Tax Type
Individual Income Tax
Description
Residency
Topic
Residency
Date Issued
04-15-1999
April 15, 1999
Re: Request for Ruling: Individual Income Tax
Dear****************
This will reply to your letter of June 27, 1997, in which you request a ruling on your residency status. I apologize for the delay in responding to your letter.
FACTS
You were a resident of the Commonwealth of Virginia from 1992 until June 1997. During that time, you paid Virginia individual income taxes and filed a part-year resident return for 1997. In June 1997, you abandoned your Virginia domicile and established a domicile in Texas. Shortly after this, you were transferred to England through your employment. You are now requesting rulings concerning the following two questions:
Assuming that you properly abandoned your Virginia domicile and then returned to Virginia, you would not owe any income tax to Virginia for the period in between unless you had income from Virginia sources. If you have income from Virginia sources during the period in question, you will be required to file a Virginia Individual Income Tax return for the years in which you earned the income. Code of Virginia § 58.1-302, copy enclosed, defines "Income and deductions from Virginia sources' as:
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 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. See Virginia Regulation 23 VAC 10-110-30, copy enclosed.
You ask in your second question whether there is a lower income tax rate that you could pay if Virginia determined that you were subject to tax for that period. There is no separate rate for a situation such as this, but the Code of Virginia does provide protection to help avoid double taxation. Taxpayers are afforded a credit for income taxes paid to another state. Code of Virginia § 58.1-332(A), copy enclosed, allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income or any gain on the sale of a principal residence. This code section, in pertinent part, limits the amount of the credit:
I hope this ruling answers your questions. Should you have more questions, please feel free to contact ***** in the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12709G
Re: Request for Ruling: Individual Income Tax
Dear****************
This will reply to your letter of June 27, 1997, in which you request a ruling on your residency status. I apologize for the delay in responding to your letter.
FACTS
You were a resident of the Commonwealth of Virginia from 1992 until June 1997. During that time, you paid Virginia individual income taxes and filed a part-year resident return for 1997. In June 1997, you abandoned your Virginia domicile and established a domicile in Texas. Shortly after this, you were transferred to England through your employment. You are now requesting rulings concerning the following two questions:
-
- 1.While you do not anticipate returning to Virginia, if you did return to Virginia in the future, would you owe the Commonwealth of Virginia income taxes for the time between your abandonment of your Virginia domicile and your possible return to Virginia?
2.If Virginia considers you a resident during that time, would you pay a smaller percentage of income tax since you were not present in the state for that period?
- 1.While you do not anticipate returning to Virginia, if you did return to Virginia in the future, would you owe the Commonwealth of Virginia income taxes for the time between your abandonment of your Virginia domicile and your possible return to Virginia?
Assuming that you properly abandoned your Virginia domicile and then returned to Virginia, you would not owe any income tax to Virginia for the period in between unless you had income from Virginia sources. If you have income from Virginia sources during the period in question, you will be required to file a Virginia Individual Income Tax return for the years in which you earned the income. Code of Virginia § 58.1-302, copy enclosed, defines "Income and deductions from Virginia sources' as:
-
1. Items of income, gain, loss and deduction attributable to:
a. The ownership of any interest in real or tangible personal property in Virginia;
b. A business, trade, profession or occupation carried on in Virginia; or
c. Prizes paid by the Virginia Lottery Department, and gambling winnings from wagers placed or paid at a location in Virginia.
2. Income from intangible personal property, including annuities, dividends, interest, royalties and gains from the disposition of intangible personal property to the extent that such income is from property employed by the taxpayer in a business, trade, profession, or occupation carried on in Virginia.
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 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. See Virginia Regulation 23 VAC 10-110-30, copy enclosed.
You ask in your second question whether there is a lower income tax rate that you could pay if Virginia determined that you were subject to tax for that period. There is no separate rate for a situation such as this, but the Code of Virginia does provide protection to help avoid double taxation. Taxpayers are afforded a credit for income taxes paid to another state. Code of Virginia § 58.1-332(A), copy enclosed, allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income or any gain on the sale of a principal residence. This code section, in pertinent part, limits the amount of the credit:
-
- The credit allowable under this section shall not exceed ... such proportion of the income tax otherwise payable by him under this chapter as his income upon which the tax imposed by the other state was computed bears to his Virginia taxable income upon which the tax imposed by this Commonwealth was computed ....
- The credit allowable under this section shall not exceed ... such proportion of the income tax otherwise payable by him under this chapter as his income upon which the tax imposed by the other state was computed bears to his Virginia taxable income upon which the tax imposed by this Commonwealth was computed ....
I hope this ruling answers your questions. Should you have more questions, please feel free to contact ***** in the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12709G
Rulings of the Tax Commissioner