Tax Type
Individual Income Tax
Description
Residency of Spouse of Military Service Member
Topic
Domicile
Persons Subject to Tax
Residency
Date Issued
02-11-2011
February 11, 2011
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you appeal an assessment of individual income tax issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2009. I apologize for the delay in responding to your letter.
FACTS
In June 2007, the Taxpayer moved from ***** (State A) to Virginia. In early 2009, she married a service member on active duty in the armed forces in Virginia. The service member, who had been stationed in State A, was deployed oversees in 2006 and reassigned to Virginia when he returned in late 2008. The Taxpayer claimed the military spouse exemption from individual income taxation on her 2009 taxable year Virginia income tax return.
Under review, the Department disallowed the military spouse exemption because the documentation provided showed the Taxpayer was not married to the service member when she moved to Virginia. The Department concluded that she was a resident of Virginia and changed the 2009 filing to a resident return. A refund was issued based on the information available. The Taxpayer appeals the denial of a portion of the refund, contending both she and her service member spouse were domiciliary residents of State A in 2009.
DETERMINATION
Domicile
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.
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 established or abandoned his or her Virginia domicile.
The Taxpayer performed a number of actions consistent with abandoning her State A domicile and acquiring a Virginia domicile. In 2007, she moved to Virginia and established a permanent place of abode in preparation for the service members eventual transfer. In addition, she was able to retain a position with her State A employer while she lived in Virginia.
The Taxpayer also performed a number of actions consistent with maintaining a domicile in State A. She maintained her State A driver's license, voting registration and State A bank account. According to the Taxpayer, a house in State A was retained as a future retirement home for the couple.
The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. The circumstances of this case show that the move to Virginia resulted from Taxpayer's desire to continue a relationship with the service member, which eventually led to marriage in 2009. The activities of the Taxpayer resemble those of a military spouse. Under such circumstances, the Department will generally conclude that a military spouse will establish domicile in Virginia when following military personnel to Virginia and abandon Virginia domicile when following them to the next duty station. See Public Document (P.D.) 10-39 (4/08/2010).
Further, while a place of abode was retained in State A, it was converted to a rental property making it less available for a return to that state. In addition, the Taxpayer planned to move to ***** (State B) in 2010 to follow the service member to his new duty station. In fact, the service member and the Taxpayer have no assurance that they will move back to a former duty station in State A. Based on the information at hand, the Taxpayer established domicile in Virginia when she moved here in June 2007.
Residency of Spouse of Military Service Member
The Servicemembers Civil Relief Act (the "Act"), codified at 50 U.S.C. § 571 et seq., provides that military and naval personnel do not abandon their legal domicile solely by complying with military orders that station them in a different state or country whether permanently or temporarily. The Act does not apply to the spouses of military and naval personnel for the years in question. The Department has ruled that residency status of a taxpayer requires analysis separate from their military spouse. See P.D. 05-92 (6/9/2005) and P.D. 05-150 (9/8/2005).
The Act was amended, effective for 2009 taxable year and thereafter, to provide that a spouse can neither lose nor acquire domicile or residence in a state when the spouse is present in the state solely to be with the service member in compliance with the service member's military orders if the residence or domicile is the same for both the service member and spouse. See Tax Bulletin (VTB) 9-10 (11/12/2009) and VTB 10-1 (1/29/2010).
In VTB 10-1, the Department explained that the domicile of a military spouse must be the same as the service member in order to be exempt from Virginia's income tax. The determination of a military spouse's domicile requires analysis of the facts and circumstances. The elements that may be examined include:
- 1. Whether the person claiming exemption is married to a service member who is present in Virginia pursuant to military orders.
- 2. The service member's domicile.
3. The spouse's domicile and the circumstances in which it was established.
- 4. The extent to which the spouse has maintained contacts with the domicile.
5. Whether the spouse has taken any action in Virginia that is inconsistent with maintaining a domicile elsewhere.
In this case, the service member arrived in Virginia in late 2008. The Taxpayer and the service member were married in Virginia in January 2009.
The Taxpayer became a domiciliary resident of Virginia upon moving to Virginia in June 2007. The information provided indicates the service member retained his domiciliary residence in State A. Because the Taxpayer did not have the same domicile as the service member in 2009, she does not qualify for exemption from income taxation by Virginia under the Act.
Accordingly, the Department correctly changed the Taxpayer's 2009 filing to a resident return. This change, however, was made based on the information available to the Department. The Taxpayer may have additional information that more accurately reflects her taxable income. It may, therefore, be advisable for the Taxpayer to file an amended 2009 Virginia individual income tax return in order to more accurately reflect her tax liability.
The Code of Virginia sections, public documents and tax bulletins 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 about this determination, please contact ***** in the Department's Office of Tax Policy, 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/1-4490682777.E
Rulings of the Tax Commissioner