Tax Type
Individual Income Tax
Description
The Soldiers' and Sailors' Civil Relief Act of 1940 (50 U.S.C. § 574)
Topic
Domicile
Persons Subject to Tax
Date Issued
05-04-2007
May 4, 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 assessment issued to ***** (the "Taxpayer") for the 2003 taxable year.
FACTS
The Taxpayer is on active duty in the United States military service. Prior to entering the military, the Taxpayer was a domiciliary resident of ***** (State A). While serving overseas, he was transferred from ***** (Country A) to Virginia in April 2003 pursuant to military orders. The Taxpayer's only income since 2003 has been from active duty military pay.
The Internal Revenue Service (I.R.S.) informed the Department that the Taxpayer was residing at a Virginia address and had income subject to tax. A review of the Department's records indicated that the Taxpayer had not filed a Virginia individual income tax return for the 2003 taxable year. The Department requested an explanation or a tax return from the Taxpayer. When no response was received, an income tax assessment was issued based on the I.R.S. information.
The Taxpayer has provided documentation reflecting that he was on active duty in the United States military and maintained his domicile in State A. Based on this information, the Taxpayer requests abatement of the assessment issued for the 2003 taxable year.
DETERMINATION
The Soldiers' and Sailors' Civil Relief Act of 1940 (50 U.S.C. § 574) provides that military and naval personnel do not abandon their legal domicile solely by complying with military orders that require them to take residence in a different state or country. The Act, however, does not preclude the possibility that armed forces personnel may acquire a new legal domicile in the state where they are stationed, and thus subject themselves to taxation by that state as if they were a domiciliary resident. In order for the change of domicile to occur, there must be an abandonment of the old domicile and the acquisition of a new one. This change must be exhibited by an individual's intent and conduct.
In addition, Va. Code § 58.1-321 B provides that members of the armed forces that are stationed in Virginia, who are not domiciled in Virginia, are not subject to Virginia individual income tax on compensation received from their military or naval service.
The Taxpayer was stationed in Country A by the United States military until being transferred to Virginia in April 2003. The facts presented indicate that the Taxpayer retained his domicile in State A and did not establish a Virginia domicile while stationed in the Commonwealth. Based on the statutes cited above, the assessment issued for the 2003 taxable year is erroneous and has been abated.
The Code of Virginia section cited, along with other reference documents, are available online 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 ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
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AR/1-915737845E
Rulings of the Tax Commissioner