Tax Type
Individual Income Tax
Description
Domiciliary resident of Virginia
Topic
Returns and Payments
Taxable Income
Date Issued
04-30-2003
April 30, 2003
Re: Ruling Request: Individual Income Tax
Dear ****************:
This will reply to your letter in which you request a ruling on behalf of your client,************ (the "Taxpayer") with respect to his liability for Virginia individual income tax for the 2002 taxable year based on his anticipated move to Hungary ("Country A"). I apologize for the delay in the Department's response.
FACTS
The Taxpayer is a domiciliary resident of Virginia who receives retirement income from the U.S. Government and a Virginia municipality. He also receives income from investment sources outside of Virginia. The Taxpayer recently sold his residence in Virginia and is in the process of selling his tangible personal property in Virginia. He states that he intends to move to a foreign country ("Country A") and that he has no intention of returning to Virginia. You have requested a ruling with respect to his income tax liability for the taxable years 2002 forward.
RULING
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. 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 as a resident.
In order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change.
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 domicile.
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 original domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that the taxpayer did intend to return to his or her original domicile.
There is no question that the Taxpayer could successfully abandon his Virginia domicile and establish a domicile in Country A. See Public Document ("P.D.") 94-333 (11/08/1994). Because changing domicile is based on the facts and circumstances for each case, a determination as to whether a Virginia domicile has been abandoned cannot be made until such activities have occurred. As noted earlier, a person intending to move his domicile must intend to abandon his Virginia domicile with no intention of returning to Virginia. When moving one's domicile to another country, it is especially important that the person be able to show that both intent and actions undertaken are consistent with abandonment of the old domicile and remaining in the new domicile permanently or indefinitely.
Until such time that the Taxpayer can show a change in domicile, he should continue to file as a domiciliary resident of Virginia. If the Taxpayer abandons his Virginia domicile and establishes a new domicile outside Virginia during a taxable year, he is taxable as a resident of Virginia for only that portion of the taxable year during which he was a resident of Virginia. See Va. Code § 58.1-303(B).
The Code of Virginia sections and public document cited, along with other reference documents, are available online in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have any questions about this letter, you may contact ************ in the Department's Office of Policy and Administration, Appeals and Rulings, at ***************.
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- Sincerely,
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Kenneth W. Thorson
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- Tax Commissioner
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AR/40345E
Rulings of the Tax Commissioner