June 20, 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 assessments issued to your client, ***** (the “Taxpayer”), for the taxable years ended December 31, 2019, and 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 2019 and 2020 taxable years. 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. Based on his responses and the information otherwise available, the Department determined that the Taxpayer was taxable as a domiciliary resident of Virginia and issued assessments. The Taxpayer filed an application for correction, contending he was a resident of ***** (Country 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 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 Country A. He has lived and worked in Country A since 2014. He also obtained a Country A personal public service card and number, which entitled him to social welfare benefits and other public services in Country A. In addition, he contributed to the Country A healthcare system and to a nonportable Country A pension plan. Further, he was offered the opportunity to work remotely from the United States during the COVID-19 pandemic but chose to remain in Country A because he considered it to be his home. Since 2014, the Taxpayer has used his Country A address on his federal and Virginia nonresident income tax returns.
The Taxpayer also maintained some connections with Virginia. He maintained a Virginia driver’s license which he renewed in 2018. The Taxpayer remained registered to vote in Virginia and voted by absentee ballot in 2020. The Taxpayer also continued to own two residential properties in Virginia and had various tax reporting documents sent to a Virginia address.
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 did not obtain a Country A driver’s license because he did not drive in Country A. He further explains that he maintained his Virginia driver’s license as a convenience so that he could drive while visiting family in Virginia. The Taxpayer also states that he had tax reporting documents sent to the address of a family member in Virginia because he had issues receiving mail in Country A. In addition, the Taxpayer explains that one of his Virginia properties, his former residence, has been continuously rented to third parties and the rental activity has been reported on Virginia nonresident income tax returns. The second property, a vacation home purchased in 2006, has been vacant since 2014 and the Taxpayer indicates that he would sell it if he could find a buyer.
With regard to the Taxpayer’s Virginia voting registration, the Department has observed that federal law generally 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. As such, even though the Taxpayer voted in a federal election while he resided in Country A, that fact would have no bearing on this determination. The Taxpayer stated that he voted in 2020 in order to participate in the presidential election, and that he only voted in the 2020 Virginia electoral races because the ballot specifically provided that it would not be counted if all blanks were not completed.
The Department acknowledges that a determination of a change in domicile is evidenced by a process in which no single factor is dispositive. After carefully considering the information provided, the Department finds that the totality of the factors considered shows that the Taxpayer successfully changed his domicile from Virginia to Country A prior to the 2019 taxable year. Accordingly, the assessments issued for the taxable years ended December 31, 2019, and 2020, will be abated and the Virginia nonresident returns submitted by the Taxpayer will be processed.
While the Department concedes that the Taxpayer was not a domiciliary resident of Virginia during the 2019 and 2020 taxable years, he should be aware that continuing connections with Virginia, such as retaining a Virginia driver’s license or other indicators of a permanent residence in Virginia will likely result in future contacts by the Department with respect to the situs of the Taxpayer’s domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department’s determination in subsequent taxable years. In addition, the Taxpayer should be aware that Virginia law does not permit nonresidents to obtain Virginia driver’s licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law.
The Code of Virginia sections and regulation 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. 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/5053.X