84-251 | Virginia Tax

Tax Type

Individual Income Tax

Description

Part-year resident; Abandonment of Virginia domicile

Topic

Persons Subject to Tax

Residency

Date Issued

11-07-1984

November 7, 1984

Re: §58-1118 Application: Individual Income

Dear ********************

This will reply to your letter of July 20, 1983 in which you request correction of individual income tax assessed against your client,****** ("Taxpayer"), for the year ending December 31, 1981. This final determination is being issued because the Department has received no response to requests for additional information concerning your client's position.

Facts

****** is employed by ****** a *********, New York newspaper, and was transferred to the United Kingdom in May, 1981. His family joined him there in July, 1981. According to his 1981 Form 2555, Deduction from, or Exclusion of, Income Earned Abroad, *********** entered the United Kingdom under a work permit visa, which had a one year duration but was renewable; his contractual terms of employment abroad was indefinite; he rented a home in the United Kingdom; the house owned in Virginia was rented to a non-relative; and bona fide residence was claimed in and income tax required to be paid to the United Kingdom.

You also indicate that Taxpayer derives all income from sources outside of Virginia, has all of his personal property with him in the United Kingdom, has registered his motor vehicle in the United Kingdom, and has expressly stated that he has no intention of returning to Virginia.

Taxpayer filed a late 1981 760PY (Part-Year) return, with no record that tentative tax was paid to or an extension filed with the Department. Taxpayer was assessed late filing and late penalty and interest, additional tax and interest, and penalty for underpayment of estimated tax. Taxpayer paid the underpayment of estimated tax penalty and part of the late filing penalty. The balance of the original assessment was abated. However, based on information on the federal Form 2555, Taxpayer was deemed to have full-year domiciliary residence in Virginia, and was assessed additional tax and interest.

Taxpayer contests the full-year residence assessment, claiming to have abandoned Virginia domicile when transferred to the United Kingdom.

Determination

§58-151.02(e)(iii) of the Code of Virginia provides that a person who changes his abode to a place outside Virginia "with the bona fide intention of continuing actually to abide permanently" outside Virginia is taxed as a part-year resident. It "is not conclusive evidence of a change of domicile" for a person merely to remove his abode outside Virginia. Factors to be considered in determining domicile include:

- the applicant's expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, business pursuits, employment, income sources, residence for federal income tax purposes, marital status, residence of parents, spouse and children, if any, leasehold, sites of personal and real property owned by the applicant, motor vehicle and other personal property registration, residence for purposes of voting as proven by registration to vote, if any, and such other factors as may reasonably be deemed necessary to determine the person's domicile.

As set forth above, you have indicated that Taxpayer has expressly stated that he has no intention of returning to Virginia, that he derives all income from sources outside Virginia, that all his personal property is with him and his motor vehicle is registered in the United Kingdom, and that his sole financial tie to Virginia is the house held for rental purposes. For federal income tax purposes Taxpayer is considered a resident of the United Kingdom and he is required to pay income tax to the United Kingdom. His wife and children reside with him in London and his employer is a New York newspaper.

Based on the foregoing, I find that during 1981 Taxpayer changed his place of abode to a place outside Virginia with the bona fide intention of abandoning domicile in Virginia. Accordingly, the full-year residence assessment will be abated.

Sincerely,

W. H. Forst
State Tax Commissioner

Rulings of the Tax Commissioner