Document Number
18-54
Tax Type
Individual Income Tax
Description
Residency, Domicile and Taxpayer Records
Topic
Appeals
Date Issued
04-19-2018

 

April 19, 2018

 

 

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, 2015.  I apologize for the delay in responding to your appeal.

 

FACTS

 

The Taxpayer filed a 2015 Virginia resident individual income tax return showing a tax liability, but no payment was received.  The return was processed and an assessment was issued.  The Taxpayer appeals the assessment, contending none of his income was earned from Virginia sources because he is currently residing in ***** (Country A).

 

DETERMINAITON

 

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, 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 providing 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, professional 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 Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

 

The Taxpayer claims he has been residing outside the United States since 2013. However, he has provided no documentation to show he left Virginia permanently. By letter dated February 23, 2017, the Department requested documentation required to determine the Taxpayer's domiciliary status.  As of the date of this letter, no information has been received.

 

With regard to Virginia, the Taxpayer has maintained connections indicating an intent to maintain his domicile in the Commonwealth. The Taxpayer filed Virginia resident income tax returns for the 2006 through 2012 taxable years.  The Taxpayer contends he resided in ***** (Country B) in 2013 and 2014 and filed Virginia income tax returns without incurring a bill.  The Department's records however, show there are no returns on file for the 2013 and 2014 taxable years.  He did file his 2015 return as a resident. In addition, Department of Motor Vehicle (DMV) records show the Taxpayer held a Virginia driver's license that was renewed in June 2007 and again in June 2012.

 

The Taxpayer argues he filed Virginia resident returns to preserve his right to vote. Under 42 U.S.C. § 1973ff-1, however, every state is required to establish procedures to permit absentee voting in federal elections for certain overseas voters. In addition, 42 U.S.C. § 1973aa-1 eliminates the application of durational residency as a precondition to voting in federal elections.  Therefore, a taxpayer can use his prior address in Virginia, whether he has ties to it or not.  To comply with federal law, the Virginia Board of Elections (VBE) has established absentee ballot procedures that allow a residential exception for covered voters living abroad.  See Virginia Code § 24.2-452 and § 24.2-700.

 

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, every person applying for a driver's license must execute and furnish to the Commissioner of the DMV a statement that certifies that the applicant is a Virginia resident.  Further, any applicant who knowingly makes a false statement to DMV is subject to penalties under Va. Code § 46.2-348.  The Department has found that an individual may successfully establish a domicile outside Virginia even if he or she 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 fact that an individual has a Virginia driver's license is one factor to consider, among other possible factors, in any given domicile case.  Nonresidents are not permitted to hold Virginia driver's licenses.  See Virginia Code § 46.2-323.1.  They are, however, permitted to continue to use their licenses from their home states or countries.  See Virginia Code § 46.2-307.  For the purposes of Title 46.2 of the Code of Virginia, “nonresident” is generally defined as every person who is not domiciled in the Commonwealth.  See Virginia Code § 46.2-100.  Thus, in general, an individual must be a domiciliary resident of Virginia in order to hold a Virginia driver's license.

 

Individuals who have resided in Virginia more than six months, however, are deemed to be residents for purposes of applying most of the provisions of Title 46.2 of the Code of Virginia, including the driver's licensing provisions of Title 46.2, Chapter 3 (Virginia Code § 46.2-300 et seq.).  In addition, because an individual who has been physically present and residing in Virginia for more than six months may nevertheless remain a domiciliary resident of another state or country, it may be necessary in such cases to examine additional factors to determine whether a person who has obtained a driver's license based on physical presence and actual residency in Virginia also intended to become a domiciliary resident of Virginia.  However, once it is clear that an individual has established domiciliary residency in Virginia, subsequent renewals of a Virginia driver's license even while absent from the state will be considered very strong evidence of the individual's intent to remain a domiciliary resident of Virginia.  That is because the basis of the individual's claim to be entitled to a Virginia driver's license would no longer be based on the length of time he was physically present in Virginia as an actual resident, but rather on the implication that he remained a domiciliary resident of Virginia.

 

While the Taxpayer neither lived nor worked in Virginia since 2012, he retained connections with Virginia and enjoyed the benefits of Virginia residency.  Further, temporary job assignments, regardless of their duration, do not demonstrate an intent acquire a permanent residence outside of Virginia.  Accordingly, I must conclude that the Taxpayer failed to abandon his Virginia domicile in 2015.

 

The Department will issue an updated bill with accrued interest.  The outstanding balance must be paid within 30 days of the bill date to avoid the accrual of additional interest.  If payment is not received within the allotted time, additional interest will be assessed and collection action may 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, please contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.

 

Sincerely,

 

Craig M. Burns
Tax Commissioner

 

AR/1093.o

 

Rulings of the Tax Commissioner

Last Updated 05/11/2018 14:54