March 9, 2021
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek reconsideration of the Department’s determination letter, issued as Public Document (P.D.) 19-79 (8/2/2019). You also appeal the individual income tax assessment issued to ***** (the “Taxpayer”) for the taxable year ended December 31, 2017.
FACTS
In P.D. 19-79, the Department found that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2014 taxable year. Subsequently, an assessment was issued to the Taxpayer for the 2017 taxable year. The Taxpayer requests that the Department reconsider its determination, contending she was a resident of the District of Columbia (D.C).
DETERMINATION
Reconsideration – Taxable Year 2014
Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer who disagrees with the Tax Commissioner’s final determination may request a reconsideration of the determination within 45 days. The Taxpayer’s request for reconsideration was received by the Department on August 15, 2020, well after the 45-day period expired. Therefore, P.D. 19-79 is the Department’s final determination for the 2014 taxable year, and the assessment remains due and payable.
Appeal- Taxable Year 2017
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 P.D. 19-79, the Department found that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2014 taxable year because she failed to abandon her Virginia domicile. The Department cited factors such as the Taxpayer’s Virginia vehicle registration, Virginia driver’s license, and Virginia voter’s registration. Those factors continued to exist for the 2017 taxable year as well
The Taxpayer provided additional evidence with her appeal, showing that she continued to have D.C. taxes withheld from her wages and she filed a D. C. resident income tax return for the 2017 taxable year. The Taxpayer entered into a lease for a personal residence located in D.C., effective February 2017. She also obtained a D.C. driver’s license and voter’s registration in October 2018.
As additional evidence, the Taxpayer also provided a Decree of Divorce filed with a Virginia Circuit Court. Under Virginia law, a suit for divorce may be brought only if one of the parties is and has been an actual bona fide resident and domiciliary resident off Virginia for at least six months preceding commencement of them suit. See Virginia Code § 20-97. In the divorce decree, the court stated that it appeared, independently of the pleadings of the parties or otherwise, the Taxpayer was domiciled in and had been a bona fide resident of Virginia for at least six months preceding the commencement of the suit. The Department has found such statements in court documents to be strong indicators of domiciliary intent. See P.D. 15-125 (6/24/2015). The Taxpayer’s divorce was finalized in November 2017. The implications of the court’s statement is that the Taxpayer still had not abandoned her Virginia domicile as of that time. In light of this, in addition to the other connections the Taxpayer retained with Virginia, I find that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2017 taxable year.
CONCLUSION
Based on the evidence, the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2017 taxable year. The assessment at issue were made based on the best information available pursuant to Virginia Code § 58.1-111. The Taxpayer, however, may have information that better represents her Virginia income tax liability for the taxable year at issue. Therefore, she should submit a 2017 Virginia resident individual income tax return to more accurately reflect her Virginia tax liability. The Taxpayer should be aware that she may be able to claim a credit on her Virginia return for tax paid to another state pursuant to Virginia Code § 58.1-332 A, so long as the income was not Virginia source income. Additional instructions for claiming the credit can be found in P.D. 18-156 (8/8/2018).
The return should be submitted within 60 days of the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 213261-7203, Attention: *****. Upon receipt, the returns will be reviewed, and the assessment will be adjusted, as appropriate. If the return are not received within the allotted time, the assessment will be adjusted based on the information available.
With regard to the 2014 assessment, the Taxpayer failed to timely file a request for reconsideration and declined to follow the instructions for filing a return in the August 15, 2019 determination. Accordingly, this assessment is considered to be correct and remains due and payable. A bill including interest to date will be issued shortly.
The Code of Virginia sections, regulations, 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/3511.A