Tax Type
Individual Income Tax
Description
Taxpayers successfully changed their domicile to State A
Topic
Domicile
Filing Status
Persons Subject to Tax
Date Issued
08-10-2010
August 10, 2010
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 assessments issued to ***** (the "Taxpayers") for the taxable years ended December 31, 2004 through 2006. I apologize for the delay in responding to your letter.
FACTS
The Taxpayers, a husband and a wife, filed a Virginia part-year resident individual income tax return for the 2004 taxable year, reflecting a move to ***** ("State A") in May of that year. The Taxpayers, who are retirees, sold their home in Virginia and disposed of most of their motor vehicles. They also rented an apartment in State A and transferred a motor vehicle registration to State A.
For the taxable years at issue, the Department's auditor found that the Taxpayers' continued to spend a significant amount of time in Virginia. The auditor also determined that the Taxpayers maintained a home and automobiles in Virginia during the 2004 through 2006 taxable years. Based on this evidence, the auditor concluded that the Taxpayers had not abandoned their Virginia domicile and issued assessments for additional tax, interest and penalty for the 2004 through 2006 taxable years. The Taxpayers appeal the assessments, contending they changed their domicile to State A in 2004.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of a taxpayer and the place to which the intends to return even though he may actually reside elsewhere. 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 person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is subject to Virginia taxation.
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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish domicile.
The Department concedes that it is difficult to know whether a taxpayer intends to return, to his or her original domicile. The Department determines a taxpayer's intent through the information provided. In this case, the Taxpayers have the burden of proving that they established domicile in State A and abandoned their Virginia domicile. If the evidence is inadequate to meet this burden, the Department must conclude that the Taxpayers intended to maintain their Virginia domicile.
The Taxpayers took a number of actions indicating an intent to establish domicile in State A. They sold their home in Virginia. While the auditor found that the Taxpayers maintained this home, the evidence indicates it was sold to one of the Taxpayers' children. The Taxpayers leased a permanent place of abode in State A. They registered to vote in State A, and records indicate that they voted in State A. Before leaving Virginia, they transferred two of their four automobiles to their children in Virginia and donated another vehicle to a charity. The Taxpayers drove one automobile to State A, where it was registered and insured. They surrendered their Virginia driver's licenses and obtained licenses in State A. In 2004, the Taxpayers filed individual income tax returns with both Virginia and State A as part-year residents.
The Taxpayers also maintained a number of contacts with Virginia. They purchased a new automobile and registered it in Virginia during 2006. The Taxpayers indicate that this automobile was taken back to State A, but it remained registered in Virginia into 2008. They also returned to Virginia regularly, spending additional days in Virginia in 2004, and up to a total 180 days in multiple visits to Virginia during 2005 and 2006. They Taxpayers claim they were visiting family and friends.
Based on the evidence provided, I find that the Taxpayers successfully changed their domicile to State A during 2004, and they were not domiciliary residents of Virginia for the 2005 and 2006 taxable years. Accordingly, the assessments for the 2004 through 2006 taxable years have been abated.
The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Linda Foster
Deputy Tax Commissioner
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AR/1-3730480267.E
Rulings of the Tax Commissioner