February 2, 2021
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek a refund of the individual income tax withheld from a distribution paid to ***** (the “Taxpayer”) for the taxable year ended December 31, 2019.
FACTS
The Taxpayer filed a Virginia Special Nonresident Claim for Individual Income Tax Withheld (Form 763-S) for the 2019 taxable year for taxes withheld on a distribution from a retirement account, and indicated he was a domiciliary resident of ***** (Country A). In considering this request, the Department found that the Taxpayer maintained his United States citizenship and determined he was a domiciliary resident of Virginia. As a result, the Taxpayer’s request for refund was denied. The Taxpayer filed an appeal, contending that he was not a domiciliary resident of Virginia because he had changed his domicile to Country A in November 2018.
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 has performed actions indicating an intent to establish domicile in Country A. The Taxpayer accepted employment in Country A. The information provided indicates the position was offered for an indefinite amount of time. He also purchased a personal residence in February 2019. The Taxpayer obtained a Country A driver’s license and vehicle registration in early 2019. In addition, the Taxpayer has also obtained a Country A residence card.
The Taxpayer maintained very few connections to Virginia. He sold his personal residence and vehicle in November 2018 and surrendered his Virginia driver’s license in March 2019. He did not, however, surrender his United States citizenship or his United States passport. While the Taxpayer does maintain a mailing address in Virginia, it is merely a post office box. In addition, although the Taxpayer indicates that he was registered to vote in Virginia, he has not voted since 2018.
The Department has observed that federal law general 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 (formerly 42 U.S.C. § 1973ff-6). See also P.D. 10-203 (9/1/2010). In addition, 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 (formerly 42 U.S.C. § 1973ff-5).
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. The Department has, however, previously ruled that an individual can abandon a Virginia domicile and establish domicile in a foreign country and continue to be a United States citizen. See P.D. 00-6 (2/28/2000).
After carefully considering all of the evidence presented, I find that the Taxpayer changed his domicile to Country A when he moved there in November 2018. Accordingly, the Taxpayer’s Virginia Special Nonresident Claim for Individual Income Tax Withheld (Form 763-S) should be processed as filed and a refund issued accordingly.
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/3494.A