September 19, 2016
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, 2012.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2012 taxable year. A review of the Department's records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer to determine if his income was subject to Virginia individual income tax. When the Taxpayer did not respond to the information request, the Department issued an assessment. The Taxpayer appeals, contending he has been a resident of ***** (Country A) since 1997.
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 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 Department must conclude that he or she intended to remain indefinitely in Virginia.
Since 1997, the Taxpayer has performed a number of actions indicating an intent to establish domicile in Country A. The Taxpayer accepted employment in Country A and has leased several personal residences there since 2001. The Taxpayer also obtained a Country A driver's license and vehicle registration in 2007. In addition, the Taxpayer married a national of Country A.
The Taxpayer also maintained some connections with Virginia. He continued to own a vehicle that was registered and garaged in Virginia at his parents' residence. He was also registered to vote in Virginia. In addition, he retained a Virginia driver's license and renewed it in 2010.
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 (12/9/2002).
The Taxpayer states that he kept a vehicle in Virginia because it was less expensive than renting vehicles when he returned to visit his family. The vehicle was kept as a convenience that was more economical than renting vehicles when the Taxpayer returned to Virginia to visit family. The vehicle, however, was disposed of sometime prior to 2012.
In addition, although the Taxpayer indicates that he was registered to vote in Virginia, he has not actually voted in more than eight years. Even if he had voted, the Department has observed that federal law generally allows United States citizens living abroad to vote in federal elections using a voter's registration from the state of the individual's last domicile. See 52 U.S.C. § 20310 (formerly 42 U.S.C. § 1973ff-6). See also P.D. 14-141 (8/13/2014). In addition, the exercise of such federal voting rights by an overseas citizen shall not affect the domicile or residence of such citizen for purposes of any federal, state or local tax. See 52 U.S.C. § 20309 (formerly 42 U.S.C. § 1973ff-5).
Other factors in this case are more indicative of an intent to change domicile to Country A. The Taxpayer has been employed in Country A for nearly twenty years and has married a Country A foreign national. Although mere absence from a jurisdiction is not usually sufficient by itself to prove intent to change domicile, the longer the length of absence from such jurisdiction and presence in another are, the more likely the taxpayer intended to change domicile. In addition, the Department would normally consider a taxpayer's marriage to a foreign national of another country while the taxpayer was himself living and working there to be strong evidence of intent to make that country his domicile.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the Taxpayer was not a domiciliary resident of Virginia as of the 2012 taxable year. Accordingly, the assessment will be abated. While the Department concedes that the Taxpayer was not a domiciliary resident of Virginia during the 2012 taxable year, the Taxpayer should be aware that continuing connections with Virginia, such as retaining a Virginia driver's license or other indicators of a permanent residence in Virginia will likely result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department's determination in subsequent taxable years. In addition, the Taxpayer should be aware that Virginia law does not permit nonresidents to obtain Virginia driver's licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law. Any applicant who knowingly makes a false statement to DMV is subject to penalties under Va. Code § 46.2-348.
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/1-6297041075.M