September 23, 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 "Taxpayer") for the taxable year ended December 31, 2011.
FACTS
The Taxpayer filed a Virginia part-year resident individual income tax return for the 2011 taxable year. The Taxpayer's return was selected for audit, and the Department requested additional information concerning the Taxpayer's residency status that year. When the Taxpayer did not respond to the information request, the Department issued an assessment to him for additional tax due as a resident of Virginia for the entire year. The Taxpayer appealed, contending he moved to ***** (Country A) in July 2011 and had no intention of returning to Virginia.
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 Taxpayer, a retired military servicemember, was a domiciliary Virginia resident and employed by the military as a civilian employee. In July 2011, the Taxpayer took a position with another branch of the military. He states that he intended to live and work in Country A for five years and then return to ***** (State A) where he had lived prior to joining the military. The Taxpayer, however, returned to Virginia in September 2012.
While the Taxpayer lived and worked in Country A, he maintained significant connections with Virginia. He owned three residences in Virginia, one of which was occupied by one of his children and another of which was a rental property. He also had another child who lived in Virginia. In addition, he was registered to vote in Virginia, had vehicles registered in Virginia and continued to hold 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 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 Taxpayer states that he left Virginia with no intention of returning. He placed his furniture in storage and secured his residence with the intention of selling it but it was damaged by fire shortly before he departed for Country A. Regardless, other than travel to Country A, the Taxpayer retained all significant connections with Virginia. The Taxpayer also admitted the position in Country A was temporary and he did not intend to remain there permanently. In addition, the Taxpayer could not have established domicile in State A until he established his physical presence there again with the necessary intent to remain permanently or indefinitely. Based on the information available, the Department must conclude the Taxpayer remained taxable as a domiciliary resident of Virginia for the entire 2011 taxable year.
Accordingly, the assessment for the 2011 taxable year is upheld. An updated bill with accrued interest to date will be mailed to the Taxpayer shortly. No further interest will accrue provided the outstanding balance is paid within 30 days of the bill date.
In addition, the Taxpayer should be aware that as a result of this determination, he would also be considered to have been a domiciliary resident of Virginia for the entire 2012 taxable year. Therefore, the Taxpayer should amend his part-year 2012 return to the return required for full-year residents (Form 760).
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/1-6029274813.M