July 21, 2022
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to ***** (the “Taxpayer”) for the taxable year ended December 31, 2017. I apologize for the delay in responding to your letter.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2017 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested information from the Taxpayer in order to determine if her income was taxable in Virginia. Based on the information provided, the Department determined that she was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, asserting she was a resident of ***** (State A).
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may reside elsewhere. For a person to change domiciliary residency to another state or country, 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 or in another 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 order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change.
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, situs of real or 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 the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The Department determines a taxpayer’s intent through the information provided. A taxpayer has the burden of proving that he has abandoned his Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he intended to remain indefinitely in Virginia.
The Taxpayer took several steps that indicated her intent to establish domicile in State A. The Taxpayer accepted employment in State A in 2015. The Taxpayer filed a part year Virginia return in 2015 indicating a Virginia residence ending date in June 2015. The Taxpayer also leased two personal residences in State A before purchasing a residence in State A with her husband in 2017.
The Taxpayer also maintained some connections with Virginia. She retained her Virginia driver’s license and had a vehicle registered in Virginia. Her parents also continued to live in Virginia. She renewed her Virginia driver’s license in 2017 using her parents’ Virginia address. In addition, the Taxpayer retained her Virginia’s voter registration, but states that she has not voted since she moved to State A in 2015. The Taxpayer relinquished these connections with Virginia when she and her family relocated to ***** (State B) in 2021. At that time, the Taxpayer obtained a State B driver’s license, vehicle registration and voter registration.
Virginia Code § 46.2-323.1 states, “No driver’s license... shall be issued to any person who is not a Virginia resident.” In fact, this section states that every person applying for a driver’s license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver’s license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver’s license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002).
The Taxpayer explained that she retained her Virginia driver’s license and vehicle registration because she was very busy with her work and family. She stated she was also moving frequently and did not wish to update her address each time she moved. She explained that it was convenient to retain these items using her parents’ address and she did not realize that it might raise questions regarding her domicile.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. Further, the change is generally considered to have occurred at the beginning of that process. See P.D. 16-138 (6/24/2016). Although the Taxpayer retained Virginia connections such as a driver’s license and vehicle registration, she did not return to Virginia to live and she voluntarily relinquished the connections upon moving to State B. These facts suggest that the Taxpayer did not have the intent to retain her Virginia domicile. In addition, the Taxpayer remained in State A for a substantial amount of time, purchased a home, and started a family there. These facts suggest that she at least formed the intent to remain in State A indefinitely. Therefore, after carefully considering all of the evidence presented, I find that the Taxpayer successfully changed her domicile to State A as of the 2015 taxable year and retained that domicile until she moved to State B in 2021. Accordingly, the assessment for the 2017 taxable year will be abated.
The Code of Virginia sections and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/3906.X