Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
08-06-1999
August 6, 1999
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letters in which you request a ruling on your requirement to file Virginia resident individual income tax returns for the taxable years 1992 through 1997. While you have requested a ruling, I feel it is more appropriate to handle your case as an appeal pursuant to Code of Virginia § 58.1-1821 because the department has issued you an assessment for 1997. I apologize for the delay in responding to your letters.
FACTS
You were originally a resident of another state but came to Virginia in 1956. Subsequently, you married your husband, who was stationed in Virginia on military orders. You accompanied him on various job assignments outside of Virginia, but would return with him to Virginia at the end of each assignment because his ***** headquarters was located in Virginia. In 1989, you and your husband were divorced. You remained in Virginia because of your employment with the United States *****
Government. You had a house, maintained bank accounts, had a driver's license, and paid income and property taxes in Virginia.
In July 1992, your employer, the Department of the Air Force ("USAR') ***** transferred you, as a civilian employee, to Germany. At the time of your transfer, you state that you were a resident of Virginia and filed Virginia resident income tax returns for the taxable years 1992 through 1996. While in Germany, you rented your Virginia house and continued to maintain Virginia bank accounts. Your initial employment contract with the USAR was for a three-year period. You received two additional extensions of the employment contract for two years each.
You, now, contend that you were not a resident of Virginia after you transferred to Germany with the USAR. You want to amend your 1992 through 1996 Virginia resident income tax returns to nonresident tax returns and be refunded any overpaid taxes. Additionally, you have filed a 1997 nonresident Virginia return. The department adjusted that return to show your Virginia residency status and issued an assessment. You are requesting abatement of that assessment.
DETERMINATION
Code of Virginia § 58.1-1823, copy enclosed, provides, in part, that an amended return must be filed within three years from the last day prescribed by law for the timely filing of the return in order to claim a refund. For many of the years that you filed tax returns, the three year statute of limitations period has expired. Consequently, no refunds would be issued by the department for those years.
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer is Virginia, and the place to which the person intends to return is Virginia even though the person may actually reside elsewhere. An actual resident of Virginia is a person who, for an aggregate of more than 183 days of the taxable year, maintains a place of abode within Virginia.
As indicated by a number of Virginia court cases, (e.g., Talley v. Commonwealth 127 Va. 516, 103 S.E. 612 (1920); State-Planters Bank v. Commonwealth, 174 Va. 289, 6 S.E.2d 629 (1940); and Layton v. Pribble, 200 Va. 405, 105 S.E.2d 864 (1958)) in order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. An old domicile remains until a new domicile is established. The burden of proving that the domicile has been changed lies with the person alleging the change.
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.
At issue in this case is whether you changed your domicile from Virginia when you were transferred to Germany to work as a civilian employee with the USAR. Several factors seem to show that you remained a domiciliary resident of Virginia during your tour in Germany. You moved to Virginia from another state and have not lived or worked in that state since leaving. You have provided no information to show ties, connections, property, or other business or personal interests in that state. It appears, therefore, that you did not retain that state as your domiciliary residence when you moved to Virginia. After marriage, you traveled with your husband while he fulfilled military assignments in various parts on the world and returned to Virginia after ***** completion of the assignments. Once you divorced in 1989, you continued to live in Virginia in order to stay with your employer. At that time, you admit you were a Virginia resident, took ownership of the Virginia house after the divorce, maintained bank accounts, and had a driver's license in Virginia.
After being transferred by your employer to Germany, there has been no information provided to indicate that you changed your residency after the transfer. At the time you were transferred to Germany by the USAR, you were approved for an initial three-year employment contract and subsequently a two-year extension to your contract. Although overseas employment contracts with the USAR are typically limited to five years, an exception was made in your case. You were approved for an ***** additional two-year extension. The initial three-year employment contract and both two-year extensions to the contract specified definite periods of time that you would be employed by the USAR in Germany. For Virginia tax purposes, your employment in Germany would not be considered permanent or indefinite as your tour in Germany was approved for specific periods of time by the USAR. Consequently, Germany would not be considered your domiciliary residence since you did not establish a domicile there permanently or for an indefinite period of time.
Concerning establishing residency in other states, you indicate that since you have no rights to a job in Virginia after the expiration of your tour in Germany, you cannot predict which state you would return. It is clear, therefore, that you did not establish residency in another state during your tour in Germany.
Based on the information provided, there is no basis to conclude that you abandoned Virginia as your domiciliary residence when you were transferred by your employer to Germany. You remain a domiciliary resident of Virginia for the taxable years 1992 through 1997. Accordingly, you correctly filed resident returns for the taxable years 1992 through 1996. The nonresident return filed for the taxable year 1997 was properly adjusted by the department to a resident return. The outstanding assessment totaling ***** which represents tax of ***** and interest of ***** updated through the date of this letter, is due and payable. Please remit your payment to the attention of ***** Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, you may contact ***** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13915N
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will reply to your letters in which you request a ruling on your requirement to file Virginia resident individual income tax returns for the taxable years 1992 through 1997. While you have requested a ruling, I feel it is more appropriate to handle your case as an appeal pursuant to Code of Virginia § 58.1-1821 because the department has issued you an assessment for 1997. I apologize for the delay in responding to your letters.
