86-219 | Virginia Tax

Tax Type

Individual Income Tax

Description

Temporary overseas assignment; Domicile resident

Topic

Residency

Date Issued

11-03-1986

November 3, 1986

Re: Ruling Request/Domicile
Individual Income Tax

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

This is in reply to your letter of May 9, 1986 in which you request guidance regarding the residency status of one of your clients for Virginia income tax purposes. I apologize for the delay in responding to Your request for information.

Your client was a domiciliary resident of Virginia at the time he accepted employment in West Germany. He has resided in West Germany for two years and expects to continue to reside there for at least another 16 months. At that time, he expects to return to the United States; however, he is uncertain whether he will again reside in Virginia. He has maintained minimal contact with Virginia and has not filed returns or paid taxes to Virginia since his departure in 1984.

You are requesting a ruling regarding his residency status for Virginia income tax purposes. Specifically, you request an interpretation of Virginia Code §§58.1-302 and 58.1-303.

Virginia Code §58.1-302 defines resident in the following manner:

- "Resident" applies only to natural persons and includes, for the purpose of determining liability to the taxes imposed by this chapter upon the income of any taxable year every person domiciled in Virginia at any time during the taxable year and every other person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia, whether domiciled in Virginia or not. The word "resident" shall not include any member of the United States Congress who is domiciled in another state. (Emphasis added.)

Domicile, for Virginia income tax purposes is defined in this same section accordingly:

- "Domicile" means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. In determining domicile, consideration may be given to 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. (Emphasis added.)

In your letter you indicate that the following language in Virginia Code §58.1-303, regarding residency for a portion of a tax year, appears to be contradictory to the language in Virginia Code §58.1-302.

- Any person who, on or before the last day of the taxable year, changes his place of abode to a place without the Commonwealth with the bona fide intention of continuing actually to abide permanently without Virginia shall be taxable as a resident for only that portion of the taxable year during which he was a resident of Virginia ... (Emphasis added.)

There is no contradiction between the requirements of these two sections. In order for an individual to abandon his Virginia domicile and thus cease to be liable for income taxation in Virginia as a resident, both sections require that he must: (1) physically move from Virginia with the intention of permanently abiding without Virginia and (2) establish a permanent domicile elsewhere. It is not only the act of "abiding without Virginia" that is necessary to demonstrate the abandonment of a Virginia domicile. This action must be in conjunction with the intention of making this a permanent change. That is why each determination of domicile must be based upon the facts as they relate to the items enumerated in Virginia Code §58.1-302 (set out above).

Based upon the information that you have provided and upon the temporary nature of your client's assignment in West Germany, it does not appear that your client has abandoned his Virginia domicile; thus he is still liable for Virginia income tax. However, this ruling is based upon the limited information that you provided in your letter of May 9, 1986.

I have enclosed a copy of our Virginia Individual Income Tax Regulations for your information. If after you review this letter and the enclosed regulations you have additional questions concerning your client's status, please do not hesitate to contact this office.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner