Tax Type
Individual Income Tax
Description
Domiciliary intentions examined
Topic
Persons Subject to Tax
Residency
Date Issued
12-14-2001
December 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 clients, ***** (the "Taxpayers") for the 1997 taxable year.
FACTS
The Taxpayers, a husband and wife, are foreign nationals residing in Virginia. In January 1997, they moved back to their native country ("Country A") when the husband was transferred by his employer. In July 1998, the husband was offered and accepted a position with a different employer in Virginia.
The Taxpayers rented an apartment in Country A but maintained their house in Virginia. The Taxpayers retained their Virginia driver's licenses, but were able to use their Country A driver's licenses that they obtained prior to moving to the United States. One of their Virginia vehicles and other personal property were moved to Country A. The Taxpayers voted in Country A elections while overseas.
In 1997, the Taxpayers filed a Country A income tax return. In 1998, they filed a Virginia part-year return. Under audit, the department classified the Taxpayers as domiciliary residents of Virginia for the 1997 taxable year and assessed additional tax and interest. The Taxpayers contest the assessment and contend that they were domiciliary residents of Country A during the 1997 taxable year.
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 his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
In this case, the preponderance of the evidence indicates that the Taxpayers were domiciliary residents of Country A for taxable year 1997. They established a residence in Country A. When the Taxpayers moved to Country A, many personal items including an automobile were moved to Country A. There is no indication that the husband's transfer to Country A was temporary. In fact, the Taxpayer's return to Virginia occurred when the husband accepted a new job with an unrelated company. Based on the length of the time the Taxpayers were absent from Virginia and other circumstances surrounding their move to Country A, I find that they successfully abandoned their Virginia domicile for taxable year 1997.
Accordingly, the assessment for the 1997 taxable year has been abated. If you have any questions regarding this matter, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/36387B
Rulings of the Tax Commissioner