September 28, 2022
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, 2017.
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 2017 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 her income was taxable in Virginia. After reviewing the information provided, the Department determined that she was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending she was a resident of ***** (State A).
DETERMINATION
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 a taxpayer and the place to which he intends to return even though he may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country or in another country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. 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.
In order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change.
In determining domicile, consideration may be given to the individual’s expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, profession or employment, income sources, residence of spouse, marital status, situs of real or tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine the person’s domicile. A person’s true intention must be determined with reference to all the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The Department determines a taxpayer’s intent through the information provided. A taxpayer has the burden of proving that he has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he intended to remain indefinitely in Virginia.
The Taxpayer has extensive connections with State A. The Taxpayer purchased a residence and has been living in State A since 2010, when she retired from her employment as a staff member for a congressperson from State A. The Taxpayer has filed State A resident income tax returns and has voted in State A since then. In 2017, she also purchased a vehicle and registered it in State A. Prior to the period when she resided in Virginia while working as a congressional staff member, she lived and worked in State A. The Taxpayer has family who live in State A, and she has State A business interests.
The Taxpayer still retained some connections to Virginia as well. She continued to own a house in Virginia. The Taxpayer reports that, since 2010, she used the house as a second home to return to when she was visiting friends or attending special events. The Taxpayer explains that she intends to sell the house, but the process has been delayed because of her health issues. The Taxpayer also renewed her Virginia driver’s license in 2017.
Virginia Code § 46.2-323.1 states, “No driver’s license... shall be issued to any person who is not a Virginia resident.” In fact, this section states that every person applying for a driver’s license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver’s license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver’s license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002).
The Taxpayer explains that she renewed her Virginia license because she was in the area visiting friends, the license was expiring, and she needed it for identification purposes. The Taxpayer states that the license was set to expire before she would have returned to State A. In addition, the Taxpayer reports that she has had many medical issues regarding her eyesight that has made it impossible to pass State A’s eye exam required to receive a State A driver’s license. Her admission raises doubts as to whether she was eligible to hold a driver’s license in any state.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the greater weight of the evidence, most notably both the Taxpayer’s extensive past and present connections with State A, indicate she had the intent to change her domicile back to State A. Therefore, I find that the Taxpayer was not a domiciliary resident of Virginia for the taxable year ended December 31, 2017. Accordingly, the assessment will be abated.
The Taxpayer should be aware that continuing connections with Virginia, such as retaining a Virginia driver’s license, or other indicators of permanent residence in Virginia will likely result in contacts by the Department inquiring about the situs of the Taxpayer’s domicile. In addition, Virginia law does not permit nonresidents to obtain Virginia driver’s licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law. Any applicant who knowingly makes a false statement to DMV is subject to penalties under Virginia Code § 46.2-348.
The Code of Virginia sections and public documents 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/4114.Y