Tax Type
Individual Income Tax
Description
Student; Actual resident
Topic
Residency
Date Issued
09-08-2000
September 8, 2000
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letter in which you contest the assessment of Virginia income tax and interest against ***** (the "Taxpayer") for the 1995 and 1996 taxable years. I apologize for the delay in response.
FACTS
The Taxpayer was a long-time resident of another State ("State A"). In August of 1994, the Taxpayer moved to Virginia for the sole purpose of attending graduate school. While in Virginia, the Taxpayer rented a house for two years, and subsequently purchased it. The Taxpayer claims that he intended to return to State A after graduation. He took State A's professional licensing examination in 1997. Unable to find work in State A, the Taxpayer accepted a position in the District of Columbia in April of 1997 and continued to reside in Virginia.
Under review, the department determined that the Taxpayer was an actual resident of Virginia for the 1995 and 1996 taxable years. The Taxpayer contests the assessments on the basis that he retained his State A domiciliary residence while residing in the Commonwealth attending graduate school and did not intend to remain in Virginia. He further contends that his income, consisting of military retirement pay and passive investment income, is not "Virginia source income" under Code of Virginia § 58.1-302. Also, he states that Code of Virginia § 58.1-3511(A) distinguishes for personal property tax purposes between a person who is domiciled in another state and a student domiciled in another state and attending school in Virginia. He believes that Virginia should make the same distinction for individual income tax purposes for nondomiciliary students.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 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 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.
While it appears that the Taxpayer was not a domiciliary resident of Virginia during the 1995 and 1996 taxable years, the department is asserting that the Taxpayer was an actual resident of Virginia for income tax purposes. A taxpayer can be an actual resident of Virginia without establishing domicile in the Commonwealth.
It is clear that the Taxpayer was an actual resident during the taxable years in question. Actual residency requires that an individual merely maintain a place of abode for an aggregate of more than 183 days in a given taxable year. The evidence shows that the Taxpayer resided in a house during the academic school years. This resulted in the Taxpayer residing in Virginia for more than 183 days during the years at issue.
Code of Virginia § 58.1-322 defines the taxable income of Virginia residents, not Code of Virginia § 58.1-302. Code of Virginia § 58.1-322 (copy enclosed) provides that the taxable income of a Virginia resident is their federal adjusted gross income ("FAGI") modified by the additions, subtractions and deductions listed in Code of Virginia § 58.1322. Code of Virginia § 58.1-322(C)(19) provides for the subtraction of income derived from federal retirement programs for taxable years beginning on after January 1, 1996. However, this subtraction is limited to the extent that contributions to the program were subject to income taxation in another state. The Taxpayer has not shown that the military retirement payments were subject to income tax in State A. There are no other modifications asserted to remove or reduce any of the Taxpayer's income from his Virginia resident income.
Code of Virginia § 58.1-3511(A) only addresses sites for the assessment of tangible personal property, merchants' capital, and machinery and tools tax. Under this section, students are exempt from personal property tax on their motor vehicle if they paid personal property tax on their vehicle in their state of domicile.
The Code of Virginia does provide an analogous treatment of income tax for Virginia residents who are domiciled in another state. Code of Virginia § 58.1-332 (copy enclosed) provides a Virginia income tax credit equal to the amount of income tax paid in another state on income subject to taxation in both states. Typically, Virginia income tax would be offset by income tax paid by a Taxpayer to their domiciliary state. However, the Taxpayer has provided no information to show that he filed income tax returns in State A.
Accordingly, the department's assessments for the 1995 and 1996 taxable years have been upheld. Please remit payment of tax and updated interest pursuant to the enclosed schedule to Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days to avoid the accrual of additional interest. If you have any questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16711B
TO WHOM IT MAY CONCERN
Under the authority of Section 58.1-1 of the Code of Virginia, I hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letter in which you contest the assessment of Virginia income tax and interest against ***** (the "Taxpayer") for the 1995 and 1996 taxable years. I apologize for the delay in response.
FACTS
The Taxpayer was a long-time resident of another State ("State A"). In August of 1994, the Taxpayer moved to Virginia for the sole purpose of attending graduate school. While in Virginia, the Taxpayer rented a house for two years, and subsequently purchased it. The Taxpayer claims that he intended to return to State A after graduation. He took State A's professional licensing examination in 1997. Unable to find work in State A, the Taxpayer accepted a position in the District of Columbia in April of 1997 and continued to reside in Virginia.
Under review, the department determined that the Taxpayer was an actual resident of Virginia for the 1995 and 1996 taxable years. The Taxpayer contests the assessments on the basis that he retained his State A domiciliary residence while residing in the Commonwealth attending graduate school and did not intend to remain in Virginia. He further contends that his income, consisting of military retirement pay and passive investment income, is not "Virginia source income" under Code of Virginia § 58.1-302. Also, he states that Code of Virginia § 58.1-3511(A) distinguishes for personal property tax purposes between a person who is domiciled in another state and a student domiciled in another state and attending school in Virginia. He believes that Virginia should make the same distinction for individual income tax purposes for nondomiciliary students.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 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 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.
While it appears that the Taxpayer was not a domiciliary resident of Virginia during the 1995 and 1996 taxable years, the department is asserting that the Taxpayer was an actual resident of Virginia for income tax purposes. A taxpayer can be an actual resident of Virginia without establishing domicile in the Commonwealth.
It is clear that the Taxpayer was an actual resident during the taxable years in question. Actual residency requires that an individual merely maintain a place of abode for an aggregate of more than 183 days in a given taxable year. The evidence shows that the Taxpayer resided in a house during the academic school years. This resulted in the Taxpayer residing in Virginia for more than 183 days during the years at issue.
Code of Virginia § 58.1-322 defines the taxable income of Virginia residents, not Code of Virginia § 58.1-302. Code of Virginia § 58.1-322 (copy enclosed) provides that the taxable income of a Virginia resident is their federal adjusted gross income ("FAGI") modified by the additions, subtractions and deductions listed in Code of Virginia § 58.1322. Code of Virginia § 58.1-322(C)(19) provides for the subtraction of income derived from federal retirement programs for taxable years beginning on after January 1, 1996. However, this subtraction is limited to the extent that contributions to the program were subject to income taxation in another state. The Taxpayer has not shown that the military retirement payments were subject to income tax in State A. There are no other modifications asserted to remove or reduce any of the Taxpayer's income from his Virginia resident income.
Code of Virginia § 58.1-3511(A) only addresses sites for the assessment of tangible personal property, merchants' capital, and machinery and tools tax. Under this section, students are exempt from personal property tax on their motor vehicle if they paid personal property tax on their vehicle in their state of domicile.
The Code of Virginia does provide an analogous treatment of income tax for Virginia residents who are domiciled in another state. Code of Virginia § 58.1-332 (copy enclosed) provides a Virginia income tax credit equal to the amount of income tax paid in another state on income subject to taxation in both states. Typically, Virginia income tax would be offset by income tax paid by a Taxpayer to their domiciliary state. However, the Taxpayer has provided no information to show that he filed income tax returns in State A.
Accordingly, the department's assessments for the 1995 and 1996 taxable years have been upheld. Please remit payment of tax and updated interest pursuant to the enclosed schedule to Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days to avoid the accrual of additional interest. If you have any questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16711B
TO WHOM IT MAY CONCERN
Under the authority of Section 58.1-1 of the Code of Virginia, I hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner