Tax Type
Individual Income Tax
Description
Virginia domicile; Domicile in a different Country
Topic
Residency
Date Issued
02-01-2005
February 1, 2005
Re: § 58.1-1821 Application: Individual Income Tax
Dear ******************:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to your client, ***** (the "Taxpayer"). I apologize for the delay in the Department's response.
FACTS
The Taxpayer, a Virginia resident, accepted a position in ***** ("Country A") in 1996. The Taxpayer signed a six-year employment contract with a Virginia employer to work in Country A. Upon expiration of the initial contract, the Taxpayer signed a second six-year employment contract. The Taxpayer died in 2004.
While in Country A, the Taxpayer rented an apartment, purchased a car, obtained a Country A driver's license and opened an account in a Country A bank. The Taxpayer also retained his home in Virginia while overseas, noting that the home was retained as a residence for his mother until her death in 2002, after which it was converted to rental property. The Taxpayer also retained his Virginia driver's license while overseas, renewing it in 1998. The Taxpayer filed Virginia resident individual income tax returns for 1996, 1997 and 1998.
In 2002, the Taxpayer timely filed an amended Virginia individual income tax return and requested a refund for all Virginia income tax paid for 1998. The Taxpayer claimed that he was domiciled in Country A during the 1998 taxable year. The Department determined the Taxpayer was a domiciliary resident of Virginia and issued assessments for the 2000 and 2001 taxable years. The Taxpayer contends he was a domiciliary resident of Country A following his move there in 1996. The Taxpayer, therefore, requests that the Department issue the refund resulting from his 1998 amended return and abate the assessments for the 2000 and 2001 taxable years.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia 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, he must acquire a new domicile where he 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) 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 residency.
The Department concedes that it is difficult to know whether a taxpayer intends to return to his or her original domicile. The Department determines a taxpayer's intent through the information provided. In this case, The Taxpayer has the burden of proving that he abandoned his original domicile. If the information is inadequate to meet this burden, the Tax Commissioner must conclude that the Taxpayer intended to return to his original domicile.
The Taxpayer performed several actions that are consistent with a change in domicile. He moved to Country A after accepting employment. He obtained both Country A residence and work permits. After completion of the initial six-year employment contract, he signed an additional six-year contract for employment in Country A. He opened a local bank account, purchased an automobile, and obtained a driver's license. He converted his former home in Virginia to rental property after his mother died in 2002. The Taxpayer states that he returned to Virginia approximately two weeks per year to spend time with his mother. It is noted that his last visit to the United States included a trip to Florida to look for retirement property.
In addition, the Taxpayer also performed some actions that are consistent with an intent to maintain a Virginia domicile. He filed 1996, 1997 and 1998 Virginia individual income tax returns as a domiciliary resident. The Taxpayer also maintained his Virginia driver's license while overseas, renewing it in 1998.
Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." In fact, this section states that every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles a statement that certifies that the applicant is a Virginia resident. While renewing his driver's license was for purposes of convenience, doing so demonstrated an indication that the Taxpayer was a domiciliary resident of Virginia. It should also be noted that a person providing a false statement is subject to punishment under the laws of the Commonwealth.
As noted earlier, the burden of proving that one's domicile has changed lies with the person alleging the change. Based on the facts presented, however, I cannot agree that the Taxpayer abandoned his Virginia domicile prior to 1999. The initial six-year contract does not represent an intent to abandon the Taxpayer's Virginia domicile. Further, the Taxpayer clearly indicated a preference to maintain ties in Virginia by filing Virginia resident income tax returns for the 1996 through 1998 taxable years and renewing his Virginia driver's license in 1998. The Taxpayer also retained a home in Virginia to which he could return if he needed to leave Country A.
Based on the information provided, I find that the Taxpayer has not shown that he abandoned his Virginia domicile and simultaneously obtained a domicile in Country A prior to 1999. While he performed a series of actions that in some cases could indicate a change in domicile, his actions prior to 1999 were indicative of a Virginia domiciliary resident. Changing one's domicile is not based on a retroactive decision.
Accordingly, the refund of taxes paid, requested through filing of the amended 1998 individual income tax return, is denied. The assessments for 2000 and 2001 will be abated because the Taxpayer has demonstrated a change in domicile for those years.
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.policylibrary.tax.virginia.gov. 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,
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- Kenneth W. Thorson
- Tax Commissioner
- Kenneth W. Thorson
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AR46647E
Rulings of the Tax Commissioner