Could one spouse be a Virginia actual resident while the other remained a nonresident when they shared a credit-card account?

Subject

Wife was a Virginia actual resident, but shared-card evidence did not make husband one

Plain-English summary

Virginia found that the wife was an actual resident in 2006 but the husband was not. Both spouses were domiciled in State A, and they originally filed a joint Virginia nonresident return.

The auditor combined the husband's day calendar with credit-card statements and concluded that both exceeded 183 Virginia days. The couple showed that the wife made almost all contested Virginia purchases while the husband remained in State A. Some January statement entries also reflected purchases made at the end of December 2005.

Because card statements can involve multiple users and delayed posting, Virginia accepted the husband's supporting records and found fewer than 183 days. Amended returns showing the wife as resident and husband as nonresident were to be processed.

What this means for you

• Spouses do not automatically share actual-resident status.
• Each spouse's Virginia days must be determined separately.
• Shared-card records can misattribute physical presence.
• Calendars, travel records, and proof of the other card user's location can correct an estimate.

Common questions

Was the wife a Virginia resident?

Yes. The couple conceded that she met the actual-resident test.

Why was the husband not a resident?

His calendar and supporting evidence showed fewer than 183 Virginia days after correcting shared-card and posting-date assumptions.

What happened next?

Virginia directed processing of amended returns and adjustment of the assessment.

Citations and references

• Va. Code § 58.1-302.
• Virginia Public Document 00-167.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-129

Original ruling text

September 8, 2009

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 "Taxpayers") for the taxable year ended December 31, 2006.

FACTS

The Taxpayers, a husband and wife, are domiciliary residents of * ("State A") who spent time in Virginia during 2006. They filed a joint 2006 nonresident Virginia income tax return.

Under audit, the Department determined that the Taxpayers were actual residents of Virginia and assessed additional tax and interest. The Taxpayers concede that the wife was an actual resident in 2006, but contend that the husband was not an actual resident. They contend that the methodology used by the auditor to determine the number of days in Virginia failed to consider that the husband and the wife were not present in the same state for every day during the 2006 taxable year.

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, he could be taxed as a resident of Virginia.

Further, a taxpayer that is a domiciliary resident of a state other than Virginia, but spends significant portions of his time in Virginia (whether for business or personal reasons) should retain records to substantiate where he spent his time. An account book, diary, log, statement of expenses, trip sheet, or similar record should include information as to where the taxpayer spent each day of the taxable year. Absent such record, the Department will have to rely on available information to make a determination. In this case, the husband provided a calendar indicating the state in which he spent each day.

The Department's auditor used the husband's calendar of days in Virginia in combination with credit card statements to calculate that the husband spent more than 183 days in Virginia. The evidence provided indicates the Taxpayers shared one credit card account under the husband's name. They have provided evidence and documentation showing that the wife was in Virginia while the husband remained in State A for almost all of the contested days during 2006. For January 2006, the credit card statement includes several purchases in Virginia made at the end of December 2005. It appears that the auditor counted these as days in Virginia for January 2006.

Although credit card and debit card statements are helpful in determining how much contact a taxpayer has with Virginia, they may not be reliable in determining the precise number of days a taxpayer spends in Virginia. Reasons for this lack of reliability include vendors that may not transmit transactions on the day they occur, cards with multiple users, and banks that may not record a transaction on the date it occurs. When a taxpayer, however, fails to keep sufficient records as to the number of days or portions of days spent in Virginia, these statements can be used to estimate such taxpayer's days spent in Virginia.

In this case, the husband has provided sufficient evidence to demonstrate that he spent less than 183 days in Virginia and was, therefore, not an actual resident during the 2006 taxable year. The Taxpayers have provided amended 2006 Virginia returns to reflect the wife as a resident and the husband as a nonresident. These returns will be processed and the assessment adjusted accordingly.

The Code of Virginia sections and public document 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 * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2933440051.B