Tax Type
Individual Income Tax
Description
Residency; Penalties and Interest
Topic
Penalties and Interest
Residency
Date Issued
05-17-1991
May 17, 1991
Re: §58.1-1821 Application: Individual Income Tax
Dear*****************
This will reply to your recent letter requesting relief from the penalties and interest accrued on Virginia income taxes assessed by the Department for taxable years 1987 and 1988.
FACTS
You retired from the U. S. Army in August 1973, and have lived. worked and paid taxes in Virginia since then, with the exception of a short tenure in Germany during 1987 and 1988. In 1973, you were denied reduced tuition, which is generally allowed to Virginia residents, for your daughter's education at Virginia Polytechnical Institute, presumably because you were a domiciliary resident of a state other than Virginia when you joined the service. Also. notwithstanding your continuous residence in Virginia and your employment in the state, you state that you have made no effort to "become a resident of Virginia," and that you intend to retire to another state in 1993.
Therefore, you did not consider yourself to be a Virginia resident for income tax purposes during your tenure in Germany. You believed that you were not liable to Virginia for income taxes, and did not become aware until receiving a Non-Filer Questionnaire in 1988. You filed returns for both years and paid the tax due on December 3, 1990. The Department of Taxation subsequently issued assessments for additional tax, penalty, interest and an addition to tax for underpayment of estimated taxes.
You are requesting relief from penalty and interest that was assessed by the Department, because your failure to pay the tax when due resulted from your reliance upon the residency status determination previously issued by the Virginia state-supported university in 1973.
DETERMINATION
For purposes of income taxation, Va. Code §58.1 -302 sets forth two classes of residents, (1) actual residents and (2) domiciliary residents. Domiciliary residents are those whose legal domicile is Virginia. An actual resident is any individual who is not domiciled in this State. but who actually maintains a place of' abode in Virginia for more than 183 days during the taxable year. Virginia residency status, for income tax purposes, subjects a taxpayer to the Virginia income tax on income from all sources.
Va. Code §58.1-302 sets forth the factors to be used in determining one's domicile. i.e., 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, 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. A person's true intention must be determined with reference to all of the facts an circumstances of the particular case.
The general principles of domicile preclude a dual domicile and require that a taxpayer abandon one domicile in order to establish another. While you have stated no intent to establish residence in Virginia for years 1973 through 1988, you have not demonstrated that during those years, you maintained a domicile in any other state. Your Virginia residence has been continuous since 1973, with the exception of a foreign tour of no more than two years. After the conclusion of your tour in 1988, you returned to live in the Virginia home you purchased in 1971.
In your case. several factors would seem to indicate a Virginia domicile. Accordingly sufficient basis exists for Virginia to levy income tax based on your federal adjusted gross income to taxable years 1987 and 1988. If you can demonstrate that you maintained a domicile in a state other than Virginia from 19.3 through 1988, I will be willing to reconsider this determination.
However, based upon the facts and circumstances that you have presented, I do find sufficient basis for the abatement of any penalties and interest accrued upon the penalties related to the 1987 and 1988 assessments. A revised assessment will be mailed to you.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner