June 29, 2018
Re: § 58.1-1821 Appeal: Individual Income Tax
Dear *****:
This will respond 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, 2009.
FACTS
The Taxpayer timely filed a 2009 Virginia resident individual income tax return and claimed a subtraction for Operation Joint Endeavor Combat Pay. Under audit, the Department requested additional information to determine whether the Taxpayer was entitled to the subtraction. When no further information was received, the Department disallowed the subtraction and issued an assessment.
The Taxpayer subsequently asserted that he had been a resident of ***** (State A) since 2008. Based on new information provided, the Department adjusted the resident return to a part-year resident return and issued a revised assessment, which was paid through collection actions. The Taxpayer later filed a 2009 Virginia nonresident return to report a Virginia income tax liability of zero and claim a refund. The Department denied the refund. The Taxpayer appeals, contending that he was not a resident of Virginia during the 2009 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 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, maintains 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, voter's registration, 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 Taxpayer performed some actions consistent with retaining his Virginia domicile. He continued to own a residence in Virginia, and used Virginia addresses in tax filings and other correspondence. He also initially filed a 2009 Virginia resident income tax return. However, the Taxpayer has explained that the original Virginia resident return was filed in error and his Virginia address was a rental property subject to an active lease.
The Taxpayer has also provided evidence that he took actions to establish domicile in State A. He purchased a residence and began living in State A in 2008. He also registered to vote there and obtained a State A driver's license in June 2009. The Taxpayer explains that he was unable to obtain the voter's registration and driver's license earlier because he was frequently overseas.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. Where a change in domicile occurs as part of a process, the exact timing of when the true intent of an individual to change domiciliary residence can be difficult to discern. Unless a change in domicile has clearly been established through the preponderance of evidence, the Department will generally consider a change to have occurred toward the beginning of the process. See Public Document (P.D.) 16-138 (6/24/13). In light of this principle and after carefully considering the information provided, I find that that the Taxpayer was not taxable as a Virginia resident for the 2009 taxable year even though he did not obtain the State A driver's license and voter's registration immediately upon moving to State A. Accordingly, the assessment will be abated and a refund issued as warranted.
The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Laws, Rules and 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/1552.C