03-90 | Virginia Tax

Tax Type

Individual Income Tax

Description

Domiciliary resident, actual resident

Topic

Basis of Tax

Residency

Taxpayers' Remedies

Date Issued

11-14-2003

November 14, 2003

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 assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 1999. I apologize for the delay in the Department's response.

FACTS

The Taxpayer is a United States citizen who was a domiciliary resident of State A until 1997, when he accepted a transfer to an overseas position offered by his employer. The Taxpayer and his spouse sold their home in State A and moved to Country A at that time. The Taxpayer obtained a Country A driver's license so that he could continue to drive a car when in the United States.

In 1999, the Taxpayer was transferred to Country B. Also in 1999, the Taxpayer purchased a house in Virginia so that he would have a place to stay when visiting relatives in the United States. The Taxpayer acquired a Virginia driver's license so that he could drive in the United States and rent a car (he did not qualify for a Country B driver's license). In addition, the Taxpayer used a Virginia address for receiving certain financial documents.

As a result of information obtained from the Internal Revenue Service ("IRS"), the Department issued an individual income tax assessment to the Taxpayer for the 1999 taxable year. The Taxpayer appeals this assessment contending he is not a domiciliary resident of Virginia.

DETERMINATION

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 Virginia, that person must intend to abandon his old domicile with no intention of returning to that same domicile. 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 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.

Changing domicile is a two-step process. First, a person must intend to permanently move away from one domicile. Second, the person must acquire a new domicile where he intends to remain permanently or indefinitely.

The Taxpayer performed actions that are consistent with a change in domicile. The Taxpayer purchased a home in Virginia, had certain financial documents mailed to a Virginia address and obtained a Virginia driver's license.

Other actions and activities of the Taxpayer are consistent with maintaining a domicile outside Virginia. Prior to 1999, the Taxpayer had never been an actual or domiciliary resident of Virginia. The Taxpayer has never worked in Virginia, nor has he registered to vote in Virginia. In 1999, the Taxpayer spent 40 days in the United States, 324 days residing in Country A where he worked for his employer, and one day working for his employer in another country.

In considering all of the facts, I find that the weight of the evidence in this case indicates that the Taxpayer was neither an actual nor a domiciliary resident of Virginia during the 1999 taxable year. The available information demonstrates that the Taxpayer did not intend to abandon his domicile in Country B and obtain a Virginia domicile. Accordingly, the Department's assessment issued to the Taxpayer for the 1999 taxable year will be abated.

It is my understanding that the Department has issued an assessment to the Taxpayer for the 2000 taxable year. The Taxpayer should contact ***** in the Office of Customer Relations, Office Audit Unit, at ***** extension ***** to resolve that assessment.

The Code of Virginia sections cited, along with other reference documents, are available on-line 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 determination, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Kenneth W. Thorson
        Tax Commissioner

AR/42295E

Rulings of the Tax Commissioner