Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
08-06-1999
August 6, 1999
Re: Sec. 58.1-1821 Application: Individual Income Tax
Dear ****
This is in reply to your letters concerning Virginia individual income tax assessments for your client, ***** (the ``Taxpayer') for the taxable years 1993 through 1996. I apologize for the delay in responding to your letters.
FACTS
The Taxpayer was a resident of Virginia and working in Washington D.C. In January 1993, his employer permanently transferred him to an employment position in another state. He contends that at the time he was permanently transferred to the other state, he moved his domiciliary residence from Virginia to that state. In 1996, his employer transferred him back to the Washington, D.C. office, and he returned to his home in Virginia. He did not file Virginia income tax returns for the taxable years 1993 through 1995. For 1996, however, he filed a Virginia part-year return.
The department obtained information from the Internal Revenue Service indicating that the Taxpayer received income from Virginia resources. The Taxpayer was asked to either file the appropriate tax returns or provide an explanation of why he would not be required to file with Virginia. The documentation provided by the Taxpayer appeared to indicate that he was a resident of Virginia. The department, therefore, issued assessments for the taxable years 1993 through 1996. The Taxpayer claims that he was not a resident of Virginia for those periods, and for that reason, he is requesting that the assessments be abated.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia Sec. 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. For a person to change domiciliary residency to another state, 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 or her place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the 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 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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The Taxpayer performed many activities in the other state consistent with changing domicile. The Taxpayer's employer provided a detailed description of the nature of his permanent employment transferred to the other state. The Taxpayer stayed in hotels and motels when he got to the other state until he was able to lease an apartment. Subsequently, he moved his belongings to that state. He also registered his car, obtained a driver's license, and subscribed to publications while in the other state. He paid property taxes to the other state on his car. He changed all of his important banking, insurance, and pension contacts to his address in the other state. In February 1996, he entered into a three-year lease of an automobile from a dealer in the other state, although he eventually was transferred back to Virginia later that year. All of his important mail was sent by his wife living in Virginia to him in the other state until he made the appropriate changes in his address.
The Taxpayer also performed activities which were consistent with not changing domicile. The Taxpayer maintained a house in Virginia where his wife continued to reside throughout the years in question. She, however, became ill around the time he accepted the permanent employment position in the other state. She began an unusual and radical course of treatments with her physician which required frequent personal visits over a 20 month period. As of the taxable year 1996, she had not fully recovered from her illness. The wife's car was registered in Virginia and her driver's license was obtained from Virginia. The Taxpayer paid property taxes on the wife's cars and real estate taxes on the house in Virginia. Although the Taxpayer was permanently transferred to the other state in 1993, he was transferred back to Virginia in 1996.
The department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The department determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
It appears that the Taxpayer has met his burden of proving that he intended to acquire another domicile with the intention to remain there permanently or indefinitely. The weight of the evidence demonstrates that he performed a significant number of acts which were consistent with changing domicile. Actions such as being permanently transferred to another state by his employer, renting apartments, registering his car, and entering into a three-year lease of a car in the other state favor a change in domicile. While maintaining a home and receiving mail in Virginia is a strong indication of Virginia residency, the medical care associated with the illness of the Taxpayer's wife provided legitimate reasons for her to remain in Virginia in the family home. Consequently, the Taxpayer was not required to file Virginia returns for the taxable years 1993 through 1995. Additionally, the part-year return for the taxable year 1996 was appropriately filed.
While the Taxpayer was not a Virginia resident from the beginning of 1993 through June 1996, his wife was a Virginia resident during that time. Code of Virginia Sec. 58.1-326, copy enclosed, provides that if one spouse is a Virginia resident and the other is a nonresident, the resident spouse must file and pay tax determined on his or her separate Virginia taxable income, unless both spouses elect to determine their joint Virginia taxable income as if both were residents. Code of Virginia Sec. 58.1-321, copy enclosed, provides that individuals filing separately and having an adjusted gross income greater than $4,000 in a particular tax year are required to file a return. Thus, if the Taxpayer's wife had sufficient Virginia income for 1993 thorough 1996, she should have filed and paid Virginia income taxes for the appropriate period. The Taxpayer's wife must file returns for the 1993 through 1996 taxable years if she was subject to tax for those years. She may contact the department's Forms Request Unit at (804) 236-2760 or (804) 236-2761 for forms and instructions if needed.
