Tax Type
Individual Income Tax
Description
Intent to abandon Virginia domicile upon move to a foreign country
Topic
Residency
Date Issued
02-28-2000
February 28, 2000
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letter in which you protest the assessment made against you (the "Taxpayer") for the 1995 taxable year.
FACTS
Prior to August 1994, the Taxpayer was a domiciliary resident of Virginia. The Taxpayer owned a residence in Virginia, maintained an automobile and driver's license in Virginia, voted in Virginia, and held banking accounts in Virginia among other connections.
In August 1994, the Taxpayer accepted a transfer to a foreign country for employment purposes. At the time of the transfer, the Taxpayer left his United States clients to other individuals in the firm because the assignment was intended to be permanent.
In December 1994, the Taxpayer hired a realtor and listed his Virginia residence for sale. The Taxpayer kept his automobile registered in and stored in Virginia. During a holiday visit in December 1994, the Taxpayer renewed his Virginia driver's license. The Taxpayer did not obtain a driver's license in the foreign country as he did not own or lease an automobile there and did not have a need to obtain a license. Two bank accounts in Virginia remained active during the time the Taxpayer was in the foreign country. However, the taxpayer opened and maintained a bank account in the foreign country.
In August 1995, the Taxpayer moved back to Virginia into his previous residence after having resigned from his position. During the time he was in the foreign country, he was unable to sell the residence due to a poor housing market and a boundary line dispute with a neighbor that discouraged potential buyers. For the 1995 taxable year, the Taxpayer filed a part-year resident return in Virginia.
Under audit, the department determined that the Taxpayer was a domiciliary resident and assessed additional income tax for the 1995 taxable year. The Taxpayer has paid the assessment and now requests a refund.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. For a person to change domiciliary residency to another state, 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 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 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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The department determines a taxpayer's intent through the information provided. The taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
In the present case, the Taxpayer did have a number of contacts remaining with Virginia after he began working in the foreign country. However, he has provided adequate evidence to explain why each of those contacts remained. While he did own a residence, he was actively trying to sell the house. He kept bank accounts in Virginia as a means to pay any U.S. based expenses such as federal income taxes and credit card bills. His automobile was kept in Virginia as a matter of convenience for storage purposes and for use if he had to return the U.S. for business purposes. Subsequent to the audit review, the Taxpayer has provided adequate evidence which shows that his position in the foreign country was intended to be a permanent relocation.
In considering all of the facts together, the department concludes that the Taxpayer intended to abandon his Virginia domicile upon his move to the foreign country and did not reacquire a Virginia domicile until he moved back to Virginia. Accordingly, a refund in the amount of $**** plus an appropriate amount of interest, will be issued to you. If you have any questions, you may contact ************ in the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16647G
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letter in which you protest the assessment made against you (the "Taxpayer") for the 1995 taxable year.
FACTS
Prior to August 1994, the Taxpayer was a domiciliary resident of Virginia. The Taxpayer owned a residence in Virginia, maintained an automobile and driver's license in Virginia, voted in Virginia, and held banking accounts in Virginia among other connections.
In August 1994, the Taxpayer accepted a transfer to a foreign country for employment purposes. At the time of the transfer, the Taxpayer left his United States clients to other individuals in the firm because the assignment was intended to be permanent.
In December 1994, the Taxpayer hired a realtor and listed his Virginia residence for sale. The Taxpayer kept his automobile registered in and stored in Virginia. During a holiday visit in December 1994, the Taxpayer renewed his Virginia driver's license. The Taxpayer did not obtain a driver's license in the foreign country as he did not own or lease an automobile there and did not have a need to obtain a license. Two bank accounts in Virginia remained active during the time the Taxpayer was in the foreign country. However, the taxpayer opened and maintained a bank account in the foreign country.
In August 1995, the Taxpayer moved back to Virginia into his previous residence after having resigned from his position. During the time he was in the foreign country, he was unable to sell the residence due to a poor housing market and a boundary line dispute with a neighbor that discouraged potential buyers. For the 1995 taxable year, the Taxpayer filed a part-year resident return in Virginia.
Under audit, the department determined that the Taxpayer was a domiciliary resident and assessed additional income tax for the 1995 taxable year. The Taxpayer has paid the assessment and now requests a refund.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. For a person to change domiciliary residency to another state, 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 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 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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The department determines a taxpayer's intent through the information provided. The taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
In the present case, the Taxpayer did have a number of contacts remaining with Virginia after he began working in the foreign country. However, he has provided adequate evidence to explain why each of those contacts remained. While he did own a residence, he was actively trying to sell the house. He kept bank accounts in Virginia as a means to pay any U.S. based expenses such as federal income taxes and credit card bills. His automobile was kept in Virginia as a matter of convenience for storage purposes and for use if he had to return the U.S. for business purposes. Subsequent to the audit review, the Taxpayer has provided adequate evidence which shows that his position in the foreign country was intended to be a permanent relocation.
In considering all of the facts together, the department concludes that the Taxpayer intended to abandon his Virginia domicile upon his move to the foreign country and did not reacquire a Virginia domicile until he moved back to Virginia. Accordingly, a refund in the amount of $**** plus an appropriate amount of interest, will be issued to you. If you have any questions, you may contact ************ in the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16647G
Rulings of the Tax Commissioner