September 20, 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 “Taxpayers”) for the taxable year ended December 31, 2013.
FACTS
The Taxpayers, a husband and wife, filed a joint 2013 part-year resident Virginia individual income tax return. Under audit, the Department determined that the Taxpayers were taxable as residents of Virginia for the entire 2013 taxable year and issued an assessment. The Taxpayers appealed, contending the husband became a resident of ***** (State A) in February 2013.
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.
The husband performed some activities to indicate his intent to establish domicile in State A in February 2013. He obtained full-time employment in State A . He also obtained a State A driver's license. The husband leased space in a park for recreational vehicles. It appears the husband lived in the Taxpayers' Virginia registered camper while he was in State A. The Department does not generally consider such accommodations to be a permanent place of abode. The Taxpayers also claim that they paid taxes to State A on the husband's income. State A, however, did not have an income tax.
In addition, the husband became a full-time student at a university in State A in August 2013. It has been the Department's experience that college students rarely establish domicile in the state where they attend college. See Public Document (P.D.) 82-39 (4/2/1982) and P.D. 11-121 (6/30/2011). Likewise, employment engaged in by college students tends to be temporary in nature. It is unclear, however, whether the husband continued to be employed after he began school, and if he was, whether it was full or part-time.
The Taxpayers also maintained a number of connections with Virginia. The wife continued to live at the Taxpayers' Virginia residence. The Taxpayers were registered to vote in Virginia, owned vehicles that were registered in Virginia and had family members who resided in Virginia. In addition, the Taxpayers filed their 2013 federal and Virginia income tax returns using their Virginia address and had all of their 2013 tax information returns mailed to that address.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully weighing the evidence, I find that even if the husband performed sufficient activities to establish domicile in State A, his retained connections with Virginia indicate he did not intend to abandon his Virginia domicile. In particular, it appears that the camper or recreational vehicle the husband lived in continued to be registered in Virginia. The Department has observed that insurance rates are generally lower in Virginia than in State A. See P.D. 11-5 (1/11/2011). The Department considers a taxpayer's continued connections to Virginia for the purpose of taking advantage of favorable Virginia laws in order to gain the benefits of lower costs available to Virginia residents to be strong intent of that taxpayer's desire to be a domiciliary resident of Virginia In addition, although the Taxpayers indicated that the husband's employment in State A was permanent and that he did not intend to return to Virginia, he did, in fact, return to Virginia after approximately one year without having ever relinquished a number of other Virginia connections.
As stated above, a change of domicile requires not only the establishment of a new domicile but also the abandonment of the old. Because the Taxpayers have not proven that the husband intended to abandon his Virginia domicile, a change of domicile did not occur and the husband, therefore, remained a domiciliary resident of Virginia. A domiciliary resident of Virginia working in another part of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Accordingly, the assessment is upheld.
The Taxpayers will receive an updated bill, which will include accrued interest to date. The Taxpayers should remit payment within 30 days of the bill date to avoid the accrual of additional interest.
The Code of Virginia sections 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/1-6335013252.M