Was an out-of-state domiciliary an actual Virginia resident when she owned a Virginia home but spent fewer than 184 days in the state?

Subject

Day-count evidence defeated actual-residency assessment

Plain-English summary

Virginia found that the taxpayer was not an actual resident in 2004 or 2005 because she proved she spent fewer than 184 days in the Commonwealth. The Department abated the assessments she had already paid and directed that a refund with interest be issued.

The taxpayer was domiciled in another state but owned homes with her husband there, in a second state, and in Virginia. Her husband moved permanently into the Virginia home in May 2004. The auditor inferred that the taxpayer also spent more than 183 days in Virginia and assessed her as an actual resident.

The taxpayer supplied a daily log and receipts for the last six months of each year, along with other information submitted during the audit and appeal. After reviewing that evidence, the Commissioner concluded that she had demonstrated a Virginia day count below the statutory threshold.

What this means for you

• A person can be a Virginia actual resident without being domiciled in Virginia if the person maintains an abode and spends more than 183 days here.
• A spouse's Virginia domicile does not automatically establish the other spouse's day count.
• Detailed contemporaneous records can overcome an auditor's inference about where a taxpayer spent the year.
• The ruling does not say that property ownership alone makes a nonresident an actual resident.
• Because these assessments had been paid, abatement resulted in a refund with interest rather than merely cancellation of unpaid bills.

Common questions

What is the actual-residency threshold described in the ruling?

More than 183 aggregate days in a taxable year while maintaining a Virginia place of abode.

Was the taxpayer a Virginia domiciliary?

No. The ruling identifies her as a domiciliary resident of another state; the dispute was actual residency.

What evidence persuaded the Commissioner?

A detailed daily log, receipts for the last six months of the year, and the other information submitted during the audit and appeal.

What relief did she receive?

The 2004 and 2005 assessments were abated, and the Department said it would issue a refund with interest.

Citations and references

• Va. Code § 58.1-1821.
• Va. Code § 58.1-302.
• P.D. 00-167 (Sept. 8, 2000).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-194

Original ruling text

November 27, 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 assessments issued to * (the "Taxpayer") for the taxable years ended December 31, 2004 and 2005. I note that the assessments have been paid in full.

FACTS

The Taxpayer is a domiciliary resident of * (State A). The Taxpayer and her husband own residences in State A, *** (State B) and Virginia. In May 2004, the husband, who was also a State A resident, moved permanently into the couple's Virginia residence.

In 2004 and 2005, the Taxpayer filed a nonresident Virginia income tax return using the married filing separately filing status. The husband filed a part-year Virginia income tax return for 2004 and a resident income tax return for 2005 using the married filing separately filing status.

The Taxpayer was audited for the 2004 and 2005 taxable years. The auditor determined that the Taxpayer was an actual resident of Virginia and assessed additional tax and interest. The Taxpayer contests the auditor's findings, contending that she was not an actual resident of Virginia.

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 that the permanent place of residence of a taxpayer is Virginia and the place to which he intends to return is Virginia even though he may actually reside elsewhere. 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 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.

A taxpayer can be an actual resident of Virginia without establishing domicile in the Commonwealth. See Public Document (P.D.) 00-167 (9/8/2000). As such, even though the Taxpayer is a domiciliary resident of State A, she could be an actual resident of Virginia.

The Department's auditor determined that, because the husband changed his domicile to Virginia in 2004 and 2005, the Taxpayer spent more than 183 days in Virginia. The Taxpayer provided detailed documentation, including a daily log and a number of receipts for the last six months of the year, to the auditor to show that she did, in fact, spend less than 183 days in Virginia during the taxable years at issue. The auditor concluded that the information provided was not sufficient to prove that the Taxpayer was not an actual resident and issued the assessments.

After reviewing the information submitted with your letter and during the audit, it is my determination that the Taxpayer has provided sufficient evidence to demonstrate that she spent less than 183 days in Virginia during the 2004 and 2005 taxable years. Therefore, she was not an actual resident of Virginia during the taxable years at issue. The assessments issued for the taxable years ended December 31, 2004 and 2005 will be abated and a refund, with interest, will be issued shortly.

The Code of Virginia sections and public document cited are available online 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 * in the Office of Policy and Administration, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1118661735B