December 28, 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 the Taxpayer had not filed a return. Subsequently, an assessment was issued. The Taxpayer appealed, contending he became a resident of ***** (State A) in 2014.
DETERMINATION
Domicile
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 explains that his employment in Virginia ended in February 2014 and he moved to State A to begin new employment in March 2014. He states that he listed his Virginia residence for sale the same month. He leased a personal residence from family members in State A. In addition, his spouse obtained a State A driver’s license and vehicle registration. Further, they filed a 2014 State A income tax return as part-year residents. They filed that return and their 2014 federal income tax return using a State A address.
The Taxpayer also maintained some connections with Virginia. He continued to hold a Virginia driver’s license and had a trailer registered in Virginia. Some third party information returns were also sent to his Virginia address. The Taxpayer later obtained employment in Virginia again, and he returned in September 2015. He filed a 2015 part-year Virginia resident return reflecting the date he moved back.
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 Department considers placing the primary residence up for sale to be strong evidence of intent to abandon the domicile. In addition, a change of domicile can occur even if the taxpayer still owns the prior residence pending the sale. See P.D. 15-84 (4/23/2015). The Department has also ruled that individuals who engage in employment under set term contracts generally lack the intent to abandon their Virginia domicile based on the temporary nature of the activity. See, e.g., P.D. 18-161 (8/22/2018). Conversely, obtaining employment for an indefinite duration and physically relocating to a new state is evidence that a taxpayer intended to remain at least indefinitely in the new state. Further, although spouses do not have to share the same domicile, the fact that the Taxpayer’s wife moved with him to State A and obtained a State A license, vehicle registration and voter’s registration is additional evidence that the Taxpayer and the spouse, when considered together, intended to change domicile to State A.
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 changed his domicile when he left Virginia for State A in March 2014.
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
The Department finds that the Taxpayer successfully changed his domicile to State A in March 2014. Therefore, he was taxable only as a part-year resident of Virginia until the date of the move. The Taxpayer has submitted a part-year return for the 2014 taxable year. The return will be reviewed and processed, and the assessment will be adjusted accordingly and a refund issued, if 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/1777.M