October 26, 2023
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, 2019.
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 2019 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 received, the Department determined that the Taxpayer was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was a resident of ***** (Country 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 that person and the place to which that person intends to return even though they reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.
The Taxpayer took actions consistent with establishing domicile in Country A. He has lived and worked in Country A for ten years. He obtained a Country A driver’s license and government identification card. He also owned two vehicles registered in Country A. In addition, the Taxpayer has two children who were born in Country A and attended school there. Further, he purchased a residence in Country A in September 2022.
The Taxpayer also maintained some connections with Virginia. He obtained a Virginia driver’s license, which was renewed in 2017. He states, however, that he does not intend to renew the license when it expires. The Taxpayer indicates that he had registered to vote in Virginia at some time in the past, but it does not appear that he has been using the 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 that individual 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).
With regard to the Taxpayer’s Virginia voting registration, the Department has observed that federal law generally allows United States citizens living abroad to vote in federal elections using a voter’s registration from the state of the individual’s last domicile. See 52 U.S.C. § 20310 (formerly 42 U.S.C. § 1973ff-6). See also P.D. 10-203 (9/1/2010). In addition, the exercise of such federal voting rights by an overseas citizen shall not affect the domicile or residence of such citizen for purposes of any federal, state, or local tax. See 52 U.S.C. § 20309 (formerly 42 U.S.C. § 1973ff-5). As such, even if the Taxpayer had voted in a federal election while he resided in Country A, that fact would have no bearing on this determination.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. The Department has, however, previously ruled that an individual can abandon a Virginia domicile and establish domicile in a foreign country and continue to be a United States citizen. See P.D. 00-6 (2/28/2000).
After carefully considering all of the evidence presented, I find that the Taxpayer was domiciled in Country A during the 2019 taxable year. Accordingly, the assessment issued for the taxable year ended December 31, 2019, will be abated.
While the Department concedes that the Taxpayer was not a domiciliary resident of Virginia during the 2019 taxable year, he should be aware that continuing connections with Virginia, such as retaining a Virginia driver’s license or other indicators of a permanent residence in Virginia will likely result in future contacts by the Department with respect to the situs of the Taxpayer’s domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department’s determination in subsequent taxable years. In addition, the Taxpayer should be aware that Virginia law does not permit nonresidents to obtain Virginia driver’s licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law. Any applicant who knowingly makes a false statement to DMV is subject to penalties under Virginia Code § 46.2-348.
The Code of Virginia sections and public documents cited are available on-line 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/4495.B