Document Number
00-151
Tax Type
Individual Income Tax
Description
Abandonment of Virginia domicile; Residency
Topic
Residency
Taxpayers
Date Issued
08-18-2000
August 18, 2000

Re: § 58.1-1821 Application: Individual Income Tax


Dear *********

This will reply to your letter in which you protest the assessment made against your client, ***** (the "Taxpayer") for the 1995 through 1998 taxable years.

FACTS

The Taxpayer was a resident of Virginia through the beginning of 1995. In May 1995, the Taxpayer began employment that required him to move outside of the United States ("U.S."). The Taxpayer stated that at this time he intended to abandon his Virginia domicile and establish an overseas domicile until he retired. The Taxpayer also stated that upon retirement, he planned to move back to the U.S., but to a state other than Virginia ("State A"). For 1995, the Taxpayer filed a part-year resident return with Virginia.

While the Taxpayer lived outside of Virginia, his wife remained in their home in Virginia. Her reasons for not leaving Virginia were that she had only a short time period remaining until she obtained full retirement benefits from her employment. Upon her retirement, she planned to join her husband. For each of the 1995 through 1998 taxable years, the Taxpayer's wife filed resident individual income tax returns with Virginia.

At the time of the Taxpayer's initial move, the Taxpayer had an automobile registered in Virginia. The Taxpayer also leased an automobile and a furnished apartment during his stay outside the U.S., and paid income taxes to the foreign country. However, the Taxpayer retained his Virginia driver's license during this time as it was honored in the foreign country. The Taxpayer lived outside of the U.S. through August 1996.

In September 1996, the Taxpayer returned to the U.S. to begin a new job in State A. During a visit to his wife in Virginia, the Taxpayer purchased an automobile in Virginia and drove it to State A where he registered the car and obtained a State A driver's license. While in State A, the Taxpayer leased a furnished apartment and had most of his mail directed to his office in State A. He also saw a physician in State A for regular appointments. For the 1996 general election, however, the Taxpayer voted in Virginia via absentee ballot, but failed to pay State A's intangible property tax during his stay there. The Taxpayer lived in State A continuously until October 1998.

In October 1998, the Taxpayer returned to Virginia upon accepting employment based in Virginia. The Taxpayer filed a Virginia part-year resident return for 1998. Upon a review by the department, the Taxpayer was assessed as a domiciliary resident of Virginia for the taxable years of 1995 through 1998. The Taxpayer disputes this assessment and contends that he was not domiciled in Virginia during this period.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302. Domiciliary residence means the permanent place of residence of a taxpayer and/or the place to which he or she intends to return even though they may actually reside elsewhere. For an individual to change domiciliary residency to another state, that individual must intend to abandon their Virginia domicile with no intention of returning to Virginia. Concurrently, that individual 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 an individual who, for an aggregate of more than 183 days of the taxable year, maintained a place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, an individual 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 as a resident.

In determining domicile, consideration may be given to an 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, sites of real and tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine an individual's domicile. An individual's true intention must be determined with reference to all of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish or abandon domicile residency.

The department concedes that it is difficult to know whether an individual intends to abandon his or her domicile. The individual has the burden of proving abandonment of his or her Virginia domicile. If the information is inadequate to meet this burden, the department will conclude that he or she was a domiciliary resident of Virginia.

Based on the facts provided, the Taxpayer has demonstrated his intent to abandon his Virginia domicile. Given the fact that the Taxpayer's wife chose to remain in Virginia, it is reasonable under the specific facts and circumstances that some of the Taxpayer's possessions in Virginia would remain for the benefit and use of his wife. Since his wife was remaining in Virginia, there was no need to sell their house in Virginia or to move all of their personal belongings out of Virginia. It would have been especially burdensome on the Taxpayer to move many of his household items, such as furniture, linens, utensils, etc., to the foreign country. The Taxpayer leased a fully-furnished apartment during his residency in the foreign country. When the Taxpayer left the foreign country and moved to State A, he also leased a fully-furnished apartment.

The Taxpayer also had a joint checking account with a Virginia bank and continued to file federal income tax returns showing the Virginia address. Both can be reasonably explained by the fact that the Taxpayer's wife remained in Virginia. Also, the checking account was with a large national bank that also has branches in State A. Upon moving to State A, the Taxpayer was able to use the same account. The Virginia address continued to be used on joint federal income tax returns for the 1995 through 1998 taxable years. Because the Taxpayer was moving out of the country and changing jobs, as well as for convenience and reliability, he and his wife chose to keep the Virginia address on their joint federal returns.

While in the foreign country, the Taxpayer retained his Virginia driver's license as it was honored in that country. Virginia law does not require a resident holder of a Virginia driver's license to surrender the license upon abandoning his Virginia residence. Most states, including Virginia, however require that once a person moves into another state and intends to operate a motor vehicle they must obtain a license from that state within a certain time period and surrender their previous license. The Taxpayer moved to a foreign country that did not have a like requirement. Because the country honors Virginia driver's licenses as a form of identification and a permit to operate a motor vehicle, and based on the other facts and circumstances, it was understandable why the Taxpayer kept his Virginia driver's license. Upon moving to State A, the Taxpayer purchased an automobile, registered it in State A and obtained a State A driver's license. These actions are consistent with his intent to establish domicile in State A.

The Taxpayer voted in the 1996 Virginia general election via absentee ballot and failed to pay State A's intangible property tax during his residency there. The Taxpayer states that he was unaware of the tax, and states that he has already began making contacts in State A to remedy this situation. However, when looking at all of the attendant evidence and circumstances as a whole, the department has determined that the Taxpayer was not domiciled in Virginia for the periods at issue.

Accordingly, the assessments for the taxable years of 1995 through 1998 have been abated. If you have any questions, you may contact ***** in the Office of Tax Policy at *****.

Sincerely,



Danny M. Payne
Tax Commissioner

OTP/24299G

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46