March 17, 2017
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.
FACTS
The Department received information from the Internal Revenue Service (IRS) that indicated the Taxpayer may have been required to file a Virginia individual income tax return for the 2012 taxable year. Because Department records indicated the Taxpayer did not file a return, it 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 appealed the assessment, contending he was a resident of ***** (State A) and ***** (State B) during the 2012 taxable year.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia 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 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 the 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 the 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 a spouse, marital status, situs of real or tangible property, motor vehicle registration, driver's 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 graduated from a State A law school in 2011. Because he had not established permanent residence in State A during his studies, he continued to use his parent's address in Virginia as his primary residence. 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).
The Taxpayer lived and worked in State A and State B during 2012. By the Taxpayer's own admission, however, the work was temporary. In addition, he listed a family member's Virginia address on his federal income tax return, and maintained a Virginia driver's license during the taxable year.
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 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 Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. The Taxpayer states he was temporarily employed in State A and State B during the taxable year. The Taxpayer did not submit evidence that he established a permanent place of abode in State A or State B, or any other documentation that might indicate the intent to establish his domiciliary residence in State A or State B. The Taxpayer did maintain connections in Virginia through the use of a family member's address and his active driver's license. The information and documents available, therefore, indicate the Taxpayer did not abandon his Virginia domicile. Accordingly, I find the Taxpayer remained subject to Virginia income tax as a domiciliary resident of Virginia.
During the review process for this appeal, the Taxpayer did provide copies of part-year returns he filed in State A and State B. Based on these returns, the Department adjusted the 2012 assessment to allow for credit for tax paid to other states pursuant to Va. Code § 58.1-332. A revised assessment showing the adjusted balance due will be issued shortly.
Furthermore, the Taxpayer may have additional information to more accurately reflect his Virginia income tax liability. The Taxpayer may file a 2012 Virginia resident individual income tax return. If he wishes to claim a credit for income taxes paid to State A and State B, he should attach a copy of his State A and State B returns to his Virginia income tax return for the 2012 taxable year. The return and attachments should be mailed to: Virginia Department of Taxation, Appeals & Rulings Division, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****, within 30 days from the date of this letter. Once the return is received, it will be processed and the assessment may be adjusted accordingly. If the return is not filed or the revised assessment paid within the time allotted, the assessment will be considered to be correct and collection actions 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/741.o