August 2, 2019
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.
FACTS
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 2015 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 in order to determine if her income was taxable in Virginia. Based on the information provided by the Taxpayer and other information available, the Department determined that the Taxpayer was taxable as a domiciliary resident of Virginia. The Taxpayer appealed, contending she was a resident of ***** (Country A).
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, 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 has 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.
It appears the Taxpayer was a resident of Virginia from 1992 to 2004. It also appears that the Taxpayer abandoned her Virginia domicile in 2004 and became a resident of ***** (State A). In December 2014, she accepted employment in Country A and subsequently began residing there with her spouse. After her spouse died, however, she ended her employment in Country A and returned to the United States in January 2017, at which time she began residing in Virginia.
In January 2015, the Taxpayer obtained a Virginia driver’s license and vehicle registration using the address of a personal residence she had purchased in Virginia in 2013. The Taxpayer also registered to vote in Virginia and voted in the 2016 election.
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).
With regard to eligibility to vote, Article II, Section 1 of the Constitution of Virginia states in relevant part as follows:
In elections by the people, the qualifications of voters shall be as follows: Each voter shall be a citizen of the United States, shall be eighteen years of age, shall fulfill the residency requirements set forth in this section, and shall be registered to vote pursuant to this article.
The residence requirements shall be that each voters shall be a resident of the Commonwealth and of the precinct in which he votes. Residence, for all purposes of qualification to vote, requires both domicile and place of abode.
The domicile and place of abode requirement found in the Constitution of Virginia is also reflected in the definition of “residence” or “resident” used in Virginia election statutes. See Virginia Code § 24.2-101. Consistent with the precedent established by the Virginia Supreme Court in Coopers Adm’r v. Commonwealth, 121 Va. 338, 93 S.E. 680 (1917), the Department will consider the fact that a taxpayer obtained a Virginia voter’s registration and voted in elections in Virginia to be very strong evidence that that individual considered Virginia to be her domicile during the time she held and used such registrations.
In addition, the Department has observed that federal law generally allows United States citizens living abroad to vote in federal elections using a voter’s registration from the state of the individual’s last domicile. See 52 U.S.C. § 20310. See also P.D. 14-141 (8/13/2014). The exercise of such federal voting rights by an overseas citizen shall not affect the domicile or residence of such citizen for purposes of any federal, state or local tax. See 52 U.S.C. § 20309. Therefore, the Taxpayer could have used a State A voter’s registration to vote in federal elections while overseas without having had to obtain a Virginia voter’s registration. By obtaining a Virginia voter’s registration first, however, before going overseas, the Taxpayer expressed her intent to treat Virginia as her domicile.
The Taxpayer explains that she and her spouse intended to lease their State A residence while they were living in Country A and that created a practical issue concerning where to store their vehicle, because it was an urban residence with only one assigned parking spot. In addition, she explains that her spouse’s State A license was coming up for renewal, and they were not sure it could be renewed because they would not be residing at their State A residence while it was being leased. She states that they obtained Virginia driver’s licenses because they owned another personal residence in Virginia and merely needed permission to drive in the United States when they would return from overseas.
Having connections such as personal residences, driver’s licenses, motor vehicle registrations and voter’s registrations indicates that an individual had the intent to establish domicile in the state or country where such connections were established. Acquiring domicile, however, in a new location requires both intent and personal presence. See Coopers Adm’r v. Commonwealth, 121 Va. 338, 93 S.E 680 (1917), in which the Virginia Supreme Court observed that neither physical presence alone, nor expressed intention alone are sufficient to create a legal domicile for taxation purposes. The Department has determined that individuals cannot establish a domicile despite having some or all of the above connections if they have not yet resided in the jurisdiction with the intention to remain permanently or indefinitely. See, e.g., P.D. 13-97 (6/11/2013) and P.D. 15-4 (1/8/2015).
It appears in this case that the Taxpayer was a domiciliary resident of State A at the time she accepted employment in Country A and began residing overseas. To have become a domiciliary resident of Virginia again, she would need to have established a physical presence in Virginia with the intention to remain permanently or indefinitely in Virginia at that time. Although the Taxpayer owned a personal residence in Virginia, it appears to have been a second home with her primary residence remaining in State A up until when she left the United States for Country A. By the time she obtained the Virginia driver’s license, vehicle registration and voting registration in 2015, the Taxpayer had already accepted employment in Country A. Thus, it appears that the Taxpayer was not yet residing in Virginia as of 2015 with the intention to remain in Virginia permanently or indefinitely. That intention, however, became clear when she decided to return to the United States upon completion of her employment in Country A and began residing in Virginia in January 2017.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the Taxpayer was not taxable as a domiciliary resident of Virginia for the 2015 taxable year. The assessment, therefore, will be abated. The Department’s records indicate that the Taxpayer paid the assessment while the appeal was pending. A refund will be issued accordingly.
The Taxpayer should be aware that even though the Department concedes that she did not establish domiciliary residence for income tax purposes, applicants who knowingly make false statements to the DMV are subject to penalties under Virginia Code § 46.2-348. In addition, knowingly voting without the proper qualification may also subject voters to penalties under Virginia Code § 24.2-1004.
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/1916.M