Tax Type
Individual Income Tax
Description
Domiciliary Resident and Actual Resident Discussed
Topic
Persons Subject to Tax
Residency
Date Issued
09-14-2001
September 14, 2001
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****
This will reply to your letter in which you seek correction of the Virginia individual income tax assessment issued to your client, ***** (the "Taxpayer") for the 1994 through 1996 taxable years. I apologize for the delay in the department's response.
FACTS
The Taxpayer accepted a work assignment in a foreign country ("Country A") in June 1992. His wife and children remained in their Virginia family home. The Taxpayer separated from his spouse in 1994 and received a final decree of divorce in April 1996. As part of the separation/divorce process, the Taxpayer maintained the home as the residence for his wife and children. Also as part of the agreement, the family home was put on the market in 1995 and eventually sold in August 1996.
The Taxpayer maintained his Virginia driver's license during his period of residence overseas. The Taxpayer owned three vehicles in Virginia. Two vehicles were used by his children, and one was used by the Taxpayer when he was in Virginia.
While in Country A, the Taxpayer rented accommodations, obtained a Country A driver's license, purchased and registered an automobile, opened a bank account, and obtained Country A's equivalent of a social security card. As part of his transfer, the Taxpayer obtained a permanent visa from Country A. The Taxpayer married a citizen of Country A in 1996, purchased a Virginia home in October 1996, and moved back to Virginia in January 1997 to live with his new wife.
The Taxpayer filed joint federal income tax returns using his former Virginia address with his former wife for the 1994 and 1995 taxable years. He filed separate Virginia nonresident returns for those years using his Country A address. He filed a joint federal return and a joint Virginia nonresident return with his current spouse for the 1996 taxable year.
The department determined that the Taxpayer was a domiciliary resident of Virginia for the 1994 through 1996 taxable years and assessed additional tax and interest. The Taxpayer contests the assessments and contends that he was a domiciliary resident of Country A during the 1994 through 1996 taxable years.
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 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 this burden, the Commissioner must conclude that he or she intended to return to Virginia.
As noted above, the Taxpayer engaged in a number of activities consistent with establishing domicile in Country A. One of these activities was the Taxpayer's acquisition of a permanent visa to remain in Country A. Permanent visas are issued in Country A to individuals who are being transferred to work as a manager, executive or director. Other types of visas exist for individuals who are visiting on temporary business.
Given the fact that the Taxpayer's former wife remained in Virginia with their children, it is reasonable under the specific facts and circumstances of this case that the Virginia residence and some of the Taxpayer's possessions would remain for the benefit and use of his family. Once the Taxpayer and his former wife separated, their Virginia home and other personal belongings remained with his family.
The Taxpayer filed joint federal income tax returns showing the Virginia address. This can be explained as a matter of convenience since his wife remained in Virginia because the Taxpayer and his wife were still eligible to file a joint return for the 1994 and 1995 taxable years. They had a choice as to what address to include on their federal income tax return and where to receive third-party returns. However, the Taxpayer filed a separate Virginia return using his Country A address for the 1994 and 1995 taxable years.
The Taxpayer was also registered to vote in Virginia in the district where he had resided with his former wife for the 1990 through 1997 taxable years. However, prior to 1996, voters were not removed from the rolls unless they failed to vote for four consecutive years. Because the Taxpayer moved to Country A in 1992, it is feasible that he remained on the voting rolls even if he did not vote.
The Taxpayer retained his Virginia driver's license and maintained one automobile in Virginia for his personal and business use when he returned to the United States. He spent approximately 60 days in Virginia during the years at issue. At the same time, the Taxpayer established a residence, obtained a driver's license, and purchased a residence in Country A.
In reviewing all of the evidence and circumstances surrounding this case, I find that the Taxpayer intended to change his domicile from Virginia for the periods at issue. Accordingly, the assessments for the taxable years of 1994 through 1996 have been abated.
If you have any questions regarding this matter, you may contact ***** in the department's Appeals and Rulings Office at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/16162B
Rulings of the Tax Commissioner