March 4, 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, 2012. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer filed a Virginia Special Nonresident Claim for Individual Income Tax Withheld (Form 763-S) for the 2012 taxable year, indicating he was a domiciliary resident of ***** (State A). In considering this request, the Department found that the Taxpayer had
a number of connections with Virginia and determined he was a domiciliary resident. As a result, the Taxpayer's request for refund was denied, and an assessment was issued for additional taxes due. The Taxpayer filed an appeal, contending that he was not a domiciliary resident of Virginia because he had changed his domicile to ***** (State B) in 2011 and then to State A in 2012.
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.
In this case, the Taxpayer performed activities consistent with establishing domicile in State B. His employer transferred him to its facility in State B in December 2011, and although the facility closed shortly thereafter, the Taxpayer had no reason to believe it was merely a temporary assignment. He also obtained a State B driver's license and registered to vote there.
The Taxpayer also retained some connections to Virginia. He still owned a residence in Virginia in which his spouse resided. He also had several vehicles registered in Virginia which she used. In addition, at least one of the Taxpayer's federal information returns was sent to the Virginia address. The Taxpayer, however, explains that his spouse remained in Virginia because she had recently graduated from college in Virginia and was trying to gain employment experience locally before joining him in State B. The Taxpayer also states that they would have incurred a significant loss if they had sold the Virginia residence at the time he was transferred to State B.
When the Taxpayer's employment was over in State B at the end of May 2012, he returned to Virginia for approximately two weeks, and then left for State A to reside in a residence he already owned there. He obtained a State A driver's license the same month (June 2012), registered a vehicle there in August 2012 and registered to vote as well. In 2013, his spouse joined him in State A, and they sold the Virginia residence.
In this case, it appears that the Taxpayer resided in State B less than six months before he returned to Virginia in June 2012. Title 23 of Virginia Administrative Code (VAC) 10-110-30 B 3 provides, in pertinent part, that:
[T]he fact that a person who has changed his place of abode to a location outside of Virginia but within six months of doing so again resides in Virginia constitutes prima fade evidence that no intent to abandon Virginia domicile existed. (Emphasis added.)
When a Virginia resident moves to a place of abode outside of Virginia and returns to Virginia within six months, this regulation deems that such action is prima facie evidence that the Virginia domicile was never abandoned. Unless the Taxpayer provides the Department with sufficient evidence to demonstrate that his or her domiciliary residence was changed to a location outside of Virginia, the Department will hold that the taxpayer never abandoned Virginia as his or her domiciliary residence.
The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. After carefully considering the information provided, I find that the Taxpayer successfully changed his domicile to State B despite the fact that he returned to Virginia within six months. This finding is bolstered by the fact that the Taxpayer only spent two weeks in Virginia before leaving for State A. The evidence shows that the Taxpayer moved directly from State B to State A and has continually resided there. Further, the wife has since moved to State A to join the Taxpayer. As such, the Taxpayer was not a domiciliary resident of Virginia during any part of the 2012 taxable year. Accordingly, the assessment will be abated and a refund of Virginia income tax withheld will be issued.
The Code of Virginia sections and regulation 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/1-5779612001.M