Document Number
12-140
Tax Type
Individual Income Tax
Description
Taxpayer did not abandon her Virginia domicile when she moved to State A
Topic
Domicile
Federal Conformity
Persons Subject to Tax
Records/Returns/Payments
Date Issued
08-29-2012

August 29, 2012




Re: § 58.1-1821 Application: Individual Income Tax

Dear *****:

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

FACTS


The Department received information from the Internal Revenue Service (IRS) indicating the Taxpayer may be required to file Virginia individual income tax return for the 2008 taxable year. The Taxpayer provided a copy of her federal income tax return, Form W-2 and ***** (State A) income tax return as evidence that her income was not subject to Virginia's income tax for the year at issue. Under audit, the Department determined that the Taxpayer was a domiciliary resident of Virginia and required to report all income to Virginia.

The Department issued an assessment for the 2008 taxable year. The Taxpayer appeals the assessment, contending she resided in State A with her military spouse and received no income from Virginia sources for 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 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 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 who has not abandoned his Virginia residency continues to be subject to Virginia taxation.

The Taxpayer performed several activities to show that she had moved to State A. She moved to be close to her spouse, a military servicemember domiciled in ***** (State B). In addition, she worked for an employer near where the spouse was stationed and filed a joint State A income tax return with her spouse. However, the Taxpayer is reported as a nonresident on the State A return.

The Taxpayer also performed activities consistent with maintaining her Virginia domicile. In her appeal, the Taxpayer admits she was a permanent resident of Virginia in 2008. Evidence to support her declared intent includes continuing to hold a Virginia driver's license and owning a motor vehicle registered in Virginia. In addition, the Taxpayer returned to Virginia in 2009 after separating from the military servicemember.

Based on the evidence provided, the Taxpayer did not abandon her Virginia domicile when she moved to State A. Therefore, she was required to file a 2008 Virginia income tax return pursuant to Va. Code § 58.1-341. Further, Va. Code § 58.1­326 states, "if a husband or wife is a resident and the other is a nonresident, separate taxes shall be determined on their separate Virginia taxable incomes on such single or separate forms as may be required by the Department, unless both elect to determine their joint Virginia taxable income as if both were residents." When a resident/nonresident married couple does not elect to determine their Virginia taxable income as if both were residents, Title 23 of the Virginia Administrative Code (VAC) 10­110-190 B provides:
    • In the case of a married couple, one of whom is a nonresident of Virginia filing separately, each spouse must account separately for items of income deductions, and exemptions. Where such items cannot be accounted for separately, deductions and personal exemptions must be proportionally allocated between each spouse based upon income attributable to each. (Emphasis added.)

As a domiciliary resident, the Taxpayer must file a separate Virginia return for the 2008 taxable year. The return must be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. Upon receipt, the return will be reviewed and processed and the assessment will be revised accordingly. If the return is not received within the allotted time, the assessment will be adjusted in accordance with the information available and collection action will resume.

The Code of Virginia sections and regulation cited 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, please contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,


                • Craig M. Burns
                  Tax Commissioner




AR/1-4996462214.D


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46