Tax Type
Individual Income Tax
Description
Failure to file a Virginia income tax return.
Topic
Domicile
Federal Conformity
Out of State Tax Credits
Persons Subject to Tax
Date Issued
05-01-2013
May 1, 2013
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 assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2008. I apologize for the delay in responding to your appeal.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating the Taxpayer may be subject to Virginia individual income tax. The Department requested additional information from the Taxpayer. When there was no response, the Department issued an assessment for the 2008 taxable year. The Taxpayer appeals the assessment, contending she was a resident of ***** (State A) from December 2007
until the beginning of the 2009 taxable year.
DETERMINATION
Residency
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 burden of proving that the domicile has been changed lies with the person alleging the change.
The Taxpayer performed several actions indicating her intent to establish domicile in State A. The Taxpayer moved into a home with her fiancé in State A and used this address for federal income tax purposes. Her Virginia employer withheld income tax in State A, and the Taxpayer filed a State A resident income tax return.
The Taxpayer also performed a number of actions consistent with maintaining domicile within Virginia. She continued to work in Virginia, owned a motor vehicle registered in Virginia, and held a Virginia driver's license that was renewed in October 2008.
Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." Every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles a statement that certifies the applicant is a Virginia resident. A person providing a false statement is subject to punishment under the laws of the Commonwealth. The Department has found that an individual may successfully establish a domicile outside Virginia even if they retain a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver's license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/09/2002).
The Taxpayer argues that she intended to change her driver's license and vehicle registration but admitted that she kept putting it off. When the relationship ended in early 2009, the Taxpayer returned to Virginia. The evidence indicates the Taxpayer kept significantly more permanent connections with Virginia than with State A.
Based on the facts presented, I find that the Taxpayer has not met the burden of proving that she abandoned her Virginia domicile. Though the Taxpayer may have been an actual resident of State A, the Department finds that the Taxpayer was a domiciliary
resident of Virginia for the 2008 taxable year.
Even though the Taxpayer was a domiciliary resident of Virginia, she lived in State A for more than 183 days. Under the State A statute, an individual domiciled in another state is considered to be a resident of State A if they are in the state for more than 183 days during the taxable year. Thus, the Taxpayer would be considered to be a resident of State A even though she was a domiciliary resident of Virginia.
Credit for Income Tax Paid to Another State
Virginia Code § 58.1-332 A allows Virginia residents a credit on their Virginia return for income taxes paid to another state, provided the income is either earned or business income or gain on sale of a capital asset. Because the Taxpayer is a domiciliary resident of Virginia, she was entitled to claim the credit for the income tax paid to State A.
The Taxpayer provided copies of her federal W-2, federal return and State A return but failed to file a Virginia income tax return. Virginia Code § 58.1-341 A requires that a taxpayer file an individual income tax return by May 1 of the year following the tax year for which the return is filed. As a domiciliary resident of Virginia, the Taxpayer was required to file a Virginia income tax return for the 2008 taxable year.
The assessment at issue was made based on the best information available to the Department. The Taxpayer may have additional information that more accurately reflects her Virginia taxable income. Accordingly, the Taxpayer is hereby requested to file a Virginia income tax return for the 2008 taxable year to more accurately reflect her Virginia income tax liability.
The Taxpayer should file the requested return within 30 days of the date of this letter. Please send the return and payment for the 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 return is received, it will be processed and the assessment will be adjusted accordingly. If such return is 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 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 determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
Craig M. Burns
Tax Commissioner
AR/1-5040865221.D
Rulings of the Tax Commissioner