December 11, 2014
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 "Taxpayer") for the taxable years ended December 31, 2010 and 2011.
FACTS
In Public Document (P.D.) 14-45 (3/28/2014), the Department upheld the assessment issued to the Taxpayer on the basis that he failed to demonstrate the clear intent to abandon his Virginia domicile because he had retained connections to Virginia and had not established a permanent place of abode elsewhere. Subsequent to the issuance of P.D. 14-45, the Department issued assessments of individual income tax for the 2010 and 2011 taxable years on the basis that the Taxpayer continued to be a Virginia domiciliary resident. The Taxpayer appeals, contending that he was a resident of ***** (State A) and ***** (State B) during the taxable years 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 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 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, situs 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.
In P.D. 14-45, the Taxpayer provided some evidence of his intent to establish domicile in State A in 2008. The Taxpayer's State A employer verified that the Taxpayer had been employed as a merchant mariner since May 2008. The Taxpayer also established a local post office box. The Department observed, however, that the Taxpayer never established a permanent place of abode in State A because he stayed either at the company's training center or motels when not at sea.
In this case, the Taxpayer contends he was a resident of both State A and State B during the 2010 and 2011 taxable years. The Taxpayer has provided a copy of a lease agreement for a personal residence in State B. The lease ran from December 2009 until November 2011. In addition, in December 2009, the Taxpayer notified the IRS that the State B residence was his new address. It appears, however, that the Taxpayer continued to spend most of his time at sea or in State A.
As noted in P.D. 14-45, the Taxpayer also performed several activities consistent with retaining domicile in Virginia. He continued to hold a Virginia voter's registration. In addition, he married a Virginia resident in 2008. The wife remained in Virginia, and the Taxpayer returned periodically to visit her. The Taxpayer gave his wife power of attorney to handle his affairs in Virginia. He also maintained his Virginia driver's license, which he renewed in September 2011.
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 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 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 (12/9/2002).
The concept of domicile requires both the establishment of a new residency in fact and an intent to abandon the old domicile and remain in the new. See Mitchell v. United States, 88 U.S. 350, 1874 WL 17410 (1874). The mere absence from a previous domicile, however long, is insufficient to prove intent. The Taxpayer must also prove he intended to change his domicile permanently even if he established a permanent place of abode in State B. See P.D. 13-89 (6/10/2013).
In this case, the activities the Taxpayer performed that were consistent with retaining domicile in Virginia during the 2009 taxable year continued during the 2010 and 2011 taxable years as well. In fact, it was during the 2011 taxable year that the Taxpayer last renewed his Virginia driver's license. As such, I find that the Taxpayer did not successfully abandon his Virginia domicile prior to or during either of the taxable years at issue. The Taxpayer, therefore, remained taxable as a domiciliary resident of Virginia during the 2010 and 2011 taxable years.
Accordingly, the assessments for the 2010 and 2011 taxable years are upheld. Updated bills, with interest accrued to date, will be mailed to the Taxpayer shortly. No further interest will accrue provided the outstanding balance is paid within 30 days from the date indicated on the revised bill.
The Code of Virginia sections and public documents 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/1-5721704204.M