Document Number
17-191
Tax Type
Individual Income Tax
Description
Domicile, Actual Resident, Nonfiler
Topic
Domicile
Date Issued
11-16-2017

November 16, 2017

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, 2013.

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 2013 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 in order to determine if her income was taxable in Virginia.  When a response was not received, the Department issued an assessment.  The Taxpayer appeals, contending she was a resident of ***** (State A) and ***** (State B).

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 has 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 Taxpayer was a domiciliary resident of Virginia and left for graduate school in State A in 2011.  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.) 11-101 (6/9/2011).  Although the Taxpayer leased a personal residence in State A while she was attending school, it does not appear that she established any other connections in State A that would indicate her intent to establish a permanent or indefinite residency.

After graduation, the Taxpayer left State A in June 2013 to begin employment in State B.  The documentation provided indicates the employment was for an indefinite duration.  The Taxpayer, however, only lived in State B for approximately one year and returned to Virginia in 2014.  The Taxpayer also claims that while she was residing in State B, she obtained a State B driver's license and vehicle registration.  The Department's records, however, indicate that she retained her Virginia driver's license and did not surrender it to State B officials.

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 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 Department's records indicate that the Taxpayer obtained a Virginia driver's license in September 2010, prior to when she began graduate school in State A.  The license was valid until 2018, and she did not renew it during her period of State B residency.

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 remained a domiciliary resident of Virginia until she left State A to begin employment in State B.  I also find that the Taxpayer changed her domicile to State B at that time.

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.  Accordingly, Virginia taxable income is computed by determining income, deductions, subtractions, additions and modifications attributable to the period of residence in Virginia.  In addition, a part-year resident may claim a portion of his Virginia personal exemptions, but the exemptions will be prorated based upon the number of days that the taxpayer was a Virginia resident.  Further, a part-year resident may claim a prorated Virginia standard deduction if he claims the standard deduction for federal income tax purposes.  See P.D. 14-67 (5/20/2014).

As a domiciliary resident of Virginia until June 2013, the Taxpayer was a part-year resident of Virginia for income tax purposes.  The Taxpayer had capital gains from sales of securities in January 2013.  Such income was subject to Virginia income tax because it was received during the period she was considered a Virginia resident.  Because the gains did not exceed the income threshold for filing a Virginia individual income tax return, however, the Taxpayer was not required to file a 2013 part-year return.

CONCLUSION

The Taxpayer remained a domiciliary resident of Virginia until June 2013, at which time she became a domiciliary resident of State B.  Although the Taxpayer received income during her period of part-year Virginia residency in 2013, it did not exceed the threshold for filing a Virginia individual income tax return.  Accordingly, the assessment will be abated.

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/1277.M

 

Rulings of the Tax Commissioner

Last Updated 12/14/2017 12:42