10-53 | Virginia Tax

Tax Type

Individual Income Tax

Description

Taxpayer not a domiciliary resident of Virginia and not subject to Virginia income tax

Topic

Definitions

Federal Conformity

Persons Subject to Tax

Date Issued

05-07-2010

May 7, 2010

Re: § 58.1-18.21 Application: Individual Income Tax

Dear *****:

This is in response to your letter in which you appeal the individual income tax assessment issued to ***** (the "Taxpayer") for taxable year ended December 31, 2006.

FACTS

The Department received information from the Internal Revenue Service that tax documents for the 2006 taxable year were sent to the Taxpayer at a Virginia address. Additional information indicated the Taxpayer maintained a Virginia driver's license and was also registered to vote in Virginia. The Department requested additional information from the Taxpayer in order to determine his residence for the tax year in question. When no response was received, the Department issued an assessment for income tax for the 2006 taxable year.

The Taxpayer contests the assessment, asserting that he has been an employee of a missionary organization in ***** (Country A) since 2003. The Taxpayer states his spouse and children resided with him in Country A, and he used his parents' address only to receive mail.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Cede § 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 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 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.

The Taxpayer had previously established domicile in Country A in 2003. He moved to Country A in July 2003, he accepted full-time employment there, rented a permanent place of abode, and resided with his family in Country A. The Taxpayer states he was never in Virginia in 2006, spending the entire year in Country A.

The Taxpayer also engaged in several activities indicating a change to a Virginia domicile. He had tax documents mailed to a Virginia address. He was registered to vote in Virginia since 1996 and in May 2003, the Taxpayer acquired a Virginia driver's license. Furthermore, the Taxpayer renewed his Virginia driver's license in December 2006.

Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." 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 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.) 00151 (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).

After reviewing all the evidence in this case, I find that the Taxpayer was not a domiciliary resident of Virginia and not subject to Virginia income tax for the 2006 taxable year. As such, the assessment has been abated.

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's determination in subsequent taxable years.

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 Department's Office of Tax Policy, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Janie E. Bowen
        Tax Commissioner

AR/1-3829616927.D

Rulings of the Tax Commissioner