September 23, 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, 2012.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers, a husband and wife, may have been required to file a Virginia individual income tax return for the 2012 taxable year. The Department requested information to verify whether the Taxpayers were subject to Virginia income tax. Based on the information provided, the Department determined that the Taxpayers were taxable as Virginia residents and issued an assessment. The Taxpayers appealed the assessment, contending the husband's income was not subject to Virginia income tax because he was an active duty military service member.
DETERMINATION
The Service Members Civil Relief Act (the "Act"), codified at U.S.C. § 571 et seq., provides that military personnel do not abandon their legal domicile solely by complying with military orders that require them to take residence in a different state or country. The Act, however, does not preclude the possibility that armed forces personnel may acquire a new legal domicile in the state where they are stationed, and thus subject themselves to taxation by that state as if they were a domiciliary resident. In order for the change of domicile to occur, there must be an abandonment of the old domicile and the acquisition of a new one. This change must be exhibited by an individual's intent and conduct. See United States of America v. Minnesota Department of Revenue, 97 F. Supp. 2d 973 (2000).
In general, the Department will not seek to tax an active duty military service member so long as the member maintains sufficient connections with another state to indicate intent to maintain domicile there. Such connections would include filing a State of Legal Residence Certificate (Department of Defense Form 2058), obtaining a driver's license, registering to vote and voting in local elections, registering an automobile, and exercising other benefits or obligations of a particular state. As long as a military service member maintains such connections, they would be considered to be a resident of the other state even though they work, live, and establish a permanent place of abode in Virginia. See Public Document (P.D.) 10-237 (9/30/2010).
The husband maintained connections with the state of ***** (State A) because he filed his state of legal residence certificate as a resident of State A, maintained a State A driver's license, and was registered to vote in State A. After consideration of all of the facts and circumstances of this particular case, I find that the evidence shows that the husband maintained significant connections with State A and did not establish a Virginia domicile for the 2012 taxable year.
The wife, however, acknowledges she was a Virginia resident during the 2012 taxable year and submitted a Virginia income tax return with the appeal. The return will be forwarded for processing and the assessment will be adjusted accordingly. A revised assessment will be issued if any outstanding liability remains. A refund will be issued if the adjustment results in an overpayment.
The Code of Virginia section and public document 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/1-6029520503.B