Document Number
12-59
Tax Type
Individual Income Tax
Description
Servicemembers Civil Relief Act
Topic
Domicile
Persons Subject to Tax
Servicemembers Civil Relief Act
Date Issued
04-27-2012

April 27, 2012



Re: § 58.1-1821 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 responding to your letter.

FACTS


The Taxpayer and a service member were married in 1995 while they both were domiciliary residents of ***** (State A). The service member was transferred to ***** (State B) in October 2000. When the service member was transferred to Virginia in 2007, the Taxpayer surrendered her ***** driver's license and obtained a Virginia driver's license. In addition, the Taxpayer established a place of abode and accepted employment from a Virginia business. In June 2009, the Taxpayer filed a special claim for refund of individual income tax withholding.

The Department denied the claim for refund on the basis that the Taxpayer and the service member were married after the Taxpayer moved away from State A and did not reside in State A after their marriage. The Taxpayer appeals the refund denial, contending she maintained her domiciliary residence in State A.

DETERMINATION


The Servicemembers' Civil Relief Act (the "Act"), codified at U.S.C. § 571 et seq was amended effective for the 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. The Act does not apply to the spouses of military and naval personnel who have established domiciliary status within Virginia.

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 general, the Department will not seek to tax the spouse of a military service member so long as the member maintains sufficient connections with another state to indicate intent to maintain domicile. The Taxpayer provided a copy of her State A voter's registration card as proof of her intent to maintain her connections to State A. The Department agrees that holding one's voting privileges in another state is a factor to consider in determining domicile, but other factors must be considered. While residing in Virginia, the Taxpayer established a permanent place of abode, found employment in Virginia, and obtained a Virginia driver's license.

Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." Every person applying for a driver's license must execute and furnish to the Department of Motor Vehicles a statement that certifies the applicant is a Virginia resident. Virginia Code §§ 46.2-306, and 46.2-600, however, provide exemptions for nonresident armed service personnel, their spouses and dependent children from Virginia's licensing and motor vehicle registrations requirements.

Based on the preponderance of evidence provided, the Department must conclude that the Taxpayer took sufficient steps to acquire domicile in Virginia in 2007. As such, the Taxpayer did not maintain the same domicile as the service member; therefore, she does not qualify for the protection of the Act. Accordingly, the claim for nonresident refund is denied and the Taxpayer is required to file individual income tax returns as a resident of Virginia for the 2009 and 2010 taxable years.

The requested returns, along with the payment of any tax due, should be submitted to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attention: *****, P.O. Box 27203, Richmond, Virginia 23261-7203 within 30 days of the date of this letter. If the returns are not filed, the Department may issue assessments based on the information available pursuant to Va. Code § 58.1-111.

The Code of Virginia sections and tax bulletin 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, please contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,



Craig M. Burns
                • Tax Commissioner



AR/1-4826078235.D


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46