Tax Type
Individual Income Tax
Description
Residency; Military personnel and spouses
Topic
Taxpayers
Date Issued
10-18-1996
October 18, 1996
Re: 58.1-1821 Application: Individual Income Taxes
Dear**************
This will respond to your letter of August 12, 1996, in which you and your spouse seek correction of an assessment of additional Virginia individual income taxes for the 1993 taxable year.
FACTS
You are a member of the Naval Reserve who was ordered to active duty in January 1993. At that time, the state of legal domicile for both you and your spouse was Tennessee. Your spouse accompanied you to Virginia in January 1993, residing in Virginia throughout the remainder of the year.
Your active duty unit issued 1993 W-2 forms to you which listed Virginia as your state of record; however, no state withholding or wages were shown on those W-2s. You believed that Virginia income tax had been withheld from your military pay, and in order to recoup those withholdings, you filed a Virginia resident individual income tax return ("Form 760") with your spouse. Subsequently, your joint 1993 federal return was adjusted by the Internal Revenue Service. This adjustment was reported to the department, which adjusted the Form 760 and issued an assessment for additional Virginia individual income tax. You protest this assessment, claiming that it should not be based on your share of the federal adjustment since you were not a resident of Virginia for income tax purposes in 1993.
DETERMINATION
The Soldiers' and Sailors' (Civil Relief Act of 1940 (50 USCA 574) provides that military and naval personnel do not abandon their legal domicile solely by complying with military orders which station them in a different state or country. The Act, however, does not preclude the possibility that military personnel may acquire a new legal domicile in the state where they are stationed, and thus subject themselves to taxation by that state as if they were a domiciliary resident. In order for the change of domicile to occur, there must be an abandonment of the old domicile and the acquisition of a new one. This change must be exhibited by an individual's intent and conduct.
The evidence presented clearly indicates that you neither intended, nor took affirmative steps to accomplish, the abandonment of your Tennessee domicile coupled with the acquisition of one in Virginia during 1993. You maintained possession of your Tennessee home, evincing a desire to ultimately return, and paid the applicable property taxes. You did not relinquish Tennessee voting privileges. You also maintained affiliation with your Naval Reserve unit in Tennessee and did not request that your service record be changed to replace Tennessee with Virginia as your home of record. In addition, you furnished sufficient information to corroborate your claim that Virginia was listed as state of record on your W-2s only due to differing administrative practices among various naval units. Pursuant to the Act, therefore, your legal domicile remained in Tennessee while you were stationed in Virginia on active duty in 1993, and consequently you are not subject to Virginia individual income taxation as a resident.
The Act, however, does not apply to the spouses of military and naval personnel. Code of Virginia § 58.1-302, copy enclosed, defines a resident as those persons domiciled in Virginia and all others who maintain their place of abode in Virginia for more than 183 days of the taxable year, whether or not they are domiciliary residents. In your case, your spouse is considered an actual resident of Virginia, subject to Virginia individual income taxation as a resident, because he resided in Virginia for more than 183 days in 1993.
The correct filing procedure for a nonmilitary spouse who is an actual resident of Virginia and a military spouse who is not a domiciliary resident, present in the Commonwealth solely in compliance with military orders, and has no income from Virginia sources (excluding compensation for military or naval service) is given in Virginia Regulation (VR) 630-2-326, copy enclosed. The nonmilitary spouse should file Form 760, separately accounting for items of income, deductions, and exemptions. The military spouse, if having no income from Virginia sources, is not required to file a Virginia individual income tax return. If the military spouse does have income from Virginia sources (for example, a part-time job in Virginia or rental income from property located in Virginia), that spouse must file Form 763, the Virginia Nonresident Individual Income Tax return.
In the instant case, your only income in 1993 was from military pay. Consequently, as a domiciliary resident of Tennessee present in Virginia for active duty, none of your income was subject to Virginia income tax. Since the adjustments to your 1993 federal return pertained to unreported military income attributable to you, and not your spouse, those federal adjustments will not result in a Virginia individual income tax liability to you.
Accordingly, based on the evidence presented and the determination herein, the assessment based on adjustments to your federal return will be abated. The department, however, finds it necessary to recompute the tax liability as reported on your 1993 Form 760 to reflect the Virginia individual income tax liability pertaining solely to your spouse's separately accounted for items of income, deductions, and exemptions, pursuant to VR 630-2-326. The balance due,******is reflected on the enclosed schedules and should be paid within sixty days to prevent the further accrual of interest. Please send your payment to*** Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If you have any questions regarding this determination, you may contact ************* directly at ******.
This determination is applicable only to the 1993 taxable year. If you abandon your Tennessee domicile and establish a new domicile in Virginia, you will be required to file a resident Virginia individual income tax return, regardless of your military status.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11550G
Rulings of the Tax Commissioner