Tax Type
Individual Income Tax
Description
Residency; Change of domicile.
Topic
Taxpayers' Remedies
Date Issued
01-14-1998
January 14, 1998
Dear**************:
This will reply to your letter concerning the 1991 through 1995 Virginia individual tax assessments for ***** (the ``Taxpayer'). I apologize for the delay in responding.
FACTS
The Taxpayer was a Virginia resident at the beginning of the 1991 taxable year. In April of 1991, the Taxpayer moved to State A pursuant to his employment. He filed a Virginia part year return from the beginning of the taxable year through April of 1991. He rented an apartment in State A for six months. He continued to rent this apartment for six month periods, with the exception of one eleven month lease, until August 1993.
During the time that the Taxpayer was in State A, he purchased and registered a vehicle, obtained a State A driver's license, registered to vote, registered for jury duty, received some personal and business mail, obtained a library card, received medical and dental services under his employer's health plan as well as other acts that would suggest a change in domicile. The Taxpayer both purchased and rented some furnishings.
While the Taxpayer was in State A, his wife remained in the family home in Virginia. Their daughter transferred her out-of-state residence to Virginia in May of 1990. Four months later, in September 1990, she started attending college at a Virginia state university, paying in-state tuition. She graduated from the state school in May of 1994.
Once the Taxpayer was in State A, he traveled extensively for his job between May of 1991 and March of 1993. Between August of 1993 and December of 1994, the Taxpayer was reassigned by his employer to a project in State B. While working on this project, the Taxpayer occupied motels and hotels except for the last eight months in which he resided in an apartment in State B.
The Taxpayer left for State A on April 16, 1991. Of the 259 days remaining in the year after April 16, the Taxpayer spent approximately 173 days in State A, 64 days traveling and 22 days in Virginia. In 1992, the Taxpayer spent approximately 38 days in Virginia and 232 days in State A. His time in Virginia increased over the remaining years in question to 114 in 1993,142 in 1994 and 323 in 1995. His time in State A declined from 145 days in 1993 to 1 in 1994 and none in 1995. Although the Taxpayer was in Virginia 323 days, the 1995 part-year return shows a move in date of July 18, 1995.
Between 1991 and 1994 most of the Taxpayer's federal information tax returns were sent to the wife's Virginia residence. As a federal retiree, the taxpayer was eligible for a refund pursuant to the Harper decision. Both his overpayment computation and the final settlement used his Virginia address.
The Taxpayer's wife would visit her husband in State A. When time permitted, they would search for a house in State A. In July of 1991 they made an offer to purchase a residence in State A, but the offer was rejected. This was the only offer the Taxpayer made for a home in State A. Their home in Virginia was never put on the market.
The Taxpayer has indicated that there are several reasons why he and his wife reexamined their move to State A which include: 1) the Taxpayer's prolonged absences from State A due to business travel; 2) a decrease in business for the employer; 3) the wife's mother, who lived near the wife, was ill; and 4) a weak State A economy, which was experiencing numerous lay-offs and a slow housing market.
In December of 1994, the Taxpayer terminated his services in State B and returned to Virginia to start a project in Virginia. No Virginia return was filed for 1994.
In addition to contesting the assessments, the Taxpayer contends that the department did not audit and assess additional tax in a timely manner.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia Sec. 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. For a person to change domiciliary residency to another state, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. 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 determining domicile, consideration may be given to the individual's expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, profession or employment, income sources, residence of spouse, marital status, sites of real and tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine the person's domicile. A person's true intention must be determined with reference to all of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.
The Taxpayer performed many activities in State A which were consistent with changing domicile. The Taxpayer leased an apartment for a period of several years, registered his car and obtained a driver's license, registered to vote and for jury duty, obtained library and charge cards, subscribed to publications using his State A address, obtained and used dental and medical services in State A. Also, the facts indicate that the Taxpayer's State A employment was permanent, rather than temporary.
The Taxpayer also performed activities which were consistent with not changing domicile. The Taxpayer maintained a house in Virginia where his wife and daughter continued to reside throughout the years in question. His daughter enjoyed in-state tuition college rates. Federal and other state tax information was sent to the Virginia address. The Taxpayer and his wife made few attempts to find a residence in State A. No attempt was made to sell the Virginia residence.
The department concedes that it is difficult to know whether a taxpayer intends to return to Virginia. The department determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to return to Virginia.
It is my opinion that the Taxpayer met his burden of proving that he intended to acquire another domicile with the intention to remain there permanently or indefinitely. The weight of the evidence demonstrates that he performed a significant number of acts which were consistent with changing domicile. Actions such as renting an apartment, acquiring full time employment and purchasing and registering a car in another state favor a change in domicile. While maintaining a home and receiving mail in Virginia is a strong indication of Virginia residency, there were legitimate reasons for the Taxpayer's wife to remain in Virginia in the family home. These reasons include the location of an ill family member and the downturn in the State A economy.
On December 9, 1994, the Taxpayer returned to Virginia to accept a consulting job where he remained through the end of the year. Returning to his house and remaining in Virginia demonstrates an intent to abandon State A domicile and acquiring Virginia as a new domicile. Thus, the Taxpayer was a part-year Virginia resident from December 9, 1994 through the end of the year. In 1995, the Taxpayer resided in Virginia for 323 days. The Taxpayer filed a part-year return showing a move in date of July 18, 1995. An actual resident of Virginia maintains his place of abode for an aggregate of more than 183 days in Virginia. Clearly, in 1995 the Taxpayer resided in Virginia for more than 183 days. Since he returned to Virginia at the end of tax year 1994 and stayed thorough tax year 1995 (with the exception of 32 days), the Taxpayer was a full time resident for the tax year 1995.
While the Taxpayer was not a Virginia resident from the beginning of 1992 through December of 1994, his wife was a Virginia resident during that time. Code of Virginia Sec. 58.1-326, copy enclosed, provides that if one spouse is a Virginia resident and the other is a nonresident, then the resident spouse must file and pay tax determined on his or her separate Virginia taxable income, unless both spouses elect to determine their joint Virginia taxable income as if both were residents. Code of Virginia Sec. 58.1-321, copy enclosed, requires individuals with adjusted gross income greater than $3,000 in a particular tax year to file a return. Thus, if the Taxpayer's wife had sufficient Virginia taxable income for 1992 thorough December 9, 1994, she should have filed and paid Virginia income taxes for that period. Your wife must file returns for the 1992 through 1994 taxable years if she was subject to tax for those years. She may contact the department for forms and instructions if needed.
Code of Virginia Sec. 58.1-1812, copy enclosed, allows for additional tax to be assessed within three years after a return was filed. Since you filed a return for 1991, the department was not allowed to assess additional tax for that year. You would have been subject to Virginia income tax for the 1992 through 1994 taxable years if you had been a Virginia resident. You are subject to an additional assessment for the 1995 tax year since that years falls within the three year statute.
Accordingly, the tax, penalty and interest assessed against the Taxpayer for the 1992 through 1993 taxable years has been abated. The Taxpayer is liable as a part- year resident for the period of December 9, 1994 through year end. I would ask the Taxpayer to submit an amended part-year return for that period. A schedule has been enclosed which shows the Taxpayer's liability for tax, penalty and interest for the 1995 taxable year. Please send your amended return and payment within 30 days to , Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23218-1880. If you have any questions about this determination, you may contact ***** at *****.
Rulings of the Tax Commissioner