06-82 | Virginia Tax

Tax Type

Individual Income Tax

Description

Virginia based income

Topic

Domicile

Date Issued

08-24-2006

August 24, 2006

Re: § 58.1-1821 Application: Individual Income Tax

Dear *****:

This will reply to your letter in which you seek correction of an individual income tax assessments issued to ***** (the "Taxpayer"), for the 2000 through 2003 taxable years. I apologize for the delay in responding to your appeal.

FACTS

The Department obtained Information from the Internal Revenue Service (I.R.S.) indicating that the Taxpayer received taxable wages from employment in Virginia for the 2000 and 2001 taxable years. The Department's records indicated that the Taxpayer had not filed a Virginia individual income tax return for these taxable years. Assessments were issued after the Taxpayer failed to show that the information provided by the I.R.S. was incorrect.

The Taxpayer filed Virginia resident individual income tax returns for the 2002 and 2003 taxable years while his prior filing history was under review. Assessments were issued for these taxable years after the Taxpayer failed to provide documentation for items of income and deductions.

The Taxpayer contends he was a domiciliary and actual resident of ***** ("State A") during the 2000 and 2001 taxable years. He contends that he was exempt from filing a Virginia individual income tax return on his wages in Virginia because he resided in Virginia for less than 184 days during these taxable years, had no place of abode in Virginia, and his wages were subject to taxation by State A. He further states that the Department has no evidence of Virginia-based income other than the salary he received during the 2000 and 2001 taxable years, and his 2002 and 2003 taxable year returns are correct as filed. The Taxpayer requests that the Department abate the assessments for the 2000 through 2003 taxable years.

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 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 that 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 domicile.

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 changed his domicile. If the evidence is inadequate to meet this burden, the Department must conclude that the Taxpayer intended to return to his original Virginia domicile.

The evidence shows that the Taxpayer moved to Virginia in 1982 and began filing individual income tax returns as a Virginia resident through 1996. Information from the I.R.S., as well as Department records, reflect that the Taxpayer received consistent wage income for the taxable years at issue from employment in Virginia for which Virginia individual income tax returns were not filed.

With respect to the Taxpayer's claim that he maintained homes outside Virginia, examination of government real estate records does not confirm that he owned those homes. The Taxpayer claims that he resided outside Virginia during the taxable years at issue, but has produced insufficient evidence to document he was actually living in State A while working in Virginia.

The Taxpayer also claims that he was subject to income tax in State A. State A's taxing authority, however, has no record of the Taxpayer filing returns or paying income tax for the 2000 through 2003 taxable years.

The Department has the authority to investigate any books and records of a taxpayer in order to ascertain the proper tax liability. See Va. Code § 58.1-219. Further, Va. Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, any assessment of a tax by the Department is deemed prima facie correct. As such, the burden of proof is on the Taxpayer to show that he was not liable for income taxation on his income for the 2000 and 2001 taxable years and, further, that the income and adjustments for the 2002 through 2003 taxable years were properly reported.

By letters dated July 25, 2005 and April 21, 2006, the Department requested that the Taxpayer provide information to substantiate residency in State A, income tax paid to State A, and income and deductions reported on the 2002 and 2003 Virginia income tax returns. Because the Taxpayer has failed to provide the requested information, there is no basis to overturn auditor's adjustments.

A copy of the Department's previous information request is enclosed. I will allow the Taxpayer one final opportunity to furnish the information necessary to support his position. Complete the information request and return it to: Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. If complete documentation is not provided within 30 days from the date of this letter, the Department's assessments for the 2000 through 2003 taxable years will be upheld and become immediately due and payable.

If the Taxpayer cannot produce the requested documentation, he should remit payment for the total outstanding balance, as shown on the enclosed schedule, within 30 days from the date of this letter to: Virginia Department of Taxation, 3600 West Broad Street, Suite 160, Richmond, Virginia 23230, Attention: *****. Failure to remit full payment within the 30-day period may result in the imposition of additional interest. If you have any questions concerning payment of the assessment, you may contact ***** at *****.

The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.state.va.us in the Tax Policy Library section of the
Department's web site. If you have any questions regarding this determination, you may contact ***** at *****.

- - - - Sincerely,

- - - - Janie E. Bowen
        
        Tax Commissioner

AR/56717E

Rulings of the Tax Commissioner