Tax Type
Individual Income Tax
Description
Determination of domiciliary residency burden of proof on Taxpayer.
Topic
Domicile
Persons Subject to Tax
Records/Returns/Payments
Residency
Date Issued
03-18-2013
March 18, 2013
Re: Request for Ruling: Individual Income Tax
Dear *****:
This will reply to your letter in which you request a ruling regarding the status of ***** and his wife (the "Taxpayers") concerning their Virginia income tax liability. I apologize for the delay in responding to your request.
FACTS
After a number of years abroad, the Taxpayers, a husband and a wife, moved to Virginia in 2004 when the husband, a foreign service specialist, was assigned to a position in Virginia. They purchased a house and registered motor vehicles in Virginia. The husband registered to vote and obtained a commission as a notary in Virginia. They retained driver's licenses for ***** (State A), their domiciliary residence.
In 2007, the husband was transferred to an overseas assignment. He surrendered his notary license. The Taxpayers also sold their motor vehicles and cancelled their Virginia voting registrations. They converted their Virginia residence into a rental property. The Taxpayers filed a Virginia part-year return for 2007 and filed nonresident Virginia returns for 2008 and subsequent taxable years.
The husband has been offered a two year assignment back in the United States. If the husband accepts the position, the Taxpayers would move back into their Virginia home. The Taxpayers request a ruling as to whether they would be considered Virginia residents for the 2007 through 2012 taxable years if they moved back to Virginia in 2013.
RULING
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 or another country who has not abandoned his Virginia residency continues to be 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 determines a taxpayer's intent through the information provided.
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 Public Document (P.D.), 91-70 (4/15/1991), the Department ruled that a foreign services employee may retain his original state of domicile even while assigned to a temporary post in Virginia. While acknowledging the employment by the United States Department of State as a foreign service officer is generally temporary in nature, the determination of one's domicile can only be made after considering all of the facts and circumstances.
In P.D. 87-161 (6/2/1987), the Department held that a foreign service officer domiciled in another state would not establish domicile in Virginia merely by purchasing a home in Virginia to reside in while temporarily on assignment in Washington D.C. In that case, the foreign service officer and his spouse maintained driver's licenses and voter registrations in another state and had no other connection with Virginia.
The Taxpayers state that their clear intent was to retain domicile in State A, as evidenced by the fact that they held State A driver's licenses. However, the Taxpayers established considerably more connections with Virginia than they held with State A during the 2004 through 2007 taxable years. Based on the facts presented, the Department would likely consider the Taxpayers to have been domiciliary residents in Virginia from 2004 through 2007.
When they moved overseas, however, they did take substantial steps to abandon their Virginia domicile. They relinquished all of their connections with Virginia except for the house, which they converted to rental property.
In order to change one's domicile, the current domicile must be abandoned and a new domicile established. While the facts appear to show that the Taxpayers took steps to abandon their Virginia domicile, the question remains as to whether the Taxpayers took sufficient steps to establish their domiciliary residence outside Virginia in 2007. If the Taxpayers failed to establish a new domicile after leaving Virginia in 2007, they would be considered to have retained their Virginia domiciliary residence for 2008 and thereafter. Under such circumstances, they would be subject to tax as Virginia residents for those taxable years.
The Taxpayers have made no claim that they established domicile in a foreign country. The question, therefore, hinges on whether the Taxpayers' stated intent and State A driver's licenses are sufficient to reestablish domicile in State A.
In the context of a ruling request, the Department is limited to analyzing a set of facts as presented by a taxpayer. The facts presented here do not clearly indicate a reestablishment of domicile in State A when the Taxpayers moved overseas in 2007. Generally, acquiring domicile in a new location requires both intent and personal presence. See Coopers Adm'r v. Commonwealth, 121 Va. 338, 93 S.E 680 (1917). The Taxpayers have provided no evidence that they were physically present in State A after leaving Virginia in 2007.
Because the determination of domiciliary residency is highly dependent on facts and circumstances, not just those presented by a taxpayer, this ruling is based on the facts presented as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
Additional information and documentation that could affect the Taxpayers' residency would include, but not be limited to, the nature of the husband's assignments in Virginia and overseas; information regarding the wife's connections to Virginia, State A or other states and countries; any additional connections the Taxpayers maintained or established with State A or a foreign country; and State A's tax filing and residency requirements.
The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules, and Decisions section of the Department's web site. If you have any questions regarding this ruling, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5202244377.B
Rulings of the Tax Commissioner