Tax Type
Individual Income Tax
Description
Information provided was inadequate to overturn assessment
Topic
Domicile
Federal Conformity
Persons Subject to Tax
Records/Returns/Payments
Date Issued
08-12-2014
August 12, 2014
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
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, 2009. I apologize for the delay in responding to your appeal.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may be required to file a Virginia income tax return for the 2009 taxable year. The Department requested information to verify whether the Taxpayer was subject to Virginia income tax. Under audit, the Department determined that the Taxpayer was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals the assessment, contending she moved to ***** (State A) during the 2009 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 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, situs of real or 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 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. A taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information provided is inadequate to meet this burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
The Taxpayer contends that she moved to State A in April 2008, returned to Virginia in January 2009 then moved back to State A again in April 2009. State A motor vehicle records indicate that the Taxpayer registered a motor vehicle in State A in July 2008. The Taxpayer filed a 2009 Virginia part-year resident income tax return with a State A address; however, the return was filed in January 2013, well after the due date for the 2009 taxable year.
The Taxpayer, who established domiciliary residency in Virginia prior to 2008, also maintained significant connections with Virginia. She reported a Virginia residence on the 2009 federal income tax return. The Taxpayer indicates she did so because she was residing with her father in Virginia when the return was filed. In addition, the Taxpayer filed Virginia returns and reported Virginia withholding for the 2010 and 2011 taxable years. The Taxpayer also obtained a Virginia driver's license in June 2007.Under Virginia Code § 46.2-323.1 "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 (12/9/2002). In this case, the Taxpayer surrendered her Virginia license for a State A driver's license in September 2010.
The Taxpayer states that she transitioned between State A and Virginia as needed to find employment. In Mitchell v. United States, 88 U.S. 350, 1874 WL 17410 (1874), the Supreme Court opined that to constitute a new domicile, two things must occur. First, a new residence must be established. Second, there must be an intent to remain there. The Taxpayer's admission that she was moving periodically, coupled with the facts that she did not obtain a permanent place of abode, retain steady employment or establish any other significant connection with State A other than register an automobile there, indicates a lack of intent to establish domicile outside Virginia.
Based on the information provided, I must conclude the Taxpayer was a domiciliary resident of Virginia during the 2009 taxable year and did not establish domicile in State A for the period of time she lived there. Accordingly, the assessment for the 2009 taxable year is upheld. An updated bill, with interest accrued to date, will be mailed to the Taxpayer shortly. No further interest will accrue provided the outstanding balance is paid within 30 days from the date indicated on the revised bill.
The Code of Virginia sections, and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding 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
AR/1-5307724017.D
Rulings of the Tax Commissioner