Tax Type
Individual Income Tax
Description
Requirements of the Servicemembers Civil Relief Act were not satisfied
Topic
Federal Conformity
Persons Subject to Tax
Residency
Date Issued
04-26-2011
April 26, 2011
Re: § 581-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek a refund of the Virginia individual income tax withheld for ***** (the "Taxpayer") for the taxable year ended December 31, 2009. I apologize for the delay in the Department's response.
FACTS
The Taxpayer and her spouse, an active duty military servicemember, were assigned to a military duty station in ***** (State A) in June 2005. In May 2008, the spouse received a change of duty station and transferred to a military installation in Virginia. The wife moved to Virginia with her husband.
The Taxpayer filed a nonresident claim for individual income tax withheld in February 2010, for the 2009 taxable year. In this claim the Taxpayer attested that she and her spouse were domiciliary residents of ***** (State B). The Department denied the claim on the basis that the information provided supported the Taxpayer's claim that her spouse is a domiciliary resident of State B, but it did not support her claim of domicile.
The Taxpayer filed an amended claim in August 2010, attesting that she was erroneously advised and should have claimed State A as their domiciliary residence. The Taxpayer provided documentation to substantiate her claim of maintaining her domicile in State A. The Department agreed that the Taxpayer maintained her domicile in State A, but determined her spouse did not abandon his State B domicile. Therefore they did not share the same domicile prior to being stationed in Virginia. The Taxpayer filed an appeal, contending that she and her spouse shared domicile in State A, and she should be allowed a refund for individual income tax withheld in 2009.
DETERMINATION
The Servicemembers Civil Relief Act (the "Act"), codified at 50 U.S.C. § 571 et seq., 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.
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:
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- 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.
- 1. Whether the person claiming exemption is married to a service member who is present in Virginia pursuant to military orders.
In this case, the servicemember was a native resident of State B. The service member elected State B as his withholding state. He also maintained motor vehicles registered in State B and held a State B driver's license. The Taxpayer provided the Department with a copy of a State B driver's license issued January 2010.
The service member and the Taxpayer maintained a residence in State A and held State A identification cards issued in 2006. During the 2010 taxable year, while stationed in Virginia, the service member and the Taxpayer transferred all vehicle registrations to State A. They registered to vote in State A. The service member reported an error in the withholding state to the Department of Defense, contending the withholding state should be State A, and was incorrect since 2005.
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.
Based on the information provided, the servicemember did not complete the steps required to abandon his State B domicile during the time he was stationed in State A. Therefore, he remained domiciled in State B. I find the servicemember did not share the same domicile as the Taxpayer prior to entering the Virginia duty station. As such, the requirements of the Act were not satisfied, and the Taxpayer's request for refund of the Virginia individual income tax withheld is denied.
The tax bulletin cited is 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 Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
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AR/1-4539678877.D
Rulings of the Tax Commissioner