Tax Type
Employer Income Tax Withholding
Individual Income Tax
Description
Change of domicile, Refund of withheld tax
Topic
Residency
Taxpayers' Remedies
Withholding of Tax
Date Issued
03-06-2000
March 6, 2000
Re: §1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which you contest the assessment of additional income tax, penalty and interest against ***** (the ATaxpayer") for the 1998 taxable year. I apologize for the delay in responding.
FACTS
The Taxpayer was a resident of Virginia until he retired from an employer located in a state adjacent to Virginia at the end of 1997. The Taxpayer registered an automobile and a motor home in another state (State A) in November 1997 and February 1998, respectively. In January 1998, the Taxpayer began renting a residence in State A. The Taxpayer cancelled his Virginia driver's license, received a State A license, and entered into a contract to purchase a residence in State A in February 1998. In May of 1998, the Taxpayer registered to vote in State A. The Virginia residence sold in September of 1998. The Taxpayer maintained bank accounts in both Virginia and State A in 1998.
The Taxpayer's former employer withheld and remitted 1998 Virginia income tax on deferred compensation payments and annuity distributions. The Taxpayer filed a 1998 individual income tax return claiming a refund of all Virginia income tax on the basis that he was not a Virginia resident during the 1998 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. 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.
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.
Changing domicile is a two-step process. First, a person must intend to permanently move away from one domicile. Second, the person must acquire a new domicile where they intend to remain permanently or indefinitely.
There is strong evidence that the Taxpayer intended to permanently abandon his Virginia domicile. The Taxpayer clearly conducted activities consistent with establishing domicile in State A and abandoning his Virginia domicile over a period of time beginning in late 1997 through early 1998. These activities include establishing a permanent residence and acquiring a bank account, acquiring automobile registrations, receiving his driver's license, and registering to vote in State A. The Taxpayer also canceled his Virginia driver's license and automobile registrations and put his Virginia residence on the market. The residence eventually sold in September 1998.
The department concedes that it is difficult to know whether a taxpayer intends to leave Virginia and change domicile. 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.
Based on the evidence, the Taxpayer has met the burden of proving that he established domicile in State A with the intention to remain there permanently or indefinitely. Even though the Taxpayers maintained certain contacts with Virginia through the 1998 taxable year, the majority of his actions in State A were consistent with a change in domicile.
Therefore, a refund for the amount of $**** plus applicable interest will be issued shortly. If you have any questions about this determination, you may contact **** at *****.
Sincerely,
Danny Payne
Tax Commissioner
OTP/13929B
Re: §1821 Application: Individual Income Taxation
Dear ****
This will reply to your letter in which you contest the assessment of additional income tax, penalty and interest against ***** (the ATaxpayer") for the 1998 taxable year. I apologize for the delay in responding.
FACTS
The Taxpayer was a resident of Virginia until he retired from an employer located in a state adjacent to Virginia at the end of 1997. The Taxpayer registered an automobile and a motor home in another state (State A) in November 1997 and February 1998, respectively. In January 1998, the Taxpayer began renting a residence in State A. The Taxpayer cancelled his Virginia driver's license, received a State A license, and entered into a contract to purchase a residence in State A in February 1998. In May of 1998, the Taxpayer registered to vote in State A. The Virginia residence sold in September of 1998. The Taxpayer maintained bank accounts in both Virginia and State A in 1998.
The Taxpayer's former employer withheld and remitted 1998 Virginia income tax on deferred compensation payments and annuity distributions. The Taxpayer filed a 1998 individual income tax return claiming a refund of all Virginia income tax on the basis that he was not a Virginia resident during the 1998 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. 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.
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.
Changing domicile is a two-step process. First, a person must intend to permanently move away from one domicile. Second, the person must acquire a new domicile where they intend to remain permanently or indefinitely.
There is strong evidence that the Taxpayer intended to permanently abandon his Virginia domicile. The Taxpayer clearly conducted activities consistent with establishing domicile in State A and abandoning his Virginia domicile over a period of time beginning in late 1997 through early 1998. These activities include establishing a permanent residence and acquiring a bank account, acquiring automobile registrations, receiving his driver's license, and registering to vote in State A. The Taxpayer also canceled his Virginia driver's license and automobile registrations and put his Virginia residence on the market. The residence eventually sold in September 1998.
The department concedes that it is difficult to know whether a taxpayer intends to leave Virginia and change domicile. 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.
Based on the evidence, the Taxpayer has met the burden of proving that he established domicile in State A with the intention to remain there permanently or indefinitely. Even though the Taxpayers maintained certain contacts with Virginia through the 1998 taxable year, the majority of his actions in State A were consistent with a change in domicile.
Therefore, a refund for the amount of $**** plus applicable interest will be issued shortly. If you have any questions about this determination, you may contact **** at *****.
Sincerely,
Danny Payne
Tax Commissioner
OTP/13929B
Rulings of the Tax Commissioner