Tax Type
Individual Income Tax
Description
Foreign nationals temporarily In Virginia
Topic
Persons Subject to Tax
Date Issued
11-29-1989
November 29, 1989
Re: Ruling Request/ Individual Income Tax
Interpretation of Virginia Non-Residency Status
Dear**************
This will reply to your letter dated October 27, 1989 in which you request a ruling as to the status of Virginia residence of certain foreign nationals.
FACTS
The taxpayer prepares income tax returns for several Japanese nationals living and working in Virginia temporarily for a U. S. subsidiary of a Japanese company located there. The taxpayer requests an interpretation of the residency status of five individuals.
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- 1. In 1988, X moves with his family to Virginia to begin a 6-year assignment in the U. S. During the assignment, X rents his house in Japan and purchases a home in Virginia. X has no intention of remaining in Virginia and intends to sell the Virginia house upon completion of the assignment and return to a permanent location in Japan.
2. In 1988, Y is transferred to Virginia for a period of 4 years. The purpose is to gain experience and establish relationships in the U. S. business community. Y terminates the lease on his apartment in Japan and leases an apartment in Virginia for the duration of the assignment. At the end of the assignment, Y intends to terminate the lease on the Virginia apartment and return to Japan. Y is single.
3. In 1986, Z moves with his family to a state other than Virginia for a 2-year assignment with a U. S. subsidiary of the Japanese company not located in Virginia, followed by a 4-year assignment at the Virginia location. Z files his 1986 and 1987 returns as a resident of the state in which he is assigned for those years. In 1988, Z and his family move to Virginia as part of the overall 6-year assignment. Z rents a home in Virginia. At the end of the assignment Z intends to return to Japan and terminate the lease of his Virginia home.
4. In 1984, W is assigned to be the chief executive officer of the U. S. subsidiary for a period of 4 years. This assignment is part of W's overall executive training to be the CEO of the Japanese parent. In 1984, W moves with his family to Virginia, purchases a home and rents out his Japanese home. At the end of the assignment, W intends to return to Japan, reoccupy his Japanese home and sell the Virginia home. However, in 1988, W is requested to extend his assignment an additional 2 years. W accepts. W extends the lease on his Japanese home and continues to live in Virginia. At the end of the extension, W intends to return to Japan.
5. In 1987, V is transferred to Virginia for a 5-year assignment. V, who does not own a home in Japan, terminates the lease on his Japanese apartment, moves to Virginia and rents out an apartment. At the end of the assignment V intends to return to Japan. During 1988, V experiences difficulty and his assignment is curtailed. He returns to Japan after having completed only 18 months of the 5-year assignment.
- 1. In 1988, X moves with his family to Virginia to begin a 6-year assignment in the U. S. During the assignment, X rents his house in Japan and purchases a home in Virginia. X has no intention of remaining in Virginia and intends to sell the Virginia house upon completion of the assignment and return to a permanent location in Japan.
RULING
"Domicile" is defined in Virginia Code §58.1-302 as the "permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere." Virginia Code §58.1-302 also states that in determining domicile:
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- [C]onsideration may be given to the applicant's expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, business pursuits, employment, income sources, residence for federal income tax purposes, marital status, residence of parents, spouse and children, if any, leasehold, sites of personal property and real property owned by the applicant, motor vehicle and other personal property registration, residence for purposes of voting as proven by registration to vote, if any, and such other factors as may reasonably be deemed necessary to determine the person's domicile.
Based on the above, any person who is a domiciliary resident of another state (or foreign country), who has moved to Virginia but not with the intention of permanently residing within Virginia is still a domiciliary resident of that other state even though he may be actually residing in Virginia. Based on the limited information available, it appears that the taxpayer in each of your examples has retained his Japanese domicile; however, additional information may lead to a different conclusion.
It should also be noted that certain nondomiciliary residents are subject to the Virginia tax. Virginia Code §58.1-302 provides that for years in which a taxpayer maintains a place of abode (even temporarily) for more than 183 days in Virginia, that person will be treated as an actual resident of Virginia for income tax purposes. As an actual resident, a taxpayer is required to file a Virginia return and pay Virginia tax on his income from all sources. In the majority of the examples which you presented, the question of domiciliary residence appears to be moot since the individuals maintain a place of abode in Virginia for more than 183 days. In these circumstances, each of the taxpayers will be taxed as a Virginia resident irrespective of the state/country of domicile.
I hope the foregoing information has answered your questions. However, please contact the department if you need additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner