January 11, 2022
Re: § 58.1-1821 Appeal: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessments issued to ***** (the “Taxpayers”) for the taxable years ended December 31, 2015, through 2018. I apologize for the delay in responding to your appeal.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers, a husband and wife, may have been required to file a Virginia return for the 2015 taxable year. In response, the Taxpayers filed a Virginia nonresident return. Under review, the Department adjusted the return to a resident return and issued an assessment. The Department also issued assessments to the Taxpayers for the 2016 through 2018 taxable years on the basis that they were Virginia domiciliary residents. The Taxpayers appeal, contending the husband 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. See Virginia Code § 58.1-205. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.
Wife
The information provided during the appeal lists the wife’s address as a residence in Virginia and indicates that the wife continues to maintain a Virginia driver’s license. Because the Taxpayers have not disputed her residency in the appeal, she is considered to have been a domiciliary resident of Virginia.
Husband
The husband asserts that he abandoned his Virginia domicile and established domicile in State A after his children reached adulthood. The husband provided evidence that he owned residential properties in State A, held a State A driver’s license, had motor vehicles registered in State A, was registered to vote in State A, and filed State A resident income tax and business franchise tax returns.
The husband also maintained numerous connections with Virginia. He owned a personal residence in Virginia, held a Virginia driver’s license, had motor vehicles registered in Virginia, was registered to vote in Virginia, and also received numerous information returns at the Virginia residence.
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 husband’s Virginia driver’s license was issued in 2012 and was not relinquished until 2020.
The husband asserts that he maintained a Virginia driver’s license because he was required to hold one in order to operate a taxi cab in Virginia. In general, individuals who hold valid driver’s licenses issued by another state are permitted to operate motor vehicles in Virginia. See Virginia Code § 46.2-307. Therefore, if a taxpayer claims to reside permanently in another state, it would not normally be necessary for them to hold a Virginia driver’s license and a license from the other state at the same time, even if they could. Further, the Department is not aware of any statutes or ordinances that would require a driver who was already licensed by another state to obtain a Virginia driver’s license in order to operate a taxi cab in Virginia.
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 voter shall be a resident of the Commonwealth and of the precinct where 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 his domicile during the time he held and used such registrations.
The husband submitted voter’s registration information for both Virginia and State A. He did not supply information on his actual voting history, however, although it was requested several times. Whether the husband actually used the registrations to vote in any elections would be an important factor to consider in determining domiciliary intent. The Taxpayers should be aware that Virginia Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to the taxpayer’s willful failure or refusal to provide the Department with necessary information as required by law.
The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. In this case, even if the husband’s connections with State A were sufficient to indicate the intent to establish domicile there, the extent of his ongoing Virginia connections does not indicate an intent to abandon his Virginia domicile. As stated above, both requirements must exist concurrently for a change of domicile to have occurred. As such, the assessments for the 2015 through 2018 taxable years are upheld.
The assessments at issue were made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayers may have information that better represents their Virginia income tax liability for the taxable years at issue. Therefore, they should file Virginia resident income tax returns for the 2015 through 2018 taxable years to more accurately reflect their Virginia tax liability.
The returns should be submitted within 60 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 returns will be reviewed and the assessments will be adjusted as appropriate. If the returns are not received within the allotted time, update bills with accrued interest to date will be issued based on the information currently available.
The Code of Virginia sections and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s website. 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/3362-C