99-130 | Virginia Tax

Tax Type

Individual Income Tax

Description

Residency

Topic

Taxpayers

Date Issued

05-28-1999

May 28, 1999

Re: Request for Ruling: Individual Income Tax

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

This in reply to your letter requesting a ruling on the residency status of husband and wife, ************ (the "Taxpayers') for the taxable year 1997. I apologize for the delay in responding to your request.

FACTS

At the beginning of 1997, the Taxpayers were residents of Virginia. The Taxpayers owned a house, were registered to vote, paid state income and local property tax, had bank accounts, and had their automobile registrations in Virginia. In July 1997, the husband took a permanent employment position with a company in another state ("State A') and moved to that state. The Taxpayers have provided documentation to show that they moved their voter registrations, automobile insurance coverage, and banking accounts to State A. They also state that their automobiles were registered to that state. When the Taxpayers left Virginia, they leased their house to a tenant because they were not able to sell it. They state that they intended eventually to purchase a house in State A.

After being employed in State A, however, his employer decided to lay off the husband from his position in October 1997. The employer provided a statement indicating that the husband's employment was intended to be long-term. He sought employment with several companies located in State A. After being unsuccessful in finding employment, he found employment with a Virginia company. In December 1997, he returned with his family to Virginia, where they leased an apartment until they were able to move back into their house.

The Taxpayers contend that in July 1997 they changed their domiciliary residence from Virginia to State A. They are requesting a ruling on how they should file the 1997 Virginia individual income tax return.

RULING

Code of Virginia § 58.1-302, copy enclosed, provides that a 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 bona fide intention of remaining there permanently or indefinitely.

In determining a 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 has the burden of proving that he or she has abandoned his or her Virginia domicile and established a domicile elsewhere.

Title 23 of Virginia Administrative Code (VAC) §10-110-30(B)(3) provides, in pertinent part, that:

- [T]he fact that a person who has changed his place of abode to a location outside of Virginia but within six months of doing so again resides in Virginia constitutes prima facie evidence that no intent to abandon Virginia domicile existed. (Emphasis added.)

When a Virginia resident moves to a place of abode outside of Virginia and returns to Virginia within six months, this regulation deems that such action is prima facie evidence that the Virginia domicile was never abandoned. Unless the Taxpayer provides the department with sufficient evidence to demonstrate that his or her domiciliary residence was changed to a location outside of Virginia, the department will hold that the taxpayer never abandoned Virginia as his or her domiciliary residence.

Even though the Taxpayers left Virginia for less than six months, they have provided evidence to demonstrate that they changed their domiciliary residence from Virginia to State A in 1997. When the husband obtained permanent employment in the other state, he and his family abandoned Virginia, and physically relocated to State A with the intention of establishing their domiciliary residence there. Their automobile insurance, driver licenses, automobile registration, voter registrations, and bank accounts, were moved to State A. Their Virginia house was leased because they were unable to sell it at the time they left Virginia. When the husband was laid off by his employer in State A, he unsuccessfully sought employment with other companies in that state. He was eventually employed by a Virginia company and returned to Virginia with his family in December 1997.

Based the information provided, the Taxpayers should file a 1997 Virginia part-year tax return showing the dates that each respective person actually left and returned to Virginia. The wage income received by the Taxpayer while a resident of the other state would not be subject to Virginia taxation. Any rental income received from the leasing of the Virginia house while a resident of the other state, however, is subject to Virginia taxation and should be reported on a 1997 Virginia nonresident tax return. Tax returns and instructions are enclosed for your convenience.

I hope this ruling is beneficial to you. If need further assistance, please contact ***** at *****.

Sincerely,

Danny M. Payne
Tax Commissioner
OTP/13720N

Rulings of the Tax Commissioner