April 19, 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 her income was taxable in Virginia. When a response was not received, the Department issued an assessment. 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 that person and the place to which that person intends to return even though they may be residing 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 explains that she lived and worked in State A from January 2019 to May 2020. The Taxpayer leased a personal residence for a term from January until October 2019, but then only month-to-month thereafter. The Taxpayer then moved to ***** (State B) in May 2020 and lived and worked there until she returned to Virginia in May 2022.
The Taxpayer also retained significant connections to Virginia. She retained a Virginia driver’s license and vehicle registration. She was also registered to vote in Virginia and voted in the 2020 general election. In addition, the Taxpayer filed her 2019 federal income tax return using 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 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 fact that an individual has a Virginia driver’s license is one factor to consider, among other possible factors, in any given domicile case. Nonresidents are not permitted to hold Virginia driver’s licenses. See Virginia Code § 46.2-323.1. They are, however, permitted to continue to use their licenses from their home states or countries. See Virginia Code § 46.2-307. For the purposes of Title 46.2 of the Code of Virginia, “nonresident” is generally defined as every person who is not domiciled in the Commonwealth. See Virginia Code § 46.2-100. Thus, in general, an individual must be a domiciliary resident of Virginia in order to hold a Virginia driver’s license.
With regard to eligibility to vote, Article II, Section 1 of the Constitution of Virginia states in relevant part as follows:
In elections by the people, the qualifications of voters shall be as follows: Each voter shall be a citizen of the United States, shall be eighteen years of age, shall fulfill the residency requirements set forth in this section, and shall be registered to vote pursuant to this article.
The residence requirements shall be that each voter shall be a resident of the Commonwealth and of the precinct where he votes. Residence, for all purposes of qualification to vote, requires both domicile and place of abode.
The domicile and place of abode requirement found in the Constitution of Virginia is also reflected in the definition of “residence” or “resident” used in Virginia election statutes. See Virginia Code § 24.2-101. Consistent with the precedent established by the Virginia Supreme Court in Coopers Adm’r v. Commonwealth, 121 Va. 338, 93 S.E. 680 (1917), the Department will consider the fact that a taxpayer obtained a Virginia voter’s registration and voted in elections in Virginia to be very strong evidence that such individual considered Virginia to be their domicile during the time they held and used such registrations.
Virginia Code § 58.1-205 provides that, in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show she was not subject to income tax in Virginia.
As stated above, a change of domicile requires that a taxpayer prove two elements concurrently: 1) that she abandoned the old domicile and had no intent to return to it; and 2) that she established a new domicile, which must have been formed by physical presence coupled with the intent to remain permanently or indefinitely. The Department expects that, when taxpayers are seeking a permanent change of domicile, they will normally register vehicles, obtain a new driver’s license, register to vote and perform other official acts indicating their intent to change domicile. To the extent such connections may be retained with Virginia, it appears that taxpayers may not have been certain that they intended to abandon their Virginia domicile. If a permanent change of residence were intended, there would be no need to retain such connections with the former state.
In this case, the Taxpayer’s ongoing connections with Virginia raise significant doubts as to her intent to abandon her Virginia domicile. In particular, using a Virginia voter’s registration to vote during the period when she was not actually residing in Virginia is very strong evidence of domiciliary intent. Even though this occurred after she had left State A, the Department has stated that a change of domicile occurs as part of a process in which no single factor is dispositive. As such, facts as they existed both before and after the exact taxable year at issue may be instructive as to a taxpayer’s intent over a broader period of time.
In addition, the Taxpayer began leasing her State A residence on a month-to-month basis in October 2019. Further, the laws of both State A and State B require new residents to obtain a State A or State B driver’s license within 90 or 30 days, respectively, of establishing residency. The Taxpayer did not obtain a driver’s license in either state. These facts raise doubts as to whether she intended to establish domicile in either State A or State B.
After carefully reviewing all of the evidence provided, I find that that the Taxpayer has failed to prove that she satisfied the elements necessary to change her domicile to State A. Therefore, she remained subject to income tax as a domiciliary resident of Virginia for the 2019 taxable year.
The assessment at issue were made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer may, however, have information that better represents her Virginia income tax liability. Therefore, the Taxpayer should file a 2019 Virginia resident income tax return to more accurately reflect her Virginia income tax liability. 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 considered correct.
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/4391.B