April 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 "Taxpayer") for the taxable year ended December 31, 2011. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer, a Virginia resident, accepted employment in ***** (State A) in June 2010. He listed his Virginia residence for sale in July 2010 and left Virginia to begin living and working in State A in August 2010. The Taxpayer, however, decided to end his employment and returned to Virginia in May 2011.
The Taxpayer filed a Virginia nonresident individual income tax return for the 2011 taxable year. Under review, the Department requested additional information from the Taxpayer concerning his residency status. The Taxpayer responded to the Department's information request. Based on the information provided, the Department determined that the Taxpayer was taxable as a domiciliary resident of Virginia for the 2011 taxable year because he had maintained a home in Virginia, retained his Virginia driver's license and voter's registration, and continued to use vehicles that were registered in Virginia. The Department also determined that the Taxpayer was an actual resident of Virginia because he had not submitted sufficient information concerning the number of days he was present in Virginia and elsewhere during 2011.
The Taxpayer appealed, contending that he should not have been considered a Virginia resident during the period he lived and worked in State A. The Taxpayer, however, states that he became a Virginia resident again when he returned to Virginia in May 2011.
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, 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish domicile. The Department determines a taxpayer's intent through the information provided.
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 this case, the Taxpayer performed some actions indicating that he intended to establish domicile in State A. In June 2010, the Taxpayer accepted an offer of permanent employment in State A. He then listed his Virginia residence for sale and left to take up his new position. While he worked in State A, he also leased a personal residence there. The Taxpayer, however, chose to end his employment and returned to Virginia in May 2011.
The Taxpayer also retained some ties to Virginia. He continued to lease a vehicle that was registered in Virginia, and he was still registered to vote in Virginia. In addition, he retained his Virginia driver's license.
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).
According to the Taxpayer, he did not obtain a State A driver's license because he became uncertain as to his employment status. In addition, although the Taxpayer continued to be registered to vote in Virginia, he did not actually vote in the 2010 election. Although the Taxpayer retained these connections to Virginia, the Department notes that he did not take any affirmative actions while he resided in State A that would indicate that he still considered himself a Virginia domiciliary, such as voting in a local Virginia election or renewing his Virginia driver's license (which would have required a statement acknowledging that he was a Virginia resident). Also, the information provided indicates that the Taxpayer attempted to sell his Virginia residence, by listing the home for sale with two different agents from July 2010 to March 2011. As such, it appears that when the Taxpayer left for State A, he intended to abandon his Virginia domicile with no intention of returning. The Taxpayer also established his personal presence in State A and showed his intent to remain there at least indefinitely by the acceptance of the permanent employment offer.
Part-Year Residents
Virginia Code § 58.1-303 provides that a person who becomes a resident of Virginia is subject to taxation during the period in which he or she is a Virginia resident and is taxed as a resident only for the portion of the year that he or she resides in Virginia. Generally, an individual who moves into or out of Virginia is permitted to file a part-year income tax return.
CONCLUSION
In this case, the information provided indicates that the Taxpayer was not a domiciliary or actual resident of Virginia in 2011 until he returned to Virginia in May. The Taxpayer, therefore, was required to file a part-year individual income tax return reflecting his status as a Virginia resident for the remainder of the 2011 taxable year. The Taxpayer submitted a part-year return with his appeal. The return will be reviewed and processed, and the assessment will be adjusted as warranted.
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/1-5803069473.M