Tax Type
Individual Income Tax
Description
Taxpayer is a Virginia domiciliary resident subject income taxation in Virginia
Topic
Domicile
Residency
Date Issued
10-05-2006
October 5, 2006
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of an individual income tax assessment issued to******** (the "Taxpayer") for the 2002 taxable year.
FACTS
The Taxpayer was a domiciliary resident of Virginia in 2001. The Taxpayer asserts that in January 2002, he divorced his spouse and moved to ***** ("State A").
Information provided to the Department by the Internal Revenue Service showed that the Taxpayer used a Virginia address to receive third-party information returns. Based on this evidence and information subsequently provided by the Taxpayer, the Department determined that the Taxpayer was a domiciliary resident of Virginia, and an assessment was issued for the 2002 taxable year.
The Taxpayer contends he was not a resident of Virginia in 2002 and, therefore, is not subject to individual income tax in Virginia. Further, he contends that as a merchant seaman who is a nonresident, his income is not subject to Virginia income taxation. The Taxpayer requests abatement of the assessment at issue.
DETERMINATION
Domicile
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1 302. Domiciliary residence means the permanent place of residence of a taxpayer or the place to which he or she intends to return even though he or she may actually reside elsewhere. For an individual to change 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 person is physically present with the intention to remain there permanently or indefinitely.
A Virginia domiciliary resident, therefore, working in other parts of the country or, as in your case, employed onboard a vessel, who has not abandoned his Virginia residency continues to be subject to Virginia taxation. An actual resident of Virginia means an individual who, for an aggregate of more than 183 days of the taxable year, maintained a place of abode within Virginia.
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 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.
The Taxpayer has provided little evidence that he performed actions to change his domicile after obtaining a divorce from his spouse in Virginia. He claims to have moved to State A, but provided no evidence to support this claim.
The Taxpayer has performed a number of actions that are consistent with retaining a domicile in Virginia during the 2002 taxable year. He received financial documents, such as tax documents, bank statements and bills, in Virginia. The fact that a person receives such mail in Virginia does not provide conclusive evidence of a Virginia domicile, but does serve as a factor to be considered.
Other actions of the Taxpayer are also indicative of a Virginia domicile. The Taxpayer has maintained motor vehicle registrations in Virginia since at least 1998. Two vehicles purchased in 2000 remained titled in Virginia until they were sold in 2004 and 2005. The Taxpayer subsequently purchased vehicles in 2003, 2004 and 2005, all of which are registered in Virginia.
The Taxpayer has also maintained a Virginia driver's license, which he most recently renewed in 2004. By maintaining a Virginia driver's license, the Taxpayer has demonstrated his intent to retain his domiciliary residence in Virginia. 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. A person providing a false statement is subject to punishment under the laws of the Commonwealth.
After reviewing all the available information, it is my determination that the Taxpayer has not provided sufficient evidence demonstrating that he abandoned his Virginia domicile and simultaneously obtained a domicile elsewhere. Accordingly, the Taxpayer is considered a domiciliary resident of Virginia for the 2002 taxable year and is subject to income taxation on his income.
Merchant seamen
The Taxpayer argues he is exempt from taxation under Public Law (P.L.) 106489, codified at 46 U.S.C. § 11108. P.L. 106-489 addresses employer income tax withholding with regard to merchant seamen and state and local income taxation. This law does not exempt a domiciliary resident from state income taxation, but prohibits the mandatory withholding of state or local taxes from crewmembers on certain vessels. Voluntary withholding payments, however, are permitted. In the case at hand, the issue is whether the Taxpayer is a domiciliary or actual resident of Virginia who is subject to taxation on his income. P.L. 106-489 has no bearing on the residency of a merchant seaman.
CONCLUSION
Based on the foregoing, the Taxpayer is a Virginia domiciliary resident subject to individual income taxation in Virginia.
The assessment for the 2002 taxable year was made based on the best information available to the Department. The Taxpayer may have additional information that more accurately reflects a true and correct filing for the 2002 taxable year. It is recommended, therefore, that the Taxpayer file an individual income tax return as a Virginia resident for the 2002 taxable year.
The requested tax return should be filed, along with the appropriate payment, within 60 days from the date of this letter. The income tax return and payment should be mailed to: *****, Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203.
If the 2002 income tax return is not filed within the allotted time, the assessment will be upheld as issued and collection action will resume. A schedule is enclosed showing the current outstanding balance. No additional interest will accrue provided the total outstanding balance is paid within 30 days from the date of this letter.
The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.vlrginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact ***** at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-593677405E
Rulings of the Tax Commissioner