Tax Type
Individual Income Tax
Description
Changing domicile
Topic
Residency
Date Issued
06-17-1999
June 17, 1999
Re: §1821 Application: Individual Income Taxation
Dear****************
This will reply to your letter in which you contest the assessment of additional income tax, penalty and interest against the ***** (the "Taxpayer') for the 1995 and 1996 taxable years. I apologize for the delay in responding.
FACTS
The Taxpayer and his spouse moved from their domiciliary state in 1989. The Taxpayer and his spouse purchased a home in Virginia in 1989. The spouse moved into the Virginia home, and the Taxpayer moved to another state ("State A') where he was stationed by his employer.
When the Taxpayer moved to State A, he leased an apartment, acquired a State A drivers license, registered an automobile in State A and registered to vote in State A. The Taxpayer maintained all aviation licenses in State A and he maintained his membership in State A aviation groups throughout the taxable years in question.
In December of 1994, the Taxpayer was reassigned to a position based out of a third state ("State B'). The Taxpayer terminated the lease on an apartment in State A and his State A mailing address became a mail drop. The Taxpayer states that in December of 1994, he moved in with friends and paid rent to them. In January 1997, the Taxpayer moved to Virginia to be with his wife and became an actual resident of Virginia.
Under audit, the department determined that the Taxpayer surrendered his State A domicile and established Virginia domicile for the 1995 and 1996 taxable years. The Taxpayer contends that his State A domicile was not abandoned until January 1997.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302. 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 Virginia, that person must intend to abandon his old domicile with no intention of returning to that same domicile. 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 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.
Changing domicile is a two step process. First, a person must intend to permanently move away from one domicile. Second, the person must acquire a new domicile where they intend to remain permanently or indefinitely.
There is strong evidence that the Taxpayer intended to permanently move away from his State A domicile. He terminated the apartment lease in State A when he was reassigned to State B. He continued to maintain a mail drop as an address in State A. However, the Taxpayer continued to retain his State A driver's and aviation licenses, State A automobile registration, and State A voter registration during 1995 and 1996. This evidence raises some doubt as to the Taxpayer's intent to retain domicile in State A.
This case, then, pivots on whether the Taxpayer intended to establish Virginia as his state of domicile in 1995 and 1996. The information provided indicates that all of the Taxpayer's connections with Virginia where initiated during 1989 and 1990. During this period, the Taxpayer established domicile in State A. In fact, the department has conceded that the Taxpayer was a domiciliary resident of State A from 1989 through 1994. In addition, there is no clear evidence to substantiate that the Taxpayer intended to establish Virginia as his state of domicile for the 1995 and 1996 taxable years.
Based on the information provided, the Taxpayer was not a Virginia domiciliary for the 1995 and 1996 taxable years. A refund for the full amount of the tax, penalty and interest including an appropriate amount of refund interest will be issued shortly. If you have any questions about this determination, you may contact ****************at *************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13929B
Rulings of the Tax Commissioner