AFFIRMED.

WHEREFORE, it is the DECISION of the State Tax Department that the personal income tax assessment issued against the Petitioners, for the year 1989 for tax, additions to tax, and interest, updated through February 28, 1994, should be and is hereby AFFIRMED.

WHEREFORE, it is the DECISION of the State Tax Department that the personal income tax assessment issued against the Petitioners for the year 1990 for tax, additions to tax, and interest, updated through February 28, 1994, should be and is hereby AFFIRMED.