Tax Type
Individual Income Tax
Description
One spouse was a resident, they are not permitted to file a joint nonresident return
Topic
Domicile
Date Issued
11-14-2007
November 14, 2007
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 assessments issued to ***** (the "Taxpayers") for the 2004 taxable year. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayers have been legally separated since 1989. ***** (the "Husband") lived at several locations in Virginia, and then moved to ***** ("State A") in late 1997. ***** (the "Wife") remained in the jointly owned home in Virginia. The Husband returned to live in Virginia in January 2005. The Taxpayers filed a joint nonresident income tax return for the 2004 taxable year. Under audit, the Department determined that the Taxpayers were domiciliary residents of Virginia for the 2004 taxable year and issued an assessment.
The Husband contends that he was a domiciliary resident of State A during the 2004 taxable year and requests that the assessment issued for the 2004 taxable year be abated in full.
DETERMINATION
Residency
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 or in another 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 residency.
The Department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The Department determines a taxpayer's intent through the information provided. A taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
The Husband performed a number of actions that are consistent with a change in domicile. The Husband moved out of the family home after separation from the wife in 1989. In late 1997, he moved to State A, where he purchased a home, registered to vote, and obtained a driver's license.
At the same time, the Husband maintained several connections with Virginia. He continued to own and operate a business within Virginia until it was sold in 2004. The Husband also maintained a home in Virginia that was occupied by the Wife. Under a separation agreement, the Husband was required to provide a home and maintenance for the Wife.
In this case, the Husband took steps to establish his domicile in State A in 1997. The evidence also shows that the Husband concurrently took steps to abandon his Virginia domicile. While some connections with Virginia were retained, they do not constitute a sufficient connection with Virginia to make him a domiciliary resident of Virginia in 2004. It is, therefore, my determination that the Husband met his burden of proving that he acquired a domicile in State A with the intention to remain there permanently or indefinitely in 1997 and did not reestablish residency with Virginia until 2005.
Tax Returns
The Taxpayers filed a joint Virginia nonresident individual income tax return for the 2004 taxable year. Under Title 23 of the Virginia Administrative Code (VAC) 10-110-240 C 4, when a spouse that is a resident of Virginia and a spouse that is a nonresident elect to file a joint return, they must determine their tax liability as if both were Virginia residents. Because the Wife was a Virginia resident, the Taxpayers are not permitted to file a joint nonresident return for the 2004 taxable year.
In conjunction with his appeal, the Husband has filed an amended nonresident return as married filing separate. Once the amended return is processed, the assessment against the Husband will be adjusted to reflect the proper amount of tax and, if necessary, a refund will be issued.
The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.virginia.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
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AR/1-893486198E
Rulings of the Tax Commissioner