Document Number
Tax Type
Individual Income Tax
Taxpayer was neither an actual or domiciliary resident under Virginia law during the tax year in question.
Filing Status
Date Issued

February 29, 2016

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.


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 2012 taxable year.  A review of the Department's records showed that the Taxpayer had not filed a return.  The Department requested additional information from the Taxpayer to determine if his income was subject to Virginia individual income tax.  When the Taxpayer did not respond to the information request, the Department issued an assessment.  The Taxpayer appeals, contending he was a resident of ***** (Country A) and did not meet the substantial presence test during the taxable year at issue.


Substantial Presence Test

            Virginia Code § 58.1-301 provides that terminology and references used in Title 58.1 of the Code of Virginia will have the same meaning as provided in the Internal Revenue Code (IRC) unless a different meaning is clearly required.  For individual income tax purposes, Virginia "conforms" to federal law in that it starts the computation of Virginia taxable income with federal adjusted gross income (FAGI).  Income included in the FAGI of a Virginia resident is subject to taxation by Virginia, unless it is specifically exempt as a Virginia modification pursuant to Va. Code § 58.1-322. 

The Taxpayer contends he was not a United States resident for tax purposes during 2012 because he did not meet the "substantial presence test."  Under this test, an alien individual is considered a resident alien if he or she has been in the United States for at least 183 days during a three year period that includes the current year, as long as more than 30 of those days have been spent in the United States in the current year.  See Treas. Reg. § 301.7701(b)-1(c).

For Virginia income tax purposes, however, an individual is considered a resident if he is an actual or domiciliary resident of Virginia, as defined by Virginia law. As such, the substantial presence test under federal law has no bearing on the determination whether an individual is subject to Virginia income tax as a Virginia resident.


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 was a citizen of Country A.  He came to the United States in 2001 on a student visa.  It has been the Department's experience that college students rarely establish domicile where they attend college.  See Public Document (P.D.) 82-39 (4/2/1982) and P.D. 11-121 (6/30/2011).  Although the Taxpayer was a graduate student, the Department's experience has been that graduate programs are typically for a fixed duration.  As such, in many cases it is also unlikely that a graduate student has the intent to remain in the state where his school is located for a permanent or indefinite period of time and thus establish domicile.

The Taxpayer, however, performed some actions indicating an intent to establish domicile in Virginia while he was a student.  He purchased a personal residence in Virginia in July 2004 and obtained a Virginia driver's license in December 2004.  After he graduated in 2007, the Taxpayer remained in Virginia on a temporary employment visa.

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 retained his Virginia driver's license, renewing it in May 2011.  DMV records also indicate that the Taxpayer surrendered his Virginia driver's license in August 2015.

The Taxpayer also retained connections with Virginia.  He continued to own the personal residence in Virginia.  He also owned two vehicles which remained registered in Virginia.  The Taxpayer indicates that the Virginia residence has been used as a rental property.

The Taxpayer also performed a number of actions consistent with establishing domicile in Country A.  The Taxpayer was a citizen of Country A and did not obtain United States citizenship.  In addition, both of his prior United States visas have lapsed and his Virginia driver's license has been surrendered.  Accordingly, it does not appear that the Taxpayer could legally reside in the United States again until he obtains another visa.  He returned to Country A in 2011 to begin employment with Country A's government and has been living and working there continuously since 2011.  In addition, the Taxpayer was in Virginia for only 10 days in 2012.

The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive.  Assuming, without deciding, that the Taxpayer established domicile in Virginia, I find that the Taxpayer abandoned his Virginia domicile when he returned to Country A to begin employment with Country A's government.

Nonresident Individuals

Under Va. Code § 58.1-325, individuals who are neither domiciliary nor actual residents of Virginia and have income from Virginia sources are taxed as nonresidents. Virginia Code § 58.1-302 limits the term income and deductions from Virginia sources to the items of income, gain, loss and deductions attributable to the ownership of property in Virginia or the conduct of a business, trade, profession or occupation in Virginia.  In this case, the Taxpayer had rental income attributable to his Virginia residence.   Such income was Virginia source income subject to Virginia income tax.


The Taxpayer may not rely on the fact that he was not a resident alien for federal income tax purposes under the substantial presence test to prove that he was not a resident for Virginia income tax purposes.  In this case, however, the Taxpayer was neither an actual or domiciliary resident under Virginia law during the 2012 taxable year.  As such, he was only taxable as a nonresident on his Virginia source income.

Accordingly, the Taxpayer must file a nonresident Virginia individual income tax return (Form 763) for the 2012 taxable year.  The return should be filed within 30 days from the date of this letter and mailed to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attention: *****, P.O. Box 27203, Richmond, Virginia 23261-7203.  When the return is received, it will be reviewed and processed, and the assessment will be adjusted accordingly.

The Code of Virginia sections and public documents cited are available on-line at 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 *****.


Craig M. Burns
Tax Commissioner


Last Updated 03/16/2016 08:50