Tax Type
Individual Income Tax
Description
Taxpayer became a domiciliary resident of Virginia
Topic
Domicile
Persons Subject to Tax
Records/Returns/Payments
Date Issued
06-20-2011
June 20, 2011
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, 2007.
FACTS
In 2006, the Taxpayer and her spouse resided in ***** (State A). The couple also owned a house in Virginia, and the Taxpayer held a Virginia driver's license. Her employer was based in ***** (State B), which borders Virginia. In early 2007, the spouse was transferred by his employer to ***** (Country A) and the couple sold their home in State A. The Taxpayer continued to work for her employer in State B and lived in the home in Virginia when she was not in Country A with her spouse.
The Department received information from the Internal Revenue Service (IRS) indicating the Taxpayer had income for the taxable year at issue. The Taxpayer was requested to file a Virginia individual income tax return for the taxable year at issue, provide a copy of the return filed, or explain why she was not subject to Virginia income taxation. When an adequate response was not received, the Department: issued an assessment. The Taxpayer appeals the assessment, contending she changed her domicile to Country A in 2007, the income from her employment was exempt under federal law, and her income was insufficient to require filing.
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. For a person to change domiciliary residency to another state, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. 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. A Virginia domiciliary resident, therefore, working in other parts of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.
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 domicile.
The Department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. 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 Virginia domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
The Taxpayer performed several actions consistent with an intent to change domicile in 2007. The home in State A was sold after the spouse was transferred to Country A. The Taxpayer traveled to Country A with the spouse.
The Taxpayer also performed a number of actions indicating an intent to establish her domicile in Virginia. The Taxpayer purchased a home, registered an automobile in Virginia, and obtained a Virginia driver's license prior to 2007. In addition, the Taxpayer spent more days in Virginia than in Country A or State A in 2007.
The Taxpayer argues that she intended to establish her domiciliary residence in Country A and considered the home in Virginia to be a second home. When in Country A, the Taxpayer was able to telework for her State B employer. When she had to work in the office in State B, she lived in the Virginia home and commuted to work. Based on the evidence, the Taxpayer was not able to permanently telework from a home office in Country A.
Further, 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 (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has ruled that obtaining or renewing a Virginia license is a strong indicator of an individual's intent to be a domiciliary resident of Virginia. See Public Document (P.D.) 02-149 (12/09/2002). The Department has also found that an individual may successfully establish a domicile outside Virginia even if a Virginia driver's license is retained. See P.D. 00-151 (8/18/2000). In this case, the Taxpayer obtained a Virginia driver's license in 2002 and renewed it in 2007.
The preponderance of evidence suggests that the Taxpayer abandoned her domicile in State A during the 2007 taxable years and established her domicile in Virginia. While the Taxpayer did take some steps consistent with changing domicile: to Country A, she established significantly more connections with Virginia. Accordingly, the Taxpayer became a domiciliary resident of Virginia in May 2007.
The Department's assessment is based on the information at hand. In order to more accurately compute the tax, it is recommended that the Taxpayer complete and file a 2007 part-year Virginia income tax return. The return should be completed within 30 days from the date of this letter and sent to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attention: *****. The assessments will be adjusted as appropriate after the return is processed. If the return is not filed, the current assessment will be considered correct as issued, and collection action on the outstanding liability will resume.
The Code of Virginia sections and public documents cited are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4586770704.E
Rulings of the Tax Commissioner