Tax Type
Individual Income Tax
Description
Individual Request for Settlement
Topic
Collection of Delinquent Tax
Persons Subject to Tax
Date Issued
08-23-2004
August 23, 2004
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, 2000. I apologize for the delay in this response.
FACTS
The Taxpayer, a Virginia resident, was incarcerated in another state ("State A") for the entire 2000 taxable year. During the 2000 taxable year, the Taxpayer received income from the termination of retirement accounts. You state that in August 2000, the Taxpayer's representative received guidance over the phone from a Department representative indicating that the Taxpayer would not need to file a 2000 Virginia individual income tax return.
In May 2003, the Department assessed tax, penalty, and interest against the Taxpayer for the 2000 taxable year on the basis that the Taxpayer was a Virginia resident who failed to file an individual income tax return and pay income tax. The Taxpayer contends that he was a resident of State A during the 2000 taxable year and was not required to pay Virginia income tax or file a Virginia income tax return pursuant to advice given by the Department.
DETERMINATION
Domicile - Generally
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 that 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 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.
Temporary residence outside Virginia
Virginia Code § 58.1-303 provides a legal presumption that an individual will not relinquish his Virginia domicile if he moves back to Virginia within six months of moving out of Virginia. The Taxpayer contends that he has shown a bona fide intent to abandon his Virginia domicile by living outside of Virginia for nearly two years while he was incarcerated, and neither owned nor leased property in Virginia. The Taxpayer believes that his ultimate return to Virginia is not indicative of intent to retain a Virginia domicile while he was in prison in State A. The statute, however, goes on to state that "[t]he fact that a person has removed his abode to a place without the Commonwealth is not conclusive evidence of a change of domicile." As such, the fact that the Taxpayer did not return to Virginia within six months does not automatically mean that he became the domiciliary of another state.
A change in domicile requires that a taxpayer abandon his Virginia domicile and intentionally acquire a new domicile without Virginia. In the instant case, the Taxpayer was incarcerated in State A. The Taxpayer claims that he established domicile in State A by involuntarily moving to the prison and receiving mail and telephone calls there. The Taxpayer clearly indicates, however, that he did not intend to establish residency in State A while he was incarcerated. In fact, he took no action to obtain property, register with any government agency, or seek employment in State A. He did not file an income tax return with State A for the 2000 taxable year even though he resided in the state. Further, the Taxpayer states that he was uncertain as to where he would live after being released from prison. Such a statement clearly shows that the Taxpayer did not abandon his Virginia domicile and establish domicile in another state.
Advice from Department Representative
The Taxpayer also contends that his accountant contacted the Department's customer assistance by telephone and was told that the Taxpayer was not required to file a Virginia return for the 2000 taxable year. He argues that he should not be assessed tax, penalty, and interest for the 2000 taxable year because he relied on the Department's advice.
Virginia Code § 58.1-1835 provides that "[t]he Tax Commissioner shall abate any portion of any tax, interest, and penalty attributable to erroneous advice furnished to the taxpayer in writing by an employee of the Department acting in his official capacity ...." [Emphasis added.] In the instant case, the Department provided advice by telephone, not in writing. As such, the Tax Commissioner is not required to abate the assessment based on erroneous telephonic advice.
Conclusion
Based on the foregoing, the assessment is correct. An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No further interest or penalties will accrue provided the outstanding assessment is paid within 30 days from the date of this letter. Please remit your payment to: Virginia Department of Taxation, 3600 West Broad Street, Suite 160, Richmond, Virginia 23230, Attention: *****. If you have any questions concerning payment of the assessment, you may contact ***** at *****.
You state that payment of the assessment would create a financial hardship; however, you have not presented financial information to support this position. Without such information, I am unable to consider an offer in compromise based on doubtful collectibility. If you wish to pursue such an offer, please complete the enclosed form, Offer in Compromise - Individual Request for Settlement, and the accompanying Financial Information Statement. The completed form and statement will allow the Department to review and analyze the Taxpayer's financial situation. Upon completion of that review, a response will be issued to the Taxpayer.
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 regarding this determination, you may contact ***** in the 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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AR/47196B
Rulings of the Tax Commissioner