Did a couple become Virginia domiciliaries merely by living there temporarily and listing Virginia as their permanent passport address?

Subject

A simple declaration is not sufficient to establish residency

Plain-English summary

A married couple lived in Virginia while the husband completed training and prepared for a civilian career position overseas. They had previously been domiciled in another state, maintained that state's income-tax filings, and the husband retained its driver's license. They did not own or rent a Virginia home and reported no Virginia family ties. Although they listed Virginia as their permanent address on passport applications, they explained that this was done under time pressure before the overseas move.

Virginia concluded that the couple never acquired Virginia domicile. Domicile required both abandoning the old permanent home and acquiring a new one through presence and an intent to remain permanently or indefinitely. One address declaration did not outweigh the couple's broader conduct and circumstances.

That did not eliminate every filing obligation. The husband had filed 2003 as a Virginia resident and had spent more than 183 days in Virginia during 2004. He was directed to amend 2003 to nonresident status and file a 2004 part-year resident return reflecting actual residency for part of that year. Neither spouse needed a 2005 Virginia return because they were outside Virginia and had no Virginia-source income.

What this means for you

• Domicile turns on objective conduct and the full facts, not a single stated address.
• A person can avoid Virginia domicile yet still become an actual resident through more than 183 days of presence while maintaining a Virginia abode.
• Filing status must be determined separately for each year and can require amended returns even when the Department agrees on domicile.

Citations and references

• Va. Code § 58.1-302, definitions of domiciliary resident and actual resident.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-69

Original ruling text

May 10, 2007

Re: Request For Ruling: Individual Income Tax

Dear *:

This will reply to your letter in which you request a ruling concerning the domicile of * (the "Taxpayers") for individual income tax purposes. I apologize for the delay in this response.

FACTS

The Taxpayers, a husband and wife, resided in Virginia in 2004 when the husband accepted a career position in * (Country A) as a civilian with the United States armed forces (Armed Forces). They moved to Country A in December 2004.

The Taxpayers were domiciliary residents of * (State A) before they moved to Virginia. The husband moved to Virginia in July 2003, for 18 months of training as a student/intern with the United States Army. The Taxpayers married in State A in 2004, after which the wife moved to Virginia in September 2004. The Taxpayers state that, although they had no property, family or any ties to Virginia, they claimed temporary residency in Virginia to accommodate their preparations for a career overseas, but had no intention of staying in or returning to Virginia once leaving for Country A.

The Taxpayers request a ruling that they are not domiciliary residents of Virginia for individual income tax purposes.

RULING

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. 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 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.

Department records show that the husband filed a Virginia individual income tax return for the 2003 taxable year as a resident. While Department records do not reflect the filing of a Virginia income tax return for the 2004 taxable year, you have provided a copy of that return, filed as a nonresident. Copies of your State A resident income tax returns for the 2003 and 2004 taxable years were also provided.

In regard to domicile, the husband performed actions that are consistent with retaining a State A domicile. He maintained his State A driver's license. He also maintained his State A automobile registration until registering the vehicle with Virginia in September 2004. The Taxpayers did not own or rent a home in Virginia and had no other family ties in Virginia. In addition, neither spouse performed actions consistent with acquiring a Virginia domicile.

The Taxpayers report that they claimed Virginia as their permanent address on their United States passport applications because of time constraints related to their upcoming move to Country A, not as an indicator of Virginia as their 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. For purposes of ascertaining domicile in this case, however, it appears that identifying Virginia as their permanent residence was provided for reasons of expediency due to the circumstances and time constraints at hand, rather than as a statement of their domicile for state income tax purposes.

Based on all the facts and circumstances presented, the Taxpayers did not become domiciliary residents of Virginia for individual income tax purposes. Accordingly, because the Taxpayers were not present in Virginia for the 2005 taxable year and had no income from Virginia sources, they are not required to file a 2005 Virginia individual income tax return.

This ruling is based on the facts presented as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

In regard to the 2003 and 2004 taxable years, the husband must amend his 2003 Virginia income tax return in order to properly reflect his status as a nonresident for the 2003 taxable year. Also, because the Taxpayer spent more than 183 days in Virginia in 2004, he must file a part-year resident return to reflect his status as an actual resident residing in Virginia for part of the 2004 taxable year.

Each amended tax return should be filed within 60 days from the date of this letter. Please attach a copy of this letter to each return to explain the reason for filing the income tax returns. In addition, attach a statement to the 2004 amended return specifying if the refund reflected on the original 2004 return copy was received. Mail these documents to: Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203.

The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. Forms and instructions for use in filing the amended income tax returns are also on the Department's web site. If you have any questions about this determination, you may contact * at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

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