Tax Type
Individual Income Tax
Description
Taxpayer did not abandon his domiciliary residence in Virginia
Topic
Domicile
Federal Conformity
Persons Subject to Tax
Records/Returns/Payments
Date Issued
05-10-2013
May 10, 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, 2009. I apologize for the delay in responding to your appeal.
FACTS
The Department received information from the Internal Revenue Service (IRS) that the Taxpayer received financial statements at a Virginia residence. The Department requested additional information from the Taxpayer to determine if his income was subject to Virginia's income tax. When no response was received, the Department issued an assessment for additional tax and interest. The Taxpayer appeals the assessment, contending he moved to ***** (State A) during the 2007 through 2011 taxable years to complete a contract assignment and returned to Virginia during the 2011 taxable year. When the contract was completed, the Taxpayer returned to 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 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.
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 or domicile.
The Department determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
The Taxpayer performed several actions indicating a possible change in domicile. He established a place of abode in State A and had State A income tax withheld from his wages. The Taxpayer filed a State A income tax returns as a resident of State A. The Taxpayer was transferred to State A to for an employment assignment. The evidence provided, however, indicates that this assignment may have been temporary.
The Taxpayer also continued to maintain a number of connections with Virginia. He received third party information returns at his Virginia residence. The Taxpayer contends that his Virginia residence was maintained by a family member, but no rental income is reported on his federal income tax return. The Taxpayer could move back into this property at any time, and he had use of the property when he was in Virginia. The Taxpayer held a Virginia voter's registration card, and participated in the 2008 and 2010 general elections in Virginia. It appears the Taxpayer was transferred back to Virginia during the 2010 and 2011 taxable years because his employer reported Virginia withholding for these taxable years. The Taxpayer continued to register his motor vehicles 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." 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 found that an individual may successfully establish a domicile outside Virginia even if he retains 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).
Based on the facts presented, the Department concludes the Taxpayer did not abandon his domiciliary residence in Virginia during the 2007 through 2011 taxable years. Accordingly, the Taxpayer was a domiciliary resident of Virginia for the taxable years at issue.
The assessments, however, are based on information available to the Department pursuant to Va. Code § 58.1-111. In addition, Va. Code § 58.1-332 does permit a credit to Virginia residents on their Virginia individual income tax return for income taxes paid to another state, provided the income is either earned or business income, or gain from the sale of a capital asset upon proof of such payment. It appears likely that the Taxpayer would have been subject to State A income tax on income he earned while working there and may be eligible for a credit for taxes paid to State A. As such, the Taxpayer may want to file Virginia income tax returns to more accurately reflect his income and to ascertain if he qualifies for a tax credit for the income tax paid to another state.
The returns should be submitted to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond Virginia 23261-7203, Attention: *****, within 30 days from the date of this letter. If the returns are not received, the Department's assessments will be considered to be correct and collection actions 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/1-5112574757.D
Rulings of the Tax Commissioner