June 1, 2023
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, 2018.
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 2018 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. Based on the information provided by the Taxpayer and the information otherwise available to the Department, the Department determined that the Taxpayer was taxable as a part-year resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was a resident of ***** (State A) for the entire taxable year.
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 that person and the place to which that person intends to return even though they may be residing elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.
The Taxpayer worked for a State A based employer during the taxable year at issue. His employment required frequent travel. In 2017, the Taxpayer began searching for a personal residence to purchase in State A. The search resulted in the Taxpayer purchasing a residence there in May 2018. The Taxpayer has provided two letters which attest that he resided with a friend in State A from February 2017 until May 2018.
The Taxpayer did retain some connections with Virginia. He maintained a Virginia driver’s license until June 2018 when it was surrendered to State A. In addition, several of the Taxpayer’s federal tax documents were sent to his parent’s Virginia address.
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 that individual 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 Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. The Taxpayer made a statement to a representative to the Department that he resided with his parents in their Virginia residence during the 2018 taxable year until May 2018. However, he provided two letters from individuals attesting that he resided with a friend in State A from February 2017 until May 2018.
The Department considers a change of domicile to be part of a process and the change is generally considered to have occurred at the beginning of that. Even though the Taxpayer did not purchase a residence in State A until May 2018, or surrender his Virginia driver’s license until June 2018, his actions demonstrated a clear intent to change his domicile. In particular, the fact that his employment required him to reside in State A, combined with his search for a State A residence, established this intent. After carefully considering all of the evidence presented, I find that that Taxpayer changed his domicile to State A prior to the beginning of the 2018 taxable year. Accordingly, the assessment issued for the taxable year ended December 31, 2018 will be abated.
The Code of Virginia sections and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. 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/4450.B