Tax Type
Individual Income Tax
Description
Residency; Incompetent individual's involuntary residency
Topic
Taxpayers' Remedies
Date Issued
05-10-2000
May 10, 2000
Re: § 58.1-1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which your contest the assessment of tax, penalty and interest against your client, ***** (the "Taxpayer") for the 1996 and 1997.
FACTS
The Taxpayer, a life-long resident and domiciliary of another state ("State A"), visited family members in Virginia in late 1995. While in Virginia, the Taxpayer suffered a series of serious medical problems which resulted in her being alternatively placed in a Virginia retirement home and in a Virginia nursing home. The Taxpayer remained in the Virginia nursing home until she died in August of 1999.
In 1999, the department determined that the Taxpayer was an actual resident for the 1996 and 1997 taxable years and assessed tax, penalty and interest accordingly. You contend that the Taxpayer was not an actual resident for Virginia income tax purposes because the involuntarily nature of her stay in Virginia did not constitute the maintaining of a "place of abode" pursuant to statutory requirements. You request a refund of the 1996 Virginia income tax and interest that has been paid and the abatement of tax, penalty and interest assessed for the 1997 taxable year.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302. 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 Virginia, that person must intend to abandon his old domicile with no intention of returning to that same domicile. 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, whether domiciled in Virginia or not". A Virginia domiciliary resident 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 the evidence suggests that the Taxpayer did not intend to became a domiciliary resident of Virginia, the pertinent question in the instant case, is whether the Taxpayer's involuntary residency in Virginia for more than 183 days during the 1996, 1997 and 1998 taxable years constitutes actual residency for income tax purposes.
Neither Virginia courts nor the department have ever directly determined if the involuntary residence of an individual in Virginia for more than 183 days constitutes actual residency for purposes of Virginia state income tax. However, the department has addressed this issue indirectly. See P.D. 87-122 (3/31/87), copy enclosed. In P.D. 87-122, the Commissioner ruled that the guardian who moved an incompetent individual to a Virginia nursing home lacked the authority to change the taxpayer's domicile for estate tax purposes.
However, P.D. 87-122 goes on to state that:
It should be emphasized that this only applies to the Virginia Estate Tax. For purposes of Virginia Income Tax, the term "resident" includes natural persons who resided in Virginia for an aggregate of more than 183 days during the taxable year whether domiciled in Virginia or not.
The Commissioner's statement regarding residence clearly implies that an incompetent individual involuntarily placed in the Virginia nursing home would be an actual resident of Virginia provided he resided in Virginia for an aggregate of more than 183 days in the taxable year. As such, a nursing home or other care giving facility must be a "place of abode" for residency purposes. Because the Taxpayer resided in the nursing home and the retirement center for an aggregate of more than 183 days in each of the taxable years in question, she was an actual resident for Virginia income tax purposes.
While I sympathize with the Taxpayer's situation, your request for a refund of Virginia Individual Income Tax for the 1996 taxable year must be denied. Our records indicate that the Taxpayer's estate has been assessed tax, penalty and interest for the 1997 taxable year and that Virginia individual income tax returns have not been filed for the 1998 and 1999 taxable years. Please remit payment for the assessed tax, penalty and interest for the 1997 taxable year and send the 1998 and 1999 Virginia income tax returns, along with any tax, penalty and interest due to *****, Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days. If you have any questions about this determination, you may contact **** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25808B
Re: § 58.1-1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which your contest the assessment of tax, penalty and interest against your client, ***** (the "Taxpayer") for the 1996 and 1997.
FACTS
The Taxpayer, a life-long resident and domiciliary of another state ("State A"), visited family members in Virginia in late 1995. While in Virginia, the Taxpayer suffered a series of serious medical problems which resulted in her being alternatively placed in a Virginia retirement home and in a Virginia nursing home. The Taxpayer remained in the Virginia nursing home until she died in August of 1999.
In 1999, the department determined that the Taxpayer was an actual resident for the 1996 and 1997 taxable years and assessed tax, penalty and interest accordingly. You contend that the Taxpayer was not an actual resident for Virginia income tax purposes because the involuntarily nature of her stay in Virginia did not constitute the maintaining of a "place of abode" pursuant to statutory requirements. You request a refund of the 1996 Virginia income tax and interest that has been paid and the abatement of tax, penalty and interest assessed for the 1997 taxable year.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302. 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 Virginia, that person must intend to abandon his old domicile with no intention of returning to that same domicile. 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, whether domiciled in Virginia or not". A Virginia domiciliary resident 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 the evidence suggests that the Taxpayer did not intend to became a domiciliary resident of Virginia, the pertinent question in the instant case, is whether the Taxpayer's involuntary residency in Virginia for more than 183 days during the 1996, 1997 and 1998 taxable years constitutes actual residency for income tax purposes.
Neither Virginia courts nor the department have ever directly determined if the involuntary residence of an individual in Virginia for more than 183 days constitutes actual residency for purposes of Virginia state income tax. However, the department has addressed this issue indirectly. See P.D. 87-122 (3/31/87), copy enclosed. In P.D. 87-122, the Commissioner ruled that the guardian who moved an incompetent individual to a Virginia nursing home lacked the authority to change the taxpayer's domicile for estate tax purposes.
However, P.D. 87-122 goes on to state that:
It should be emphasized that this only applies to the Virginia Estate Tax. For purposes of Virginia Income Tax, the term "resident" includes natural persons who resided in Virginia for an aggregate of more than 183 days during the taxable year whether domiciled in Virginia or not.
The Commissioner's statement regarding residence clearly implies that an incompetent individual involuntarily placed in the Virginia nursing home would be an actual resident of Virginia provided he resided in Virginia for an aggregate of more than 183 days in the taxable year. As such, a nursing home or other care giving facility must be a "place of abode" for residency purposes. Because the Taxpayer resided in the nursing home and the retirement center for an aggregate of more than 183 days in each of the taxable years in question, she was an actual resident for Virginia income tax purposes.
While I sympathize with the Taxpayer's situation, your request for a refund of Virginia Individual Income Tax for the 1996 taxable year must be denied. Our records indicate that the Taxpayer's estate has been assessed tax, penalty and interest for the 1997 taxable year and that Virginia individual income tax returns have not been filed for the 1998 and 1999 taxable years. Please remit payment for the assessed tax, penalty and interest for the 1997 taxable year and send the 1998 and 1999 Virginia income tax returns, along with any tax, penalty and interest due to *****, Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880 within 30 days. If you have any questions about this determination, you may contact **** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25808B
Rulings of the Tax Commissioner