Tax Type
Individual Income Tax
Description
Determining domicile
Topic
Persons Subject to Tax
Residency
Date Issued
03-13-2002
March 13, 2002
Re: § 58.1-1821 Application: Individual Income Tax
Dear
This will reply to your letter in which you seek correction of the individual income tax assessments issued to ***** (the "Taxpayer") for the taxable years ended December 31, 1997 through 1999. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer resided in Virginia until being transferred by the United States ("U.S.") ***** for a temporary assignment in a foreign country ("Country A") in September 1996. The Taxpayer moved back to Virginia in December 1999, after retiring from the U.S. ***** and accepting a contract position to work in Washington, D.C.
Upon moving to Country A, the Taxpayer filed a declaration with his employer claiming residence in another State ("State A") and registered to vote in State A. While still residing in Country A, the Taxpayer purchased a home in yet another State ("State B") in March 1998, and opened a bank account with a bank in State B. The Taxpayer's family moved into the State B residence and the Taxpayer visited frequently on trips from Country A. The family lived in the State B residence for six months and then moved back to the Virginia home.
Under audit, the department classified the Taxpayer as a domiciliary resident of Virginia and issued assessments for the 1997 through 1999 taxable years. The Taxpayer has paid the assessments, but contends that he abandoned his Virginia domicile when he moved to Country A in 1996.
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 an individual and/or the place to which he intends to return even though he may actually reside elsewhere. For an individual to change his domiciliary residency to another state, that individual must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that individual must acquire a new domicile, where that individual 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, maintains a place of abode within Virginia, whether domiciled in Virginia or not.
A Virginia domiciliary resident, therefore, working in other parts of the country or in another 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 domiciliary residency.
The Taxpayer performed a number of actions that are consistent with maintaining a Virginia domicile after moving to Country A in 1996. The Taxpayer retained his former Virginia residence. Although the Virginia home was used as rental property for a portion of the time the Taxpayer lived in Country A, the Taxpayer's family moved back into the residence in late 1998 and the Taxpayer returned to the residence upon returning to Virginia in late 1999. The Taxpayer and his spouse also retained their Virginia driver's licenses while residing in Country A. The Taxpayer also maintained Virginia registrations on two vehicles even though they were not used in Virginia. Both vehicles were used by the Taxpayer's family within the U.S., but not in Virginia. Although the Taxpayer stated that he intended to retire to State B upon returning from Country A, he solicited and accepted a contract position in Washington, D.C. in late 1999.
The Taxpayer also performed several actions that are consistent with a change in domicile. The Taxpayer made a declaration to the U.S. ***** that his residency changed to State A and transferred his voter registration to State A upon moving to Country A. The Taxpayer also purchased a residence in State B where the family lived for six months in 1998. The Taxpayer visited with his family in State B while he continued to live and work in Country A.
The department concedes that it is difficult to know whether an individual intends to return to Virginia. 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 intended to return to Virginia.
Based on the information provided, the department finds that the Taxpayer failed to abandon his domicile in Virginia and establish a new domicile in another state. The assignment to Country A was temporary in nature. The Taxpayer knew that he would be returning to the U.S. at the conclusion of the assignment. The mere declaration of residency and transfer of voter registration in State A was insufficient to establish domicile with State A. The Taxpayer has failed to show any evidence that he established a residence in State A. As such, the Taxpayer was clearly a domiciliary resident of Virginia for the 1997 taxable year.
In 1998, the Taxpayer purchased a residence in State B to which he moved his family from Country A. Because of State A's proximity to Country A, the Taxpayer was able to visit his family frequently during this time. However, the Taxpayer's family moved back to the Taxpayer's Virginia home in late 1998 and the State B residence was converted to rental property. Based on the shortness of the duration of the family's stay in State B, the Taxpayer's failure to fully abandon his Virginia domicile, and the Taxpayer's return to the Virginia residence in 1999, the department concludes the Taxpayer maintained a permanent residence in Virginia to which he intended to return.
Accordingly, the assessments for the 1997 through 1999 taxable years are upheld and there is no basis to issue a refund of individual income taxes paid for those periods. If you have any questions regarding this determination, you may contact ***** in the department's Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/35273E
Rulings of the Tax Commissioner