Did a taxpayer establish a new domicile outside Virginia despite retaining a Virginia driver's license during 2004?

Subject

Taxpayer abandoned Virginia domicile and established a domicile without Virginia

Plain-English summary

Virginia abated the 2004 resident assessment because the taxpayer proved she had abandoned Virginia domicile and established a new domicile in another state. She moved in November 2003, leased an apartment and vehicle there, worked full time, attended classes at night, maintained no permanent Virginia abode, and spent very little time in Virginia.

She retained her Virginia driver's license during 2004 and used her parents' Virginia address for information returns. Those facts did not outweigh the rest of the evidence. She did not renew the Virginia license and obtained the other state's license in October 2005.

Her later move back to her parents' Virginia home in July 2007 also did not change the Commissioner's conclusion about her 2004 domicile.

What this means for you

• Domicile depends on the complete pattern of intent, presence, work, housing, property, licensing, and other connections.
• A retained Virginia driver's license is important evidence but is not necessarily decisive.
• A mailing address at a relative's Virginia home does not automatically establish domicile.
• The taxpayer claiming a domicile change bears the burden of proof.

Citations and references

• Va. Code § 58.1-302.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-38

Original ruling text

April 10, 2008

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 2004 taxable year.

FACTS

In November 2003, the Taxpayer moved from Virginia to a leased apartment in * (State A). In State A, she held a full-time job while taking classes at night. She maintained a Virginia driver's license until October 2005, when she obtained a State A driver's license. During the time she resided in State A, she leased a vehicle. In July 2007, she resigned from her job in State A and moved to her parent's home in Virginia. During the time she resided in State A, her information returns were sent to the residence owned by her parents.

The Taxpayer did not file a Virginia income tax return for the 2004 taxable year. Under audit, the Department determined that she was a Virginia resident and assessed Virginia income tax. The Taxpayer contends that she was a resident of State A during the taxable year at issue.

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, 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 determines a taxpayer's intent through the information provided. A 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.

The Taxpayer performed several actions supporting a change in domicile from Virginia. She leased apartments and her vehicles in State A, and she was employed on a full-time basis while residing in State A.

The evidence shows the Taxpayer maintained no permanent place of abode in Virginia, spent very little time in Virginia, established residency connections outside Virginia by leasing an apartment and leasing vehicles in State A. While the Taxpayer did maintain a Virginia driver's license during the taxable year at issue, she eventually relinquished it and obtained a State A license. The Taxpayer did not renew her Virginia's driver license while she resided in State A.

Based on a review of the facts and circumstances in this case, I find that there is sufficient evidence to demonstrate that the Taxpayer abandoned her Virginia domicile and established a domicile without Virginia. Accordingly, the assessment of tax issued to the Taxpayer for the 2004 taxable year has been abated.

The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.virgiriia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

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