Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
11-29-1999
November 29, 1999
Re: Sec.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 "Taxpayer') for the 1995 taxable year. I apologize for the delay in responding.
FACTS
The Taxpayer was transferred by his employer from Virginia to another state ("State A') in January 1995. The Taxpayer continued to maintain a home and an apartment in Virginia although he spent only 36 days in Virginia in 1995. While in State A, he resided in an acquaintances's residence. The Taxpayer's vehicles remained registered in Virginia in 1995 and he did not receive a State A driver's license until 1997. One of the Taxpayer's Virginia residences and some of the vehicles were used by his former spouse and children. All federal information returns were sent to either one of the Taxpayer's Virginia residences or to the former spouse's residence. In addition, the Taxpayer did not register to vote in State A until 1996.
The Taxpayer did not file a Virginia individual income tax return for 1995. Under audit, the department determined that the Taxpayer was a domiciliary resident of Virginia for the 1995 taxable year and assessed tax, penalty, and interest. The Taxpayer contends the assessment asserting that he successfully changed his domicile from Virginia to State A in January 1995.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Vinginia Sec. 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 evidence that the Taxpayer intended to acquire a State A domicile. The Taxpayer was reassigned to State A for full-time employment and leased living space from a friend residing in State A. However, there is strong evidence that the Taxpayer did not abandon his Virginia domicile in 1995. The Taxpayer retained two residences in Virginia during the years. He kept his primary bank account in a Virginia bank. Taxpayer credit card records indicate numerous transactions in Virginia throughout 1995. Bills and federal tax information returns were sent to either the former spouse's residence or one of the Taxpayer's Virginia residences. The Taxpayer, also, continued to maintain his driver's license and motor vehicle registrations in Virginia through 1995.
Some of the Taxpayer's significant ties to Virginia may be explained because his former spouse was domiciled in Virginia during the 1995 taxable year. Although the Taxpayer was in Virginia only 36 days in 1995, the Taxpayer's significant ties with Virginia and his failure to establish more than a tenuous connection with State A do not provide a clear indication that the Taxpayer abandoned his Virginia domicile and established domicile in State A.
Based on the information provided, the Taxpayer has not established that he changed his domicile from Virginia to State A for the 1995 taxable year. Please send the tax, penalty and interest due according to the enclosed schedule to ***** Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia, 23218-1880 within 30 days to avoid the accrual of additional interest. If you have any questions about this determination, you may contact ***** at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/22028B
Re: Sec.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 "Taxpayer') for the 1995 taxable year. I apologize for the delay in responding.
FACTS
The Taxpayer was transferred by his employer from Virginia to another state ("State A') in January 1995. The Taxpayer continued to maintain a home and an apartment in Virginia although he spent only 36 days in Virginia in 1995. While in State A, he resided in an acquaintances's residence. The Taxpayer's vehicles remained registered in Virginia in 1995 and he did not receive a State A driver's license until 1997. One of the Taxpayer's Virginia residences and some of the vehicles were used by his former spouse and children. All federal information returns were sent to either one of the Taxpayer's Virginia residences or to the former spouse's residence. In addition, the Taxpayer did not register to vote in State A until 1996.
The Taxpayer did not file a Virginia individual income tax return for 1995. Under audit, the department determined that the Taxpayer was a domiciliary resident of Virginia for the 1995 taxable year and assessed tax, penalty, and interest. The Taxpayer contends the assessment asserting that he successfully changed his domicile from Virginia to State A in January 1995.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Vinginia Sec. 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 evidence that the Taxpayer intended to acquire a State A domicile. The Taxpayer was reassigned to State A for full-time employment and leased living space from a friend residing in State A. However, there is strong evidence that the Taxpayer did not abandon his Virginia domicile in 1995. The Taxpayer retained two residences in Virginia during the years. He kept his primary bank account in a Virginia bank. Taxpayer credit card records indicate numerous transactions in Virginia throughout 1995. Bills and federal tax information returns were sent to either the former spouse's residence or one of the Taxpayer's Virginia residences. The Taxpayer, also, continued to maintain his driver's license and motor vehicle registrations in Virginia through 1995.
Some of the Taxpayer's significant ties to Virginia may be explained because his former spouse was domiciled in Virginia during the 1995 taxable year. Although the Taxpayer was in Virginia only 36 days in 1995, the Taxpayer's significant ties with Virginia and his failure to establish more than a tenuous connection with State A do not provide a clear indication that the Taxpayer abandoned his Virginia domicile and established domicile in State A.
Based on the information provided, the Taxpayer has not established that he changed his domicile from Virginia to State A for the 1995 taxable year. Please send the tax, penalty and interest due according to the enclosed schedule to ***** Office of Tax Policy, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia, 23218-1880 within 30 days to avoid the accrual of additional interest. If you have any questions about this determination, you may contact ***** at *****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/22028B
Rulings of the Tax Commissioner