Was a 2003 Virginia nonfiler's statement that he moved abroad enough to overturn the residency assessment?

Subject

Unsupported claim of foreign domicile left assessment intact

Plain-English summary

Virginia upheld the 2003 nonfiler assessment because the taxpayer did not prove his claimed September move to another country changed his domicile.

The Department had IRS information sent to the taxpayer at a Virginia address and no Virginia return. It repeatedly asked for information needed to determine residence, but the taxpayer did not respond. On appeal he asserted that all 2003 income was earned after he moved abroad.

Changing domicile required both actual abandonment of Virginia with no intent to return and physical presence at a new home with intent to remain permanently or indefinitely. A statement alone was insufficient. Because Virginia assessments are presumed correct and the taxpayer provided no supporting facts, the Commissioner left the assessment in place.

What this means for you

• Moving abroad does not end Virginia domicile without evidence of both leaving Virginia and establishing the new domicile.
• The Department may examine housing, employment, family, property, vehicles, licenses, and other conduct.
• Ignoring residency-information requests leaves the taxpayer unable to rebut the assessment's presumption of correctness.
• The ruling reflects failure of proof, not a finding that foreign domicile was legally impossible.

Common questions

Did the taxpayer claim he moved abroad?

Yes, in September 2003.

What evidence did he provide?

The ruling says he did not respond to repeated written requests for substantiation.

Was his statement enough?

No. A simple declaration did not prove abandonment and new domicile.

What happened to the assessment?

It remained correct and enforceable.

Citations and references

• Va. Code §§ 58.1-205 and 58.1-302.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-190

Original ruling text

November 21, 2007

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2003.

FACTS

The Department received information from the Internal Revenue Service that tax documents for the 2003 taxable year were sent to the Taxpayer at a Virginia address. The Taxpayer did not file a 2003 Virginia income tax return. The Department requested additional information from the Taxpayer in order to determine his residence for that taxable year. The Taxpayer did not respond to the information requests. As such, the Taxpayer was assessed individual income tax liability as a nonfiler for the 2003 taxable year.

The Taxpayer has appealed the assessment and states he changed his Virginia domicile to * (Country A) as of September 2003. He contends that all income earned in 2003 was earned after he changed domicile and therefore is not subject to Virginia income tax.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. The domiciliary residence of a person means 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 another state or country, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. 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, therefore, working in other parts of the country or in another 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 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. The burden of proving that the domicile has been changed lies with the person alleging the change.

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 remain indefinitely in Virginia.

On several occasions, the Department made written requests to the Taxpayer for information substantiating his residency outside Virginia. The Taxpayer failed to respond to these requests.

Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer to show that his 2003 income was not subject to Virginia income tax. Inasmuch as the Taxpayer has not provided the requested information, the assessment of individual income tax for the 2003 taxable year is deemed correct.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, you may contact * at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1164820507B