Tax Type
Individual Income Tax
Description
Taxpayer did not complete the process in changing his domicile.
Topic
Domicile
Persons Subject to Tax
Records/Returns/Payments
Date Issued
06-11-2013
June 11, 2013
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 from ***** (the "Taxpayer") for the taxable year ended December 31, 2011. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer, a domiciliary resident of Virginia, is employed by the United States Department of State. The Taxpayer was transferred by his employer to ***** (Country A) in February 2011. The Department of State withheld Virginia income tax from the Taxpayer's compensation. The Taxpayer filed a Virginia part year return for the period he resided in Virginia and a refund claim for nonresident withholding for the period withholding payments were paid to Virginia after February 2011. Under review, the Department determined the Taxpayer was a domiciliary resident of Virginia in 2011, denied the claim for nonresident withholding and issued an assessment for additional tax and interest. The Taxpayer filed an appeal, contending he changed his domiciliary residence to ***** (State A) in February 2011.
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. D. 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 another country who has not abandoned his Virginia residency continues to be 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 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 his or her burden, the Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
In Public Document (P.D.) 91-70 (4/15/1991), the Department ruled that Foreign Service employees may retain their original state of domicile even while assigned to a temporary post. The Department acknowledges that most assignments from the Department of State are generally temporary in nature and the determination of one's domicile can only be made after considering all of the facts and circumstances.
The Taxpayer performed a number of actions to establish domicile in State A. He obtained a driver's license, registered his motor vehicles, and registered to vote in State A. The Taxpayer also argues he was a State A domiciliary resident and he continued to maintain a residence in State A while he resided in Virginia.
The Taxpayer also took actions to abandon his connections with Virginia. He canceled his Virginia driver's license and voter registration and moved and registered his motor vehicles in State A. He also abandoned his permanent place of abode in Virginia.
Generally, however, acquiring domicile in a new location requires both intent and personal presence. See Coopers Adm'r v. Commonwealth, 121 Va. 338, 93 S.E 680 (1917), in which the Virginia Supreme court observed that neither physical presence alone, nor expressed intention alone are sufficient to create a legal domicile for taxation purposes.
The information provided indicates the Taxpayer moved from Virginia to Country A. While the Taxpayer took sufficient steps to abandon his connection in Virginia and establish domiciliary connections in State A, it is not clear as to when the Taxpayer physically resided in State A. Absent of any evidence that the Taxpayer was physically present in State A for a sufficient amount of time to establish domicile there, the Department must conclude that the Taxpayer did not complete the process in changing his domicile and remained a domiciliary resident of Virginia in 2011.
Accordingly, the Taxpayer's appeal of the 2011 assessment and request for a refund of withholding tax is denied. I will, however, grant the Taxpayer one final opportunity to provide sufficient evidence regarding his domicile for the 2011 taxable year. Such evidence should be provided within 30 days from the date of this letter to: Virginia Department of Taxation, Appeals and Rulings, Attention: *****, Post Office Box 27203, Richmond, Virginia 23261-7203. If the requested information is not provided within the allotted time, the 2011 assessment will become due and payable.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department of Taxation'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
AR/1-5160439340.D
Rulings of the Tax Commissioner