Did a taxpayer establish a new domicile outside Virginia despite retaining a Virginia home, license, vehicles, and voter registration?

Subject

Taxpayer proved a new domicile despite retaining several Virginia ties

Plain-English summary

Virginia abated a 2006 residency assessment after finding that the taxpayer had established domicile in another state. He moved there with his wife, worked and lived there, used the address on his federal return and W-2 withholding, received financial documents there, and joined a local religious organization.

The taxpayer retained a Virginia home, vehicles, driver's license, voter registration, and some mailed financial records. But his daughter used the home and vehicles, he did not renew the Virginia license during 2006, the home was listed for sale, and he returned only twice for family matters. His temporary contract work was also consistent with the nature of his field rather than proof of a temporary move.

Virginia weighed the whole record and found that he intended to remain in the other state permanently or indefinitely. The 2006 assessment was abated.

What this means for you

• A domicile change requires abandonment of the old domicile and acquisition of a new one with intent to remain.
• The taxpayer bears the burden, but no single fact is dispositive.
• Retaining a Virginia home or license does not always defeat a change when legitimate family and property reasons explain those ties.
• Federal filings, withholding, spