Document Number
22-74
Tax Type
Individual Income Tax
Description
Residency: Domicile - Failure to Establish Intent
Topic
Appeals
Date Issued
04-19-2022

April 19, 2022

Re:    § 58.1-1821 Application: Individual Income Tax
    
Dear *****:

This will reply 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, 2018.

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 2018 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. Based on the information provided, the Department concluded that the Taxpayer was taxable as a domiciliary resident of Virginia. The Taxpayer appeals, contending he 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 or she has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer established connections in State A that indicate he may have intended to establish domicile there. The Taxpayer separated from his spouse in 2017.  He then obtained employment in State A and began leasing a personal residence beginning in August 2017. After the first month, the lease was renewed month-to- month. In January 2019, he moved to ***** (State B).  

The Taxpayer also retained connections with Virginia. He jointly owned a residence in Virginia with his spouse. The Taxpayer retained a Virginia driver’s license which was renewed in March 2019. He was the owner of three vehicles that were garaged in Virginia. In addition, the Taxpayer maintained a Virginia voter’s registration since 2012, but did not vote in 2018. Further, he moved back to his Virginia residence in 2020.  

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 Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. As stated above, however, a change of domicile requires both establishing a new domicile and abandoning the old. These requirements must also be satisfied concurrently. In this case, the Taxpayer’s continuing connections with Virginia, in particular owning real property, maintaining a Virginia driver’s license, owning vehicles that were registered in Virginia and moving back to his Virginia residence in 2020, indicate the Taxpayer failed to abandon his Virginia domicile. Further, the fact that the Taxpayer failed to establish such connections in State A and then began leasing a residence in State A on a month-to- month basis after his first year there raises substantial doubts as to whether he intended to establish domicile in State A. Therefore, after carefully considering all of the evidence presented, I find that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2018 taxable year. Accordingly, the assessment is upheld.  

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. In order for the Department to have the best information that represents his Virginia income tax liability for the year at issue, the Taxpayer should file a 2018 Virginia resident income tax return. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161-7203, Attention: *****. Upon receipt, the return will be reviewed and the assessment will be adjusted, as appropriate. If the return is not received within the allotted time, the assessment will be adjusted based on the best information available. Because the assessment has already been paid, a refund will be issued to the extent that the Virginia return indicates a lower liability than has previously been assessed.

The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site.  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/3985.B

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Last Updated 08/22/2022 06:31