08-170 | Virginia Tax

Tax Type

Individual Income Tax

Description

Taxpayer took sufficient actions to establish a domiciliary residence in another state

Topic

Domicile

Residency

Date Issued

09-11-2008

September 11, 2008

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 taxable year ended December 31, 2005.

FACTS

The Taxpayer leased a residence in Virginia through 1986. At that time he possessed a Virginia driver's license and was registered to vote in Virginia. After 1986, the Taxpayer commenced residing in ***** (State A) and working long term assignments in that state and various foreign countries. He resided briefly in Virginia at his brother's house in 1992 and voted that year in Virginia. The Taxpayer has continuously renewed his Virginia driver's license through the present time.

In 1994, the Taxpayer registered to vote in State A. In 2003, the Taxpayer acquired a post office box in Virginia. The Taxpayer filed a State A nonresident income tax return for the taxable year at issue. In 2007, the Taxpayer began to physically reside in Virginia.

In an audit of the Taxpayer for the 2005 taxable year, the Department determined the Taxpayer was a resident of Virginia and assessed additional tax and interest. The Taxpayer contests the assessment, asserting that he was not a Virginia resident.

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. 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.

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 determines a taxpayer's intent through the information provided. The taxpayer has the burden of proving that he or she has abandoned his or her original domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that the taxpayer did intend to return to his or her original domicile.

In the instant case, the Taxpayer performed several actions that are consistent with ending his Virginia domicile and acquiring a domicile outside the Commonwealth. The Taxpayer registered to vote in Stare A and filed a 2005 State A nonresident income tax return that reported his residence as a foreign country. The Taxpayer has worked and lived outside of Virginia for many years prior to the taxable year at issue. The Taxpayer spent few days in Virginia in 2005.

The Taxpayer also performed actions indicative of maintaining a Virginia domicile. The Taxpayer rented a Virginia post office box and maintained a Virginia driver's license, which he has continually renewed. Although the Taxpayer registered to vote in State A, he never took any steps to terminate his Virginia voting registration.

The Taxpayer indicates that the post office box was maintained because the mail system was unreliable in the foreign country in which he lived. The Taxpayer indicates that his father had access to the box and would pick up the Taxpayer's mail. The Taxpayer contends that he believed that his State A voter registration terminated his Virginia voter registration.

Regarding the Virginia driver's license, the Taxpayer states he maintained the Virginia driver's license as a convenience. He states that he never got a State A driver's license because he has not owned a car since 1986. Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." While renewing his driver's license may have been for purposes of convenience for the Taxpayer, doing so is a strong indicator of the Taxpayer's intent to maintain a Virginia domiciliary residence. See Public Document (P.D.) 02-149 (12/09/2002).

The strongest evidence that would indicate the intent to maintain a Virginia domicile is the renewal of a Virginia driver's license. The overwhelming evidence, however, clearly shows that the Taxpayer moved to State A and took sufficient actions to establish a domiciliary residence there. After carefully weighing all of the evidence, I find that the Taxpayer successfully abandoned his Virginia domicile and established domicile in State A prior to the 2005 taxable year. Accordingly, the assessment of individual income tax for the 2005 taxable year has been abated.

I would note that the Taxpayer has indicated that he intends to file a Virginia return for the 2007 taxable year as a resident. The information provided also indicates that he no longer maintained a permanent place of abode in State A. In addition, he continues to maintain a Virginia driver's license. Although he maintains a voter registration in State A, the Taxpayer appears to have abandoned his domicile in State A. As such, based on his statements and actions, the Taxpayer will be considered to have established his domicile in Virginia during the 2007 taxable year.

For future reference, should the Taxpayer intend to establish domicile outside Virginia, in addition to other actions he has taken in tine past, he must surrender his Virginia driver's license in order to fully abandon his old domicile and show an intent not to return.

The Code of Virginia sections and public document cited 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 regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.

- - - - Sincerely,
        
        Janie E. Bowen
        Tax Commissioner

AR/1-1-2451591971.B

Rulings of the Tax Commissioner