12-136 | Virginia Tax

Tax Type

Individual Income Tax

Description

Burden of proving domicile lies with the person alleging the change.

Topic

Domicile

Federal Conformity

Persons Subject to Tax

Records/Returns/Payments

Date Issued

08-20-2012

August 20, 2012

Re: § 58.1-1821 Application: Individual Income Tax

Dear *****:

This will reply to your letter in which you seek correction of individual income tax assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2008.

FACTS

The Department received information from the Internal Revenue Service (IRS) that third party information returns were mailed to the Taxpayer at a Virginia address. A review of the Department's records indicated that the Taxpayer had not filed a Virginia individual income tax return for the 2008 taxable year. The Department requested an explanation or a tax return from the Taxpayer. When a response was not received, an income tax assessment was issued based on available information. The Taxpayer appeals the assessment, contending he was a domiciliary of ***** (State A) and ***** (Country A) during the taxable year at issue.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. The domicile 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 actually reside elsewhere. For a person to change domiciliary residency to another state, 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, 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 residency.

In 2004, the Taxpayer abandoned his Virginia domicile and established domicile in State A after he accepted employment in State A. In January 2008, he accepted a position with a professional sports team in Country A. In the process of moving from State A to Country A, he visited his family in Virginia. While in Virginia, the Taxpayer obtained a Virginia driver's license, registered a motor vehicle, and registered to vote.

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 ruled that obtaining or renewing a Virginia license is a strong indicator of an individual's intent to be a domiciliary resident of Virginia. See Public Document (P.D.) 02-149 (12/09/2002). The Department has also found that an individual may successfully establish a domicile outside Virginia even if a Virginia driver's license is retained. See P.D. 00-151 (8/18/2000).

The Taxpayer states that the motor vehicle was left in Virginia for the use of his parents and they took over payments on the loan. The Taxpayer also used the Virginia address for federal information returns because of the timing of his move to Country A. He had left State A before the returns would have been mailed and did not establish a permanent address in Country A until after they were required to be issued.

In Country A, the Taxpayer began working for his employer and established a permanent place of abode. The evidence shows that he lived and worked in Country A for more than 280 days in 2008, while spending less than a month in Virginia. The information also shows that the Taxpayer worked in Country A at a permanent job assignment through 2010.

After considering all of the evidence, I find that the Taxpayer did not intend to establish his domiciliary resident in Virginia in 2008. Accordingly, the assessment issued for the 2008 taxable year has been abated.

The Taxpayer should be aware, however, that any additional connections with Virginia (continuing to hold or renewing a Virginia driver's license, using a Virginia address for primary financial documents, maintaining property in Virginia, or other indicators of a permanent residence in Virginia) could change this determination for subsequent taxable years. In particular, the Department will scrutinize any individual availing himself of the protection of Virginia law by obtaining a driver's license and then claiming to be resident of a jurisdiction other than Virginia.

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 *****.

- - - - Sincerely,

- - - - Craig M. Burns
        Tax Commissioner

AR/1-5004601207.E

Rulings of the Tax Commissioner