Tax Type
Individual Income Tax
Description
Taxpayer failed to abandon his Virginia domicile
Topic
Domicile
Persons Subject to Tax
Date Issued
05-26-2011
May 26, 2011
Re: § 58.1-1821 Application: Individual Income Tax
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
The Taxpayer filed a 2006 Virginia resident part-year return. In April 2006, the Taxpayer was transferred by his employer to ***** (State A). In June 2006, he was transferred to ***** (Country A). He was then transferred to two other foreign countries in 2008 and 2010, respectively.
The Department received information from the Internal Revenue Service (IRS) that tax documents for the 2007 taxable year were sent to the Taxpayer at a Virginia address. The Taxpayer did not file a 2007 Virginia individual income tax return. The Department requested additional information from the Taxpayer in order to determine his residence for that taxable year. Based on the information provided by the Taxpayer, the Department determined that he was a Virginia domiciliary resident during the 2007 taxable year and issued an assessment for individual income tax. The Taxpayer appeals the assessment, asserting that he abandoned his Virginia domicile when he was transferred to State A, and he was a resident of Country A during the 2007 taxable year.
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 or country, 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 or in another 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 residency.
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 asserts that he abandoned his Virginia domicile in 2007 because he did not have any income from Virginia sources, did not lease or own any Virginia real property, had no Virginia financial accounts, and he resided and worked in Country A during the entire year.
The Taxpayer moved to State A pursuant to a job transfer. Since 2006, he has been transferred to different foreign countries approximately every two years. The Taxpayer's employment agreement indicates that the assignments were temporary in nature, and at the conclusion of a particular assignment the Taxpayer would be assigned back to the Untied States or to a different foreign country.
The evidence also shows that the Taxpayer received mail in Virginia in 2007 and held a Virginia driver's license in 2007. Virginia 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 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). DMV records indicate that the Taxpayer obtained a Virginia driver's license in 2006.
After reviewing all the evidence in this case, it is my determination that the Taxpayer did not demonstrate clear intent to abandon his Virginia domicile during the 2007 taxable year. While the Taxpayer neither lived nor worked in Virginia since April 2006, he retained connections with Virginia and enjoyed the benefits of Virginia residency. Further, temporary job assignments, regardless of their duration, do not demonstrate an intent acquire a permanent residence outside of Virginia. Accordingly, I must conclude that the Taxpayer failed to abandon his Virginia domicile in 2007.
Based on the foregoing, the assessment is be upheld. The Taxpayer will receive an updated bill with interest accrued to date. Please remit payment to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O Box 27203, Richmond, Virginia 23261-7203, Attn: *****, within 30 days from the date of bill to avoid the accrual of additional interest.
The Code of Virginia section and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this determination, you may 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
- Craig M. Burns
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AR/1-4568969611.B
Rulings of the Tax Commissioner