09-123 | Virginia Tax

Tax Type

Individual Income Tax

Description

Taxpayer did not establish a domicile in Virginia

Topic

Assessment

Domicile

Date Issued

08-07-2009

August 1, 2009

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 against ***** (the "Taxpayer") for the taxable years ended December 31, 2001, and 2003 through 2005.

FACTS

The Taxpayer has resided in ***** ("Country A") since 1989. He had no permanent place of abode or automobiles registered in Virginia during the taxable years at issue. Information obtained from the Internal Revenue Service, however, showed the Taxpayer used a Virginia address to receive third-party information returns for the taxable years at issue. Under investigation, the Department found that the Taxpayer had obtained a Virginia driver's license in 2001 and regularly spent time in Virginia.

The Department requested that the Taxpayer file Virginia income tax returns or provide evidence as to why he was not required to file for the taxable years at issue. Assessments were issued when sufficient evidence was not provided. The Taxpayer asserts that he was not a resident of Virginia, had no place of abode in Virginia and had no income from Virginia sources. The Taxpayer requests abatement of the assessments.

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 day/s of the taxable year, maintained his place of abode within 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 evidence indicates the Taxpayer was a domiciliary resident of Country A. He visited family in Virginia and had tax information sent to those family members for convenience purposes for the taxable years at issue. In 2001, the Taxpayer, however, obtained a Virginia driver's license.

With regard to the Virginia driver's license Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." In fact, this section states that every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles a statement that certifies that the applicant is a Virginia resident. A person providing a false statement is subject to punishment under the laws of the Commonwealth. The Department has found that an individual may successfully establish a domicile outside Virginia even if they retain a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver's license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/09/2002).

The strongest evidence that would indicate the evidence of a Virginia domicile is the maintaining of a Virginia driver's license. The Taxpayer indicates that he did not intend to establish Virginia domicile by obtaining a driver's license. The evidence at hand clearly shows that the Taxpayer remained a domiciliary resident of Country A and did not intend to establish a domiciliary residence here during the taxable years at issue.

While the Department concedes the Taxpayer's Country A residency for the taxable years at issue, the Taxpayer should be aware that continuing connections with Virginia, such as possession of a Virginia driver's license, using a Virginia address for primary financial documents, or other indicators of a permanent residence in Virginia, will likely continue to result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department determination in subsequent taxable years.

Based on a review of the facts at hand, the Taxpayer did not establish a domicile in Virginia during the taxable year 2001 and was not a domiciliary resident for the taxable years at issue. Accordingly, the assessments will be abated.

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/1-2479597030.E

Rulings of the Tax Commissioner