May 4, 2021
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, 2017.
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 2017 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 his income was taxable in Virginia. Based on the information provided, the Department concluded that the Taxpayer was taxable as a domiciliary resident of Virginia. The Taxpayer appeals, contending he was a resident of ***** (State 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 established connections in State A that indicate he may have intended to establish domicile there. After the Taxpayer graduated from a State A university in 2016, he obtained employment in State A. The Taxpayer has also leased several personal residences in State A since then. In addition, he filed a 2017 State A income tax return. Despite listing twelve months of residency in State A, however, he filed State A’s nonresident and part-year resident return rather than the resident return.
The Taxpayer also retained connections with Virginia. He filed his State A and federal income tax returns using a Virginia address. He also retained a Virginia driver’s license and a Virginia voter’s registration which he has used to vote each year since 2016.
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).
With regard to eligibility to vote, Article II, Section 1 of the Constitution of Virginia states in relevant part as follows:
In elections by the people, the qualifications of voters shall be as follows: Each voter shall be a citizen of the United States, shall be eighteen years of age, shall fulfill the residency requirements set forth in this section, and shall be registered to vote pursuant to this article.
The residence requirements shall be that each voter shall be a resident of the Commonwealth and of the precinct where he votes. Residence, for all purposes of qualification to vote, requires both domicile and place of abode.
The domicile and place of abode requirement found in the Constitution of Virginia is also reflected in the definition of “residence” or “resident” used in Virginia election statutes. See Virginia Code § 24.2-101. Consistent with the precedent established by the Virginia Supreme Court in Coopers Adm’r v. Commonwealth, 121 Va. 338, 93 S.E. 680 (1917), the Department will consider the fact that a taxpayer obtained a Virginia voter’s registration and voted in elections in Virginia to be very strong evidence that that individual considered Virginia to be his domicile during the time he held and used such registrations.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. It has been the Department’s experience that college students rarely establish domicile where they attend college. See P.D. 82-39 (4/2/1982) and P.D. 11-121 (6/30/2011). As such, most college students will remain domiciled where they were domiciled at the time they entered college. In this case, the Taxpayer had already graduated college in State A prior to the taxable year at issue. The fact that he remained in State A after graduation to live and work suggests that he may have had the intent to establish domicile in State A.
As stated above, however, a change of domicile requires both establishing a new domicile and abandoning the old. These requirements must also be satisfied concurrently. Although the Taxpayer may have formulated the intent to establish domicile in State A, his continuing connections with Virginia, in particular obtaining a Virginia voter’s registration and using it to vote in elections, indicate a desire to retain residency in Virginia. Therefore, after carefully considering all of the evidence presented, I find that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2017 taxable year. Accordingly, the assessment is upheld.
The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer should be aware that the Department previously granted a credit for income tax paid to State A pursuant to Virginia Code 58.1-332 A. The Taxpayer, however, has submitted an amended State A return that appears to show a higher tax liability to State A than was originally reported.
In order for the Department to have the best information that represents his Virginia income tax liability for the year at issue, the Taxpayer should file a 2017 Virginia resident income tax return. In addition to any other information reportable on the Virginia return, it should also include a computation of the credit for tax paid to State A based on the amended State A return. 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 adjusted based on the best information available. Because the assessment has already been paid, a refund will be issued to the extent that the Virginia return indicates a lower liability than has previously been assessed.
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/3586.M