Tax Type
Individual Income Tax
Description
Taxpayer records insufficient to prove domicile in another state.
Topic
Domicile
Federal Conformity
Records/Returns/Payments
Date Issued
06-30-2011
June 30, 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 assessments issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2007.
FACTS
The Department was notified by the Internal Revenue Service (IRS) that the Taxpayer received financial statements at a Virginia address for the 2007 taxable year. Under audit, the Department found that the Taxpayer received financial statements at multiple post office boxes in Virginia and in ***** (State A).
Because the Taxpayer held a Virginia driver's license and owned motor vehicles registered in Virginia, the Department concluded that the Taxpayer was a domiciliary resident of Virginia. As a result, the Department issued an assessment for tax, penalty and interest. The Taxpayer appeals the assessment, contending that during 2007 she and her husband were in transition between Virginia and State A while their Virginia home was under construction.
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 determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that she has abandoned her Virginia domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that she intended to remain indefinitely in Virginia.
The Taxpayer conducted a number of activities indicative of establishing domicile in Virginia. The Taxpayer maintained motor vehicles registered in Virginia since 1994 and registered additional vehicles in April 2004 and July 2005. The Taxpayer also held a Virginia driver's license that was renewed December 2004, surrendered April 2008, and re-issued again in October 2009. In addition, the Taxpayer registered to vote in Virginia in May 2008.
The Taxpayer also performed actions consistent with obtaining a domicile in State A. The Taxpayer was employed in State A. The Taxpayer asserts that she resided in State A with her husband during all of 2007. She has provided utility statements as evidence of maintaining a residence outside of Virginia.
With regard to her residence in State A, the utility bills submitted list an address for which the Taxpayer reported a loss as rental property on her federal income tax returns for the 2005 and 2006 taxable years. The Department has not been able to obtain documentation that the Taxpayer filed a 2007 federal income tax return. Consequently, the Department is unable to conclude that the Taxpayer had a permanent place of abode in State A during 2007.
The Taxpayer and her husband did enter into a construction contract to build a home in Virginia in June 2005. The Taxpayer indicates that this home was still under construction in 2007. A statement from the contractor dated May 2007 was provided, but the statement does not definitive establish when the Virginia residence was completed.
Based on the evidence presented in this case, I find that the Taxpayer has demonstrated an intent to establish and maintain a Virginia domicile for the 2007 taxable year. However, the assessment at issue was based on the information available to the Department. The Taxpayer may have additional information that more accurately reflects her taxable income. Therefore, it may be advisable for the Taxpayer to file a 2007 Virginia individual income tax return in order to more accurately reflect her tax liability.
The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. Upon receipt, the return will be reviewed and processed, and the assessments for the taxable years in question will be adjusted as warranted. If the return is not received within the time provided, the assessment will be upheld and collection action will resume.
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 any questions regarding this determination, you may contact ***** at *****.
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- Sincerely,
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Craig M. Burns
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- Tax Commissioner
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AR/1-4593613223.D
Rulings of the Tax Commissioner