Tax Type
Individual Income Tax
Description
Residency
Topic
Collection of Tax
Date Issued
04-19-1999
April 19, 1999
Re: § 58.1-1821 Application: Individual Income Tax
Dear****
This will reply to your letter concerning the 1993 and 1994 Virginia individual income tax assessments against ***** (the "Taxpayer'). I apologize for the delay in responding to your letter.
FACTS
As a domiciliary resident of Virginia, the Taxpayer filed a Virginia Individual Income Tax Return for the 1992 taxable year. During that year, the Taxpayer began working in another state (State A). The Taxpayer stayed primarily in hotels in State A and did not sign a lease or rental agreement that would indicate a long term stay.
For the 1993 taxable year, the Taxpayer did not file a Virginia Individual Income Tax Return claiming residency in State A. The Taxpayer did not create a permanent residence in State A and lived in hotels and private homes in a number of states during 1993. The Taxpayer claims the decision not to obtain a long term residence was based on the nature of his employment. The Taxpayer filed a 1993 Form 1040 with the Internal Revenue Service (IRS) which indicated an address within the Commonwealth of Virginia. All of the Taxpayer's correspondence with the IRS was conducted through this Virginia address.
In addition, the Taxpayer continued to use the Virginia address for all of his mailing purposes. The Taxpayer also retained a Virginia driver's license, had a motor vehicle registered with Virginia, and maintained a bank account with an institution in the Commonwealth during 1993 and 1994. The Taxpayer was last registered to vote in a locality within Virginia.
Under audit, the department determined that the Taxpayer was a domiciliary resident of Virginia for taxable years 1993 and 1994 and assessments for tax, penalty, and interest were issued. The Taxpayer contends that he was not a domiciliary resident of Virginia for the 1993 taxable year and part of the 1994 taxable year and requests that the assessments for the taxable years 1993 and 1994 be waived.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. Domiciliary residence means the permanent place of residence of a taxpayer and/or the place to which he intends to return even though he may actually reside elsewhere. For an individual to change domiciliary residency to another state, that individual must intend to abandon their Virginia domicile with no intention of returning to Virginia. Concurrently, that individual 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 an individual who, for an aggregate of more than 183 days of the taxable year, maintained a place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, an individual 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 as a resident.
In determining domicile, consideration may be given to an 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 an individual's domicile. An individual'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 done virtually nothing to establish residency in State A. The Taxpayer did not obtain a new driver's license, register an automobile, or register to vote in State A. After moving to State A, the Taxpayer kept an active bank account in Virginia and used a Virginia mailing address for all of his correspondence, including Federal tax returns. The Taxpayer did not own real property in either Virginia or State A during 1993 and 1994. The only evidence that the Taxpayer has offered to support a change of domicile is a simple declaration and hotel bills. As stated above, a simple declaration is not sufficient to establish residency. The hotel bills provided contradict the Taxpayer's declaration. An individual who intends to remain permanently or indefinitely in a state must make some attempt to establish a permanent place of residence in that state. The department does not consider hotels as a permanent or indefinite residence.
The department concedes that it is difficult to know whether an individual intends to return to Virginia. The individual has the burden of proving abandonment of his or her Virginia domicile. If the information is inadequate to meet this burden, the department will conclude that he or she intended to return to Virginia.
Based on the information provided, the Taxpayer has failed to meet the burden of proving intent to acquire another domicile with the intention of remaining there permanently or indefinitely. Activities such as having mail delivered to a Virginia address, filing Federal tax returns with a Virginia address, and maintaining a Virginia driver's license, coupled with no evidence to the contrary, would normally constitute an intent to return to Virginia. Accordingly, the department has concluded that the Taxpayer was a Virginia domiciliary resident for the taxable years in question.
As for the penalty, an individual who fails to file a return within the statutory time limit is subject to a penalty of six percent of the assessable tax per month or fraction thereof during which such failure to file continues, not exceeding thirty percent in the aggregate pursuant to Code of Virginia § 58.1-347, copy enclosed. Also, under Code of Virginia § 58.1-351, copy enclosed, an individual who does not pay his tax in full is subject to a penalty of six percent of the assessable tax due per month or fraction thereof, not exceeding thirty percent in the aggregate. Because a tax return has not been filed with the department for the 1993 taxable year, and the tax has not been paid, the aggregate thirty percent penalty is appropriate.
Accordingly, the assessments for the 1993 and 1994 taxable years are upheld. Attached is a schedule showing your current tax liability. Interest has been accrued through the date of this letter. Pay the assessments within 60 days to avoid the accrual of additional interest. Please remit your payment to the attention of *****, Virginia Department of Taxation, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If additional information is needed, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12387G
Re: § 58.1-1821 Application: Individual Income Tax
Dear****
This will reply to your letter concerning the 1993 and 1994 Virginia individual income tax assessments against ***** (the "Taxpayer'). I apologize for the delay in responding to your letter.
