April 19, 2023
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 her 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 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 or she intends to return even though he or she may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon his or her 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 or her 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 or her 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 performed a number of actions indicating her intent to establish domiciliary residency in State A. She attended law school in State A, passed the State A attorney licensing exam after graduation, and began working at a State A business in 2016. The Taxpayer leased several personal residences in State A while she was living there. She also registered to vote in State A in 2016. In addition, the Taxpayer filed a State A resident return for the 2018 taxable year using a State A address. Further, her doctors, gym, and library membership were all located in State A during the taxable year at issue.
The Taxpayer also retained some connections with Virginia. The Taxpayer owned a vehicle that was registered in Virginia and she retained a Virginia driver’s license until June 2022. In addition, the Taxpayer had brokerage statements sent to a Virginia address.
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 or she 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 has provided information explaining her ongoing connections with Virginia. She states she renewed her Virginia license in 2016 while she was briefly residing at her parents’ home between graduating law school and starting her new job in State A. The Taxpayer indicates that she did not register her vehicle in State A or obtain a State A license out of convenience. She indicates that the brokerage statements were sent to her parents’ Virginia address and she had not thought to update the address.
The Department considers a change of domicile to be part of a process and the change is generally considered to have occurred at the beginning of that process even when official connections such as driver’s licenses, vehicle registrations, and voter’s registrations were not obtained until later. See P.D. 16-138 (6/24/2016) and P.D. 19-19 (3/26/2019). In this case, the Taxpayer became a member of the State A bar and obtained employment in State A prior to 2018. In addition, she registered to vote in State A in 2016. The Department considers registering to vote in a state and voting in elections to be very strong evidence of domiciliary intent, consistent with Cooper’s Adm’r v. Commonwealth, 121 Va. 338, 93 S.E. 680 (1917). See P.D. 20-85 (5/14/2020).
After carefully considering the information provided, I find that the totality of the evidence shows that the Taxpayer successfully changed her domicile to State A prior to the 2018 taxable year. Accordingly, the assessment will be abated.
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 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/4312.B