Document Number
18-153
Tax Type
Individual Income Tax
Description
Residency, Domicile and Failure to Abandon
Topic
Appeals
Date Issued
08-08-2018

 

August 8, 2018

 

 

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, 2014.

 

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 2014 taxable year.  A review of the Department’s records showed that Taxpayer had not filed a return.  The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia.  When a response was not received, the Department issued an assessment.  The Taxpayer appeals, contending he was a resident of the ***** (Country A).

 

DETERMINATION

 

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia 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 states that he accepted a position in Country A and moved there with his spouse in February 2013.  The Taxpayer also explains that he purchased a personal residence in ***** (State A) in September 2013 and intended to make it his permanent home if he chose not to remain in Country A.  Because the State A residence was not complete by January 2015 when the Taxpayer decided to leave Country A, he returned to Virginia instead.

 

While he was in Country A, the Taxpayer also maintained connections with Virginia.  He owned a personal residence in Virginia, had a Virginia voter’s registration and kept several vehicles registered in Virginia.  He also maintained 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.”  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).

 

As stated above, 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 two elements must exist concurrently.  It appears doubtful whether the Taxpayer truly intended to make Country A his permanent, or at least indefinite, home based on his admission that he was uncertain about living in Country A and evidenced by his purchase of a residence in State A not long after he left the United States.  Regardless, even if the Taxpayer took sufficient steps to establish domicile in Country A, he has failed to prove his intent to abandon his Virginia domicile because of the number of connections he retained with Virginia while he resided in Country A together with the fact that he began residing in Virginia again when he returned from Country A.  Therefore, a change of domicile did not occur, and the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2014 taxable year.

 

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111.  The Taxpayer, however, may have information that better represents his Virginia income tax liability for the taxable year at issue.  Therefore, he should file a 2014 Virginia resident income tax return to reflect more accurately his Virginia tax liability.

 

The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161-7203, Attention: *****.  Upon receipt, the return will be reviewed and the assessment will be adjusted, as appropriate.  If the return is not received within the allotted time, the assessment will be considered to be correct.

 

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/1471.M

 

Rulings of the Tax Commissioner

Last Updated 09/11/2018 08:37