07-31 | Virginia Tax

Tax Type

Individual Income Tax

Description

Taxpayer asserts that she qualified as a commuter not a resident

Topic

Persons Subject to Tax

Residency

Date Issued

04-10-2007

April 10, 2007

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 assessment issued to ***** (the "Taxpayer") for the 2003 taxable year.

FACTS

In August 2003, the Taxpayer, a resident of *****, began commuting to work in Virginia on a daily basis. She moved to Virginia on November 1, 2003.

The Taxpayer failed to file a Virginia individual income tax return for the 2003 taxable year. Information provided to the Department by the Internal Revenue Service showed that the Taxpayer received income from Virginia sources. The Department determined that the Taxpayer was required to file a Virginia individual income tax return and issued an assessment for tax, penalty and interest.

In response, the Taxpayer filed a part-year resident income tax return and paid the balance due for the period from November 1, 2003 through the end of the year. As a result, the Department abated the assessment.

The Taxpayer has now filed a claim for refund asserting that she was not required to file a Virginia individual income tax return because she was not a resident of Virginia during the 2003 taxable year.

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.

The Taxpayer states that she was not a resident of Virginia because she resided in Virginia for less than 183 days. However, The Taxpayer acknowledges that she moved to Virginia on November 1, 2003. At this time, she was already employed fulltime in Virginia and obtained a place of abode in Virginia. No evidence has been provided that would indicate that she intended to remain a domiciliary resident of *****. Accordingly the Department must conclude that the Taxpayer intended to make Virginia her permanent place of residence. In fact, the Taxpayer continues to reside in Virginia as of this date.

Virginia Code § 58.1-303 provides that a person who becomes a resident of Virginia is subject to taxation during the period of Virginia residency. Title 23 of the Virginia Administrative Code (VAC) 10-110-40 provides that individuals who become residents of Virginia during the taxable year are only taxed as residents for that portion of the year that they reside in Virginia. Accordingly, the Taxpayer correctly filed a Virginia part-year individual income tax return for the portion of the 2003 taxable year in which she was a domiciliary resident of Virginia.

Nonresident Income

Prior to her move in November 2003, the Taxpayer was employed in Virginia. Individuals who are neither domiciliary nor actual residents of Virginia and have income from Virginia sources are taxed as nonresidents. The Virginia taxable income of a nonresident is defined under Va. Code § 58.1-325 as "an amount bearing the same proportion to his Virginia taxable income, computed as though he were a resident, as the net amount of his income, gain, loss and deductions from Virginia sources bears to the net amount of his income, gain, loss and deductions from all sources."

The Taxpayer asserts that she qualified as a commuter in accordance with Title 23 VAC10-110-250 and, as such, was not required to file a Virginia income tax return. Virginia Code § 58.1-342 specifies special cases in which a nonresident is not required to file a Virginia individual income tax return. Under Title 23 VAC 10-110-250, a nonresident who did not maintain a place of abode in Virginia at any time during the taxable year and who commuted on a daily basis to employment in Virginia from the nonresident's residence outside this state is not required to file a Virginia income tax return and is not liable for the payment of tax to Virginia provided certain conditions are met. In this case, the Taxpayer did not qualify for exemption because she established a place of abode in Virginia during the 2003 taxable year.

CONCLUSION

Based on the foregoing, the Taxpayer's request for refund for the 2003 taxable year cannot be granted. In addition, the Taxpayer must file a nonresident income tax return on income earned in Virginia while she resided in *****.

The 2003 Virginia nonresident income tax return, along with payment of any balance due and a copy of this letter, should be mailed within 30 days from the date of this letter to: *****, Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203. If the tax return is not filed within the allotted time, an assessment will be issued based on the information at hand.

The Code of Virginia and regulation 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 *****.

- - - - Sincerely,

- - - - Janie E. Bowen
        Tax Commissioner

AR/1-840602532E

Rulings of the Tax Commissioner