December 14, 2021
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 your client, ***** (the “Taxpayer”), for the taxable year ended December 31, 2017. I apologize for the delay in responding to your letter.
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 2017 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 ***** (State 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.
In this case, the Taxpayer was a domiciliary resident of State A prior to 2015. The Taxpayer accepted a temporary position with the federal government based in the ***** (“State B”) in February 2015. At that time, the Taxpayer sold his home in State A and began renting an apartment in Virginia. The Taxpayer leased several different personal residences in Virginia from February 2015 through the summer of 2021 and also registered a vehicle in Virginia in 2019 and 2020. The Taxpayer was physically in Virginia for 142 days during the 2017 taxable year.
The Taxpayer also performed a number of activities consistent with retaining his domicile in State A. He did not surrender his State A driver’s license and had three vehicles registered in State A, one of which was registered during the 2017 taxable year. The Taxpayer also was registered to vote in State A. In addition, the Taxpayer filed for divorce in a State A court in 2018. The divorce decree, issued in June 2018, specifically found that the Taxpayer had been a domiciliary resident of State A for the six-month period prior to the date of filing. Further, the Taxpayer’s monthly government travel vouchers listed “30 Day Contractual Trip Home” as the purpose for his monthly flights to State A during the 2017 taxable year. The Taxpayer lived with his mother during those trips home to State A. Finally, when the temporary assignment in State B ended in 2021, the Taxpayer returned to State A and obtained a new personal residence in State A.
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 even if the Taxpayer formed the intent to establish a Virginia domicile, he did not abandon his State A domicile. Therefore, a change of domicile did not occur. Accordingly, the Taxpayer was not a domiciliary resident of Virginia during the 2017 taxable year. Further, because the Taxpayer did not spend more than 183 days in Virginia during 2017, the Taxpayer also was not an actual resident of Virginia. Accordingly, the assessment will be abated.
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/3529.X