November 7, 2025
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to you (the “Taxpayer”) for the taxable year ended December 31, 2020.
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 2020 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 applied for correction, contending he was a resident of ***** (State A).
DETERMINATION
Residency
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 that person and the place to which that person intends to return even though they may be residing elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained their place of abode within Virginia. A Virginia domiciliary resident continues to be subject to Virginia taxation even if they work in another state or country. 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 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. See Cooper’s Adm’r v. Commonwealth, 121 Va. 338, 347 (1917). The burden of proof that an individual has abandoned or failed to establish domicile in Virginia rests with the individual. See Title 23 of the Virginia Administrative Code (VAC) 10-110-30 B 3.
The determination of whether a change of domicile has occurred is highly dependent on the facts and circumstances of the individual case, and no single factor is dispositive. Factors to be considered include, but are not limited to, the following:
sites of real and tangible property, location of savings and checking accounts, motor vehicle registration and licensing, motor vehicle operator’s license, voter registration, membership in clubs and civic groups, place of business, profession or employment, charitable contributions, location of schools attended by children, length of time of residence, place of birth and marriage, residence of family, reason for abandoning or acquiring domicile, and, in the case of a minor or married person, domicile of parents, husband, or wife and/or children. Id.
The Taxpayer took actions consistent with establishing domicile in State A. In January 2020, the Taxpayer began living and working in State A. In 2022, he obtained a State A driver’s license, vehicle registration, and voter’s registration.
The Taxpayer, however, also maintained connections with Virginia. He continued to own a Virginia residence. He also continued to own vehicles that were registered in Virginia, and he renewed his Virginia driver’s license in 2021. . . . . . .
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 they retain 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 Taxpayer explains that he renewed his Virginia driver’s license because it was expiring and he was unable to obtain a State A license because of restrictions in place during the COVID-19 pandemic. When pandemic restrictions began to be lifted in 2022, he surrendered his Virginia driver’s license, obtained a State A license, registered vehicles in State A, and obtained a State A voter’s registration. In addition, he explains that his daughter lived in the Virginia residence and co-owned the vehicles that were registered in Virginia.
The Department acknowledges that a determination of a change of domicile is evidenced by a process in which no single factor is dispositive. The change is generally considered to have occurred at the beginning of that process even when official connections such as driver’s licenses, vehicle registrations, and voter’s registrations were not obtained until later. See P.D. 16-138 (6/24/2016) and P.D. 19-19 (3/26/2019).
In this case, the Taxpayer’s renewal of his Virginia driver’s license and his delay in obtaining State A connections can reasonably be attributed to the pandemic. Further, his retained connections, such as the Virginia residence and registered vehicles in Virginia, were for the use of a family member who remained in Virginia. After carefully considering all of the information presented, the Department finds that the Taxpayer established domicile in State A in January 2020.
Part-Year Residency
Virginia Code § 58.1-303 provides that any individual who becomes a resident of another state during a taxable year shall be taxable as a Virginia resident for only that portion of the taxable year during which that person was a resident of the Commonwealth. Title 23 VAC 10-110-40 further explains that the Virginia taxable income of a part-year resident shall be computed by determining income, deductions, subtractions, additions, and modifications attributable to the period of residence in Virginia. As such, any individual who is a part-year resident of Virginia during a taxable year must attribute their income between their periods of residence in and outside of Virginia on a schedule of income filed with their return (Form 760PY). Part-year residents who cease residing in Virginia during a taxable year and meet the filing threshold of Virginia Code § 58.1-321, must file a Virginia part-year return.
The Taxpayer moved to State A in January 2020. Under Virginia law, he would have been considered to be a part-year resident for the part of the year he continued to live in Virginia. The Department’s records indicate that the Taxpayer had wages reported by the Virginia Employment Commissioner (VEC) for the first quarter of 2020. Based solely on the amount of wages reported, however, it does not appear that he would have met the threshold to file a Virginia part-year resident income tax return.
Nonresidents
Individuals who are neither domiciliary nor actual residents of Virginia and have income from Virginia sources are taxed as nonresidents, unless the individual meets the filing exception described in Virginia Code § 58.1-321. See Virginia Code § 58.1-325. The Virginia taxable income of a nonresident is computed by multiplying their Virginia taxable income (computed as if they were a resident) by the ratio of their net income, gain, loss, and deductions from Virginia sources to their net income, gain, loss, and deductions from all sources. Virginia Code § 58.1-302 limits the term income and deductions from Virginia sources to the items of income, gain, loss, and deduction attributable to (1) the ownership of any interest in real or tangible personal property in Virginia, (2) a business, trade, profession, or occupation carried on in Virginia, or (3) prizes paid by the Virginia Lottery Department and gambling winnings from wagers placed or paid at a location in Virginia. Thus, a nonresident with Virginia source income is required to file a nonresident Virginia income tax return unless the filing exemption applies. See Virginia Code § 58.1-341 A 2.
In this case, the Taxpayer was leasing property in Virginia and thus may have had income attributable to the ownership of real property in Virginia. In addition, he had sufficient total income to exceed the applicable threshold for filing a Virginia nonresident return, if in fact he had income from Virginia sources during his period of nonresidency.
CONCLUSION
As discussed above, the Taxpayer successfully changed his domicile to State A in January 2020. In addition, he did not appear to meet the threshold to file a part-year resident return. Accordingly, the assessment will be abated.
The Taxpayer, however, should review his records and the instructions for filing a nonresident return (Form 763) to determine if he was required to file one for the 2020 taxable year with respect to any rental income he may have had from leasing property in Virginia during his period of nonresidence. If so, he should file the return in accordance with the instructions.
The Code of Virginia sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. The nonresident return and accompanying instructions are also available on the Department’s website in the Forms and Filing section. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4684.Y