FACTS
As a domiciliary resident of Virginia, the Taxpayer filed a Virginia Individual Income Tax Return for the 1992 taxable year. During that year, the Taxpayer began working in another state (State A). The Taxpayer stayed primarily in hotels in State A and did not sign a lease or rental agreement that would indicate a long term stay.
For the 1993 taxable year, the Taxpayer did not file a Virginia Individual Income Tax Return claiming residency in State A. The Taxpayer did not create a permanent residence in State A and lived in hotels and private homes in a number of states during 1993. The Taxpayer claims the decision not to obtain a long term residence was based on the nature of his employment. The Taxpayer filed a 1993 Form 1040 with the Internal Revenue Service (IRS) which indicated an address within the Commonwealth of Virginia. All of the Taxpayer's correspondence with the IRS was conducted through this Virginia address.
In addition, the Taxpayer continued to use the Virginia address for all of his mailing purposes. The Taxpayer also retained a Virginia driver's license, had a motor vehicle registered with Virginia, and maintained a bank account with an institution in the Commonwealth during 1993 and 1994. The Taxpayer was last registered to vote in a locality within Virginia.
Under audit, the department determined that the Taxpayer was a domiciliary resident of Virginia for taxable years 1993 and 1994 and assessments for tax, penalty, and interest were issued. The Taxpayer contends that he was not a domiciliary resident of Virginia for the 1993 taxable year and part of the 1994 taxable year and requests that the assessments for the taxable years 1993 and 1994 be waived.
DETERMINATION
Two classes of residents, a domiciliary resident and an actual resident, are set forth in Code of Virginia § 58.1-302, copy enclosed. Domiciliary residence means the permanent place of residence of a taxpayer and/or the place to which he intends to return even though he may actually reside elsewhere. For an individual to change domiciliary residency to another state, that individual must intend to abandon their Virginia domicile with no intention of returning to Virginia. Concurrently, that individual 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 an individual who, for an aggregate of more than 183 days of the taxable year, maintained a place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, an individual 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 as a resident.
In determining domicile, consideration may be given to an 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 an individual's domicile. An individual'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 done virtually nothing to establish residency in State A. The Taxpayer did not obtain a new driver's license, register an automobile, or register to vote in State A. After moving to State A, the Taxpayer kept an active bank account in Virginia and used a Virginia mailing address for all of his correspondence, including Federal tax returns. The Taxpayer did not own real property in either Virginia or State A during 1993 and 1994. The only evidence that the Taxpayer has offered to support a change of domicile is a simple declaration and hotel bills. As stated above, a simple declaration is not sufficient to establish residency. The hotel bills provided contradict the Taxpayer's declaration. An individual who intends to remain permanently or indefinitely in a state must make some attempt to establish a permanent place of residence in that state. The department does not consider hotels as a permanent or indefinite residence.
The department concedes that it is difficult to know whether an individual intends to return to Virginia. The individual has the burden of proving abandonment of his or her Virginia domicile. If the information is inadequate to meet this burden, the department will conclude that he or she intended to return to Virginia.
Based on the information provided, the Taxpayer has failed to meet the burden of proving intent to acquire another domicile with the intention of remaining there permanently or indefinitely. Activities such as having mail delivered to a Virginia address, filing Federal tax returns with a Virginia address, and maintaining a Virginia driver's license, coupled with no evidence to the contrary, would normally constitute an intent to return to Virginia. Accordingly, the department has concluded that the Taxpayer was a Virginia domiciliary resident for the taxable years in question.
As for the penalty, an individual who fails to file a return within the statutory time limit is subject to a penalty of six percent of the assessable tax per month or fraction thereof during which such failure to file continues, not exceeding thirty percent in the aggregate pursuant to Code of Virginia § 58.1-347, copy enclosed. Also, under Code of Virginia § 58.1-351, copy enclosed, an individual who does not pay his tax in full is subject to a penalty of six percent of the assessable tax due per month or fraction thereof, not exceeding thirty percent in the aggregate. Because a tax return has not been filed with the department for the 1993 taxable year, and the tax has not been paid, the aggregate thirty percent penalty is appropriate.
Accordingly, the assessments for the 1993 and 1994 taxable years are upheld. Attached is a schedule showing your current tax liability. Interest has been accrued through the date of this letter. Pay the assessments within 60 days to avoid the accrual of additional interest. Please remit your payment to the attention of *****, Virginia Department of Taxation, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If additional information is needed, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12387G
Rulings of the Tax Commissioner