March 13, 2024
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond 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, 2019.
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 2019 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 Taxpayer’s response, the Department determined that the Taxpayer was taxable as a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was a resident of ***** (State A).
DETERMINATION
Residency
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 that person and the place to which that person intends to return even though they may be residing elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.
The Taxpayer lived and worked in Virginia starting in 2013. He states that he moved into his fiancé’s State A residence in 2015 and continues to live there. The Taxpayer filed a 2019 State A resident return and a federal return using the State A address. Because State A does not impose tax on retirement income, however, the Taxpayer did not have an income tax liability there for the 2019 taxable year.
The Taxpayer maintained significant connections with Virginia. He owned a Virginia residence for which he was making mortgage payments. He states that he obtained a home improvement loan to make needed repairs to the residence, which is why he was making mortgage payments on the property. The Taxpayer explains that he inherited the Virginia residence and that he uses it as a vacation property. The Taxpayer regularly returned to the Virginia residence subsequent to his move to the State A residence in order to maintain it and also to visit a family member who continued to reside in Virginia.
The Taxpayer also maintained a Virginia driver’s license which he renewed in November 2020. In addition, the Taxpayer had one vehicle registered in Virginia. The Taxpayer explains that certain cars were garaged at the Virginia residence because parking was limited at the State A residence. Further, the Taxpayer has been registered to vote in Virginia through 2022. The Taxpayer surrendered his Virginia license and obtained a State A driver’s license in 2022. He also registered to vote in State A in 2022.
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 that individual 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).
In addition, registering to vote in Virginia and voting absentee in Virginia elections is considered strong evidence of the intent to remain domiciled in Virginia. See Cooper’s Adm’r v. Commonwealth, 121 Va. 338, 349, 93 S.E. 680, 683 (1917). The Department has consistently found that individuals must be domiciliary residents of Virginia in order to be eligible to vote under the Constitution of Virginia. See P.D. 17-97 (6/12/2017) and P.D. 18-84 (5/9/2018).
As stated above, a change of domicile requires both establishing a new domicile and abandoning the old. These requirements must also be satisfied concurrently. Even if the Taxpayer had the requisite intent to establish domicile in State A, the extent of the connections he retained with Virginia raises doubts as to whether he intended to abandon his Virginia domicile as of the 2019 taxable year.
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 taxable as a domiciliary resident of Virginia during the 2019 taxable year.
CONCLUSION
Accordingly, the assessment is upheld. The Taxpayer will receive an updated bill that will include accrued interest to date. The Taxpayer should remit the balance due within 30 days of the bill date to avoid the accrual of additional interest and possible collection actions.
Further, the information provided indicates the Taxpayer may have remained a domiciliary resident of Virginia in subsequent years. As such, the Taxpayer should evaluate his residency status for succeeding taxable years under the standards set forth in this determination and file Virginia resident returns as needed.
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 website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at (804) *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4519.B