June 24, 2015
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 "Taxpayers") for the taxable year ended December 31, 2011.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers may have been required to file a Virginia income tax return for the 2011 taxable year. A review of the Department's records showed that the Taxpayers had not filed a return. The Department requested additional information from the Taxpayers to determine whether they were required to file a Virginia return. When a response was not received, an assessment was issued based on the available information. The Taxpayers appeal, contending that the husband was a resident of ***** (Country A) during the 2011 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 abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.
The information provided indicates that the Taxpayers established domicile in Virginia in 2010. The husband had resigned his position in ***** (Country B) and travelled to Virginia in January 2010 to begin new employment. The Taxpayers also purchased a residence in Virginia, registered their vehicles in Virginia and obtained Virginia driver's licenses in March 2010. In addition, they filed a joint part-year resident Virginia individual income tax return for the 2010 taxable year, indicating that they resided in Virginia from February 2010 through October 2010.
Later that year, the husband performed some actions indicating his intent to establish domicile in Country A. In November 2010, his employer transferred him back to a position based in Country A, and he leased a residence there until September 2012 when he moved to ***** (State A). The wife, however, continued to reside in Virginia at least part of the time as she travelled between Virginia and ***** (State B) to care for family members.
The husband also maintained significant connections with Virginia. He continued to own the Virginia residence in which the wife lived. He also continued to own a vehicle which was registered in Virginia, and he retained his 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 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). The husband retained his Virginia license until December 2012, and the wife retained her Virginia license until August 2014.
The husband states that the Taxpayers decided to divorce shortly before he left for Country A. He also states that they attempted to sell the Virginia residence several times in 2011, but they were not able to sell it until July 2014. He asserts that he had no intention of returning to Virginia and that the wife's intention was to move to State B to care for family members. It appears, however, that the wife did not begin residing full-time in State B until the Virginia residence was sold.
The Taxpayers' divorce became final in September 2012 by order of a Virginia court. Under Virginia law, a suit for divorce may be brought only if one of the parties is and has been an actual bona fide resident and domiciliary of Virginia for at least six months preceding commencement of the suit. See Va. Code § 20-97. In this case, the court's order recited the fact that the husband was domiciled in and had been an actual bona fide resident of Virginia for more than six months prior to commencement of the suit. The husband states that the suit was filed late in 2011 or early in 2012. In either case, the court order indicates that the husband had not, in fact, abandoned his Virginia domicile for Country A. In light of this fact, in addition to the other connections the Taxpayers retained with Virginia, the Department finds that the Taxpayers were taxable as domiciliary residents of Virginia for the 2011 taxable year.
The Taxpayers, however, may have additional information that more accurately reflects their Virginia taxable income. Accordingly, the Taxpayers are hereby requested to file a 2011 Virginia income tax return to more accurately reflect their Virginia income tax liability.
The Taxpayers should file the requested return within 30 days of the date of this letter. Mail the return and payment for the corresponding liability to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attention: *****, P.O. Box 27203, Richmond, Virginia 23218-7203. Once the return is received, it will be processed and the assessment will be adjusted accordingly. If the return is not filed within the allotted time, the assessment will be considered to be correct and collection action will resume.
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 *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5944785796.M