Tax Type
Individual Income Tax
Description
Husband did not stay in Virginia for more than 183 days in either year
Topic
Domicile
Filing Status
Persons Subject to Tax
Taxable Income
Date Issued
10-16-2013
October 16, 2013
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the Virginia individual income tax assessments issued to ***** (the "Taxpayers") for the taxable years ended December 31, 2010 and 2011.
FACTS
The Taxpayers, a husband and wife, were Virginia residents. In July 2006, the husband accepted a job in ***** (State A). His employment contract required him to work in the State A office. In 2007, the husband leased a residence, obtained a State A driver's license, and registered a motor vehicle in State A.
The wife and the couple's children continued to reside in Virginia during the taxable years at issue. The husband traveled frequently to Virginia throughout 2010 and 2011. The wife and husband jointly owned three Virginia residences during the taxable years at issue. The wife and children resided in one home, one home was rented out, and one home remained empty. In addition, two motor vehicles were registered in the wife's name in Virginia.
The husband's 2010 and 2011 W-2 statements were sent to the State A address. Some of the husband's federal reports were sent to the State A address and some were sent to the Virginia residence. The Taxpayers' federal returns were prepared using the Virginia residence. The Taxpayers filed part-year Virginia individual income tax returns under the status "married, filing separately on this combined return" for the 2010 and 2011 taxable years and attributed all of the husband's income to State A.
The Taxpayers were audited and the Department concluded that the husband was a domiciliary resident of Virginia. As a result, the Department issued assessments for additional tax and interest for the 2010 and 2011 taxable years. The Taxpayers appeal the assessments, contending the husband was not an actual or domiciliary resident of Virginia.
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 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 individuals' 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 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 or she has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
The husband performed a number of actions to establish domicile in State A. He moved to State A in order to accept an employment opportunity. The requirements of his job required that it be performed in the State A office. The evidence indicates this was a permanent position of indefinite duration. He acquired a permanent place of abode in State A and also registered a motor vehicle in State A. In addition, the Taxpayer surrendered his Virginia driver's license and obtained a State A license.
The husband also maintained a number of connections with Virginia. The wife and children remained in Virginia. The wife was employed in Virginia and the children were enrolled in Virginia schools. The Taxpayers purchased a new residence in Virginia in 2010 where the wife and children continued to reside. In addition, the Taxpayers owned a rental property and their former residence. The husband returned to Virginia numerous times in 2010 and 2011, but did not stay in Virginia for more than 183 days in either year. The Taxpayers' federal returns were filed using the Virginia residence's address.
In Public Document (P.D.) 00-151 (8/18/2000), the Department found it reasonable under specific facts and circumstances for a taxpayer domiciled outside Virginia to retain ownership in a family home when a spouse and children remained domiciled in Virginia. In this case, the wife remained in Virginia for employment reasons. In addition, the wife and children moved in 2010 to remain in a desired school district.
The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. After carefully weighing all of the facts, I find that the preponderance of evidence shows that the husband successfully abandoned his Virginia domicile and established domicile in State A in 2009.
Based on this determination, the Taxpayers incorrectly filed Virginia part-year income tax returns for the taxable years at issue. Accordingly, the wife may file separate Virginia income tax returns and the husband would be required to file nonresident returns because he would have received Virginia source income from the rental property. In the alternative, Va. Code § 58.1-326 permits married couples to compute their Virginia taxable income on a joint return as if both were residents of Virginia.
The Taxpayers should file the appropriate returns within 30 days of the date of this letter. Please send the returns and payment for any corresponding liability, to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23218-7203, Attention: *****. Once the returns are received, they will be processed and the assessments will be adjusted accordingly. If the returns are not filed within the allotted time, the assessment will be considered to be correct and collection action will resume.
The Code of Virginia sections and public document 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/1-5451117127.B
Rulings of the Tax Commissioner