FACTS
You were originally a resident of another state but came to Virginia in 1956. Subsequently, you married your husband, who was stationed in Virginia on military orders. You accompanied him on various job assignments outside of Virginia, but would return with him to Virginia at the end of each assignment because his ***** headquarters was located in Virginia. In 1989, you and your husband were divorced. You remained in Virginia because of your employment with the United States *****
Government. You had a house, maintained bank accounts, had a driver's license, and paid income and property taxes in Virginia.
In July 1992, your employer, the Department of the Air Force ("USAR') ***** transferred you, as a civilian employee, to Germany. At the time of your transfer, you state that you were a resident of Virginia and filed Virginia resident income tax returns for the taxable years 1992 through 1996. While in Germany, you rented your Virginia house and continued to maintain Virginia bank accounts. Your initial employment contract with the USAR was for a three-year period. You received two additional extensions of the employment contract for two years each.
You, now, contend that you were not a resident of Virginia after you transferred to Germany with the USAR. You want to amend your 1992 through 1996 Virginia resident income tax returns to nonresident tax returns and be refunded any overpaid taxes. Additionally, you have filed a 1997 nonresident Virginia return. The department adjusted that return to show your Virginia residency status and issued an assessment. You are requesting abatement of that assessment.
DETERMINATION
Code of Virginia § 58.1-1823, copy enclosed, provides, in part, that an amended return must be filed within three years from the last day prescribed by law for the timely filing of the return in order to claim a refund. For many of the years that you filed tax returns, the three year statute of limitations period has expired. Consequently, no refunds would be issued by the department for those years.
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. The domiciliary residence of a person means that the permanent place of residence of a taxpayer is Virginia, and the place to which the person intends to return is Virginia even though the person may actually reside elsewhere. An actual resident of Virginia is a person who, for an aggregate of more than 183 days of the taxable year, maintains a place of abode within Virginia.
As indicated by a number of Virginia court cases, (e.g., Talley v. Commonwealth 127 Va. 516, 103 S.E. 612 (1920); State-Planters Bank v. Commonwealth, 174 Va. 289, 6 S.E.2d 629 (1940); and Layton v. Pribble, 200 Va. 405, 105 S.E.2d 864 (1958)) in order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. An old domicile remains until a new domicile is established. The burden of proving that the domicile has been changed lies with the person alleging the change.
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.
At issue in this case is whether you changed your domicile from Virginia when you were transferred to Germany to work as a civilian employee with the USAR. Several factors seem to show that you remained a domiciliary resident of Virginia during your tour in Germany. You moved to Virginia from another state and have not lived or worked in that state since leaving. You have provided no information to show ties, connections, property, or other business or personal interests in that state. It appears, therefore, that you did not retain that state as your domiciliary residence when you moved to Virginia. After marriage, you traveled with your husband while he fulfilled military assignments in various parts on the world and returned to Virginia after ***** completion of the assignments. Once you divorced in 1989, you continued to live in Virginia in order to stay with your employer. At that time, you admit you were a Virginia resident, took ownership of the Virginia house after the divorce, maintained bank accounts, and had a driver's license in Virginia.
After being transferred by your employer to Germany, there has been no information provided to indicate that you changed your residency after the transfer. At the time you were transferred to Germany by the USAR, you were approved for an initial three-year employment contract and subsequently a two-year extension to your contract. Although overseas employment contracts with the USAR are typically limited to five years, an exception was made in your case. You were approved for an ***** additional two-year extension. The initial three-year employment contract and both two-year extensions to the contract specified definite periods of time that you would be employed by the USAR in Germany. For Virginia tax purposes, your employment in Germany would not be considered permanent or indefinite as your tour in Germany was approved for specific periods of time by the USAR. Consequently, Germany would not be considered your domiciliary residence since you did not establish a domicile there permanently or for an indefinite period of time.
Concerning establishing residency in other states, you indicate that since you have no rights to a job in Virginia after the expiration of your tour in Germany, you cannot predict which state you would return. It is clear, therefore, that you did not establish residency in another state during your tour in Germany.
Based on the information provided, there is no basis to conclude that you abandoned Virginia as your domiciliary residence when you were transferred by your employer to Germany. You remain a domiciliary resident of Virginia for the taxable years 1992 through 1997. Accordingly, you correctly filed resident returns for the taxable years 1992 through 1996. The nonresident return filed for the taxable year 1997 was properly adjusted by the department to a resident return. The outstanding assessment totaling ***** which represents tax of ***** and interest of ***** updated through the date of this letter, is due and payable. Please remit your payment to the attention of ***** Office of Tax Policy, Department of Taxation, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have further questions, you may contact ***** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13915N
Rulings of the Tax Commissioner