Tax Type
Individual Income Tax
Description
Taxpayer changed it's domiciliary residence to Country A in 2008
Topic
Domicile
Federal Conformity
Persons Subject to Tax
Date Issued
08-28-2014
August 28, 2014
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the Virginia individual income tax assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2008. 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 have been required to file a Virginia income tax return for the 2008 taxable year. A review of the Department's records showed that the Taxpayer had not filed a return.
The Taxpayer's parents had moved to Virginia in 2001 when she was a 19 year old student attending college in ***** (State A). Upon graduation in 2004, she moved to ***** (State B) to accept employment. In 2006, she was transferred to ***** (Country A) where she has continuously resided. She has since married a citizen of Country A, purchased a home with her spouse, and obtained a residence visa.
The Taxpayer acquired a Virginia driver's license in 2001 and renewed it in 2006. The Taxpayer filed her 2008 federal income tax return using the Virginia address of her parents' residence. She never registered to vote in Virginia.
Under audit, the Department issued an assessment to the Taxpayer as a domiciliary resident of Virginia. The Taxpayer paid a portion of the assessment and appealed, contending she was not a resident of Virginia during the 2008 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, 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 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 is inadequate to meet this burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.
In order to be a Virginia domiciliary resident, an individual residing outside the Commonwealth must establish his or her Virginia residence. A United States citizen who is a minor will have the same domicile of her parents. If the parents of the child are domiciliary residents of Virginia, the child would also be a domiciliary resident of Virginia, even if the child had never lived in Virginia. See Public Document (P.D.) 01-185 (11/2/2001). A minor's domicile will continue in effect after majority until the old domicile is abandoned and a new domicile of choice is established. In this case, the Taxpayer's parents moved to Virginia when the Taxpayer was an adult. As such, she would not have automatically obtained a Virginia domicile when her parents became residents of Virginia.
The Taxpayer did, however, have some connections with Virginia. The Taxpayer filed her 2008 federal return using the Virginia address of her parents' residence. In this case, the Taxpayer moved to State A in order to attend college. It has been the Department's experience that college students rarely establish domicile in the state where they attend college. See P.D. 11-101 (6/9/2011).
Further, the Department does not generally consider college housing, whether it be in a dorm or apartment, to be a permanent place of abode. Likewise, employment engaged in by college students tends to be temporary in nature. In this case, the Taxpayer had a permanent place of abode to which she could return (her parent's home in Virginia). In addition, the Taxpayer obtained a Virginia driver's license in 2001. Thus, the information indicates the Taxpayer may have established sufficient contacts in Virginia to establish domicile. As such, the Department must examine the evidence to determine whether the Taxpayer both abandoned her Virginia domicile and established a domiciliary residence elsewhere.
The Taxpayer performed activities consistent with establishing a new domicile. She moved to Country A in 2008 pursuant to a job transfer. The evidence indicates this was a permanent assignment without a set duration. She established a permanent place of abode and began the process of obtaining a residence permit. Subsequently, she married a Country A resident, jointly purchased a home with her spouse, and obtained a residence visa.
With regard to Virginia, the Taxpayer did not reside in Virginia, own or lease real property, register a car, or vote in Virginia. She did obtain 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." In fact, this section states that every person applying for a driver's license must execute and furnish to 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 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). The Taxpayer allowed the driver's license to expire in October 2011.
After carefully weighing all of the evidence, I find that the Taxpayer changed her domiciliary residence to Country A in 2008. Accordingly, I find that the Taxpayer was not taxable as a domiciliary resident of Virginia for the 2008 taxable year. As such, the assessment issued to the Taxpayer for the 2008 taxable year will be abated and a refund with interest will be issued.
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/1-5422480571.B
Rulings of the Tax Commissioner