July 7, 2015
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 "Taxpayers") 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 Taxpayers may have income subject to Virginia income tax for the 2009 taxable year. Because they maintained their Virginia driver's licenses, their Virginia voter's registration cards, and continued to use their Virginia address as their place of residence, the Department's auditor held the Taxpayers were domiciliary residents of Virginia and issued an assessment. The Taxpayers filed an appeal, contending they moved out of Virginia in 2000 and established domicile in ***** (Country A).
DETERMINATION
Two classes of residents, a domiciliary resident and ah 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 or 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 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 Taxpayers performed a number of steps indicative of establishing domicile in Country A. The husband, a native of Country A, accepted employment in Country A in 2000. The Taxpayers sold their Virginia residence and established a permanent place of abode in Country A. They own no personal or real property in Virginia. The Taxpayers filed Country A tax returns as residents and federal income tax returns as residents living abroad. The Taxpayer also registered a motor vehicle in Country A.
The Taxpayers, however, continued to hold their Virginia driver's licenses and Virginia voter's registrations after moving to Country A. The husband renewed his Virginia driver's license in May 2008 and again in June 2013. The wife renewed her Virginia driver's license in June 2007 and November 2012.
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. Further, any applicant who knowingly makes a false statement to DMV is subject to penalties under Va. Code § 46.2-348. The Department has also 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). Exceptions may apply for domiciliary residents who serve in the armed forces, work outside of the United States, or individuals who provide proof that they are bona fide residents of Virginia.
The Department discovered that the Taxpayers held Virginia voter's registration cards using their prior Virginia residence as their dwelling place. The Taxpayers argue that they only used the cards to vote absentee ballot. 42 U.S.C. § 1973ff-1 requires states to establish procedures in order to permit absentee voting in federal elections for certain overseas voters. In addition, 42 U.S.C. § 1973aa-1 eliminates the application of durational residency as a precondition to voting in federal elections. Therefore, a taxpayer can use his prior address in Virginia, whether he has ties to it or not.
To comply with federal law, the Virginia Board of Elections (VBE) has established absentee ballot procedures that allow a residential exception for covered voters living abroad. See Va. Code § 24.2-452 and §24.2-700. The Taxpayers provided documentation from the Virginia Election Board as proof that they participated only in federal elections, and only by absentee ballot.
After reviewing all of the evidence in this case, it is my determination that the Taxpayers were domiciliary residents of Country A during the 2009 taxable year. Accordingly, the assessment will be abated.
The Taxpayers, however, should be aware that continuing to hold their Virginia driver's licenses will likely result in future contact by the Department. Further, Virginia law does not permit nonresidents to obtain or continue to hold Virginia driver's licenses. As such, any persons providing a false statement to DMV for the purpose of maintaining a Virginia driver's license may be subject to penalty of perjury under Virginia law.
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/1-5769013183.D