Based on the information provided, I find basis to abate the Taxpayer's Virginia individual income tax assessments outstanding for the taxable years 1993 through 1996. The Taxpayer's wife may submit any Virginia tax returns within 60 days to the attention of ***** Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. Further questions may be directed to ***** at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12940N
Re: Sec. 58.1-1821 Application: Individual Income Tax
Dear ****
This is in reply to your letters concerning Virginia individual income tax assessments for your client, ***** (the ``Taxpayer') for the taxable years 1993 through 1996. I apologize for the delay in responding to your letters.
FACTS
The Taxpayer was a resident of Virginia and working in Washington D.C. In January 1993, his employer permanently transferred him to an employment position in another state. He contends that at the time he was permanently transferred to the other state, he moved his domiciliary residence from Virginia to that state. In 1996, his employer transferred him back to the Washington, D.C. office, and he returned to his home in Virginia. He did not file Virginia income tax returns for the taxable years 1993 through 1995. For 1996, however, he filed a Virginia part-year return.
The department obtained information from the Internal Revenue Service indicating that the Taxpayer received income from Virginia resources. The Taxpayer was asked to either file the appropriate tax returns or provide an explanation of why he would not be required to file with Virginia. The documentation provided by the Taxpayer appeared to indicate that he was a resident of Virginia. The department, therefore, issued assessments for the taxable years 1993 through 1996. The Taxpayer claims that he was not a resident of Virginia for those periods, and for that reason, he is requesting that the assessments be abated.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia Sec. 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. For a person to change domiciliary residency to another state, 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 or her place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the 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 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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The Taxpayer performed many activities in the other state consistent with changing domicile. The Taxpayer's employer provided a detailed description of the nature of his permanent employment transferred to the other state. The Taxpayer stayed in hotels and motels when he got to the other state until he was able to lease an apartment. Subsequently, he moved his belongings to that state. He also registered his car, obtained a driver's license, and subscribed to publications while in the other state. He paid property taxes to the other state on his car. He changed all of his important banking, insurance, and pension contacts to his address in the other state. In February 1996, he entered into a three-year lease of an automobile from a dealer in the other state, although he eventually was transferred back to Virginia later that year. All of his important mail was sent by his wife living in Virginia to him in the other state until he made the appropriate changes in his address.
The Taxpayer also performed activities which were consistent with not changing domicile. The Taxpayer maintained a house in Virginia where his wife continued to reside throughout the years in question. She, however, became ill around the time he accepted the permanent employment position in the other state. She began an unusual and radical course of treatments with her physician which required frequent personal visits over a 20 month period. As of the taxable year 1996, she had not fully recovered from her illness. The wife's car was registered in Virginia and her driver's license was obtained from Virginia. The Taxpayer paid property taxes on the wife's cars and real estate taxes on the house in Virginia. Although the Taxpayer was permanently transferred to the other state in 1993, he was transferred back to Virginia in 1996.
The department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The department determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
It appears that the Taxpayer has met his burden of proving that he intended to acquire another domicile with the intention to remain there permanently or indefinitely. The weight of the evidence demonstrates that he performed a significant number of acts which were consistent with changing domicile. Actions such as being permanently transferred to another state by his employer, renting apartments, registering his car, and entering into a three-year lease of a car in the other state favor a change in domicile. While maintaining a home and receiving mail in Virginia is a strong indication of Virginia residency, the medical care associated with the illness of the Taxpayer's wife provided legitimate reasons for her to remain in Virginia in the family home. Consequently, the Taxpayer was not required to file Virginia returns for the taxable years 1993 through 1995. Additionally, the part-year return for the taxable year 1996 was appropriately filed.
While the Taxpayer was not a Virginia resident from the beginning of 1993 through June 1996, his wife was a Virginia resident during that time. Code of Virginia Sec. 58.1-326, copy enclosed, provides that if one spouse is a Virginia resident and the other is a nonresident, the resident spouse must file and pay tax determined on his or her separate Virginia taxable income, unless both spouses elect to determine their joint Virginia taxable income as if both were residents. Code of Virginia Sec. 58.1-321, copy enclosed, provides that individuals filing separately and having an adjusted gross income greater than $4,000 in a particular tax year are required to file a return. Thus, if the Taxpayer's wife had sufficient Virginia income for 1993 thorough 1996, she should have filed and paid Virginia income taxes for the appropriate period. The Taxpayer's wife must file returns for the 1993 through 1996 taxable years if she was subject to tax for those years. She may contact the department's Forms Request Unit at (804) 236-2760 or (804) 236-2761 for forms and instructions if needed.
Based on the information provided, I find basis to abate the Taxpayer's Virginia individual income tax assessments outstanding for the taxable years 1993 through 1996. The Taxpayer's wife may submit any Virginia tax returns within 60 days to the attention of ***** Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. Further questions may be directed to ***** at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12940N
Rulings of the Tax Commissioner