August 23, 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, 2014.
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 2014 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 his income was taxable in Virginia. When a response was not received, the Department issued an assessment. The Taxpayer appeals, contending he 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.
The Taxpayer states that he married a resident of ***** (State A) in 2013, which changed his domicile to State A. It is unclear, however, whether the Taxpayer intended to remain in State A indefinitely, as he did not obtain a State A driver’s license or a voters registration. The length of time the Taxpayer was physically present in State A is unclear.
The Taxpayer has provided evidence indicating his intent to establish domicile in Country A prior to and including the 2014 taxable year. In 2012, the Taxpayer obtained employment in ***** (Country B). In 2013, the Taxpayer was promoted to an executive position with the same company. This position generally required the Taxpayer’s presence in Country A and was of an indefinite duration. The Taxpayer’s employer sponsored him for an immigration status, which entitled the Taxpayer to remain in Country A as long as he remained employed by his sponsor. There is no evidence, however, that the Taxpayer applied for permanent residency status in Country A even though such status appears to be available to him. The Taxpayer also filed and paid income tax in Country A in 2014.
The Taxpayer also maintained significant connections with Virginia. The Taxpayer received his tax reporting documents at a Virginia mailing address, where his parents reside. The Taxpayer is registered to vote in Virginia, but has not participated in an election since 2012. The Taxpayer also has a Virginia driver’s license, which was renewed in May 2018.
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 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.
In addition, the Taxpayer purchased real property in Virginia in 2018 that he claims he intends to rent once renovations have been completed. The Taxpayer should note that regardless of his residency in Virginia, the receipt of business income from a rental business for property located in Virginia would subject such income to taxation in Virginia. Contrary to the Taxpayer’s claims, the evidence indicates that he has continued to increase his presence in Virginia.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. As stated above, a change of domicile requires both the establishment of a new domicile and abandonment of the old. After carefully considering all of the evidence presented, I find that regardless of the connections the Taxpayer established in Country A, he has failed to prove his intent to abandon his Virginia domicile because of his retained connections with Virginia. Therefore, a change of domicile did not occur and the Taxpayer remained taxable as a domiciliary resident.
The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer may have information that better represents his Virginia income tax liability for the year at issue. Therefore, the Taxpayer should file a 2014 Virginia resident income tax return. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161-7203, Attention: *****. Upon receipt, the return will be reviewed and the assessment will be adjusted, as appropriate. If the return is not received within the allotted time, the assessment will be considered to be correct as issued and will become immediately due and payable.
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/1780.A