Document Number
10-93
Tax Type
Individual Income Tax
Description
Taxpayer did not abandon his Virginia domicile and is subject to tax
Topic
Domicile
Records/Returns/Payments
Residency
Date Issued
06-04-2010


June 4, 2010





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 your client, ***** (the "Taxpayer"), for taxable year ended December 31, 2006. I apologize for the delay in the Department's response.

FACTS


The Taxpayer and his spouse established domiciliary residency in Virginia during 1999. In March 2004, the Taxpayer accepted a position in ***** (Country A). The business was sold in early 2005, and the Taxpayer returned to Virginia until he was transferred to ***** (State A) in March 2005.

While the Taxpayer fulfilled his assignments in Country A and State A, his family remained in their home in Virginia. The Taxpayer maintained registered vehicles, his driver's license and voter's registration within Virginia during the entire period.

Under audit, the Department determined the Taxpayer had not successfully abandoned his Virginia domicile and assessed additional income tax for taxable year ended December 31, 2006. The Taxpayer contests the assessment, stating that he abandoned his Virginia domicile in 2004 when he moved to Country A. The Taxpayer asserts that he is a natural resident of Country A.

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 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 Department must conclude that the Taxpayer did intend to return to his or her original domicile.

The Taxpayer contends he abandoned his Virginia domicile when he moved to Country A and did not reestablish domicile in Virginia before moving to State A. The Taxpayer did perform several activities consistent with changing his domicile. For example, he was employed in Country A and obtained an international driver's license. At the same time, the Taxpayer took little action to abandon his Virginia domicile. His family remained in Virginia at a permanent place of abode. In addition, the Taxpayer continued to maintain personal property and hold a Virginia driver's license, which he renewed in early 2005. Based on the evidence, the Taxpayer did not change his domicile to Country A in 2004. Accordingly, he was a domiciliary resident of Virginia when he accepted the position in State A in 2005.

In regard to his move to State A in March 2005, the Taxpayer performed a number of activities to establish domicile in State A. The Taxpayer was employed full­time in State A, and he established a place of abode. This housing was provided by his employer at his place of employment. The Taxpayer concedes that the housing was granted on a temporary basis until his family could be moved. However, when his family decided not to relocate with him, he remained in the corporate apartment. He continued to work full-time and live in the employer-provided housing through the 2006 and 2007 taxable years. In early 2008, the Taxpayer was transferred to a position back in Virginia.

During the same period of time, the Taxpayer continued to maintain a number of connections within Virginia. He maintained a home and registered vehicles in Virginia. The Taxpayer's spouse and children remained domiciled in Virginia. He also continued to hold and maintain his Virginia driver's license and voter's registration. The Taxpayer also declared Virginia as his state of residence on his 2006 federal income tax return.

With regard to the Virginia driver's license, Va. 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 he retains 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).

In February 2005, the Taxpayer renewed his Virginia driver's license and did not relinquish it when he moved to State A. The Taxpayer contends that he did not obtain a State A driver's license because he did not have a need for transportation while living near the his place of employment. The Taxpayer further argues that he and his wife reconciled in 2008, and he was able to move back into the Virginia residence. However, no evidence has been provided to show that the Taxpayer was legally separated from his spouse during the 2005 through 2007 taxable years.

After carefully weighing all of the evidence, I find that the Taxpayer did not abandon his Virginia domicile in 2005, 2006, or 2007 and, therefore, failed to establish domicile in State A. Consequently, it is my determination that the Taxpayer was a domiciliary resident of Virginia for the 2005 through 2007 taxable years.

The assessment for the 2006 taxable year was made based on the best information available to the Department. The Taxpayer may have additional information that more accurately reflects his taxable income. The Taxpayer may file a Virginia individual income tax return as a full-year resident for the 2006 taxable year to more accurately reflect his Virginia income tax liability. In addition, the Taxpayer is requested to file returns for the 2005 and 2007 taxable years as a resident of Virginia.

Collection action on the individual income tax assessment for the 2006 taxable year will be held in abeyance for 60 days to allow the Taxpayer to file a proper 2006 individual income tax return. Please send the return to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23218-7203, Attention: *****. If such return is not filed within the allotted time, collection action will resume on the outstanding balance of the assessment.
    • The Code of Virginia sections 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 further questions' please contact ***** at *****.
                • Sincerely,

                • Janie E. Bowen
                  Tax Commissioner



AR/1-3829616829.D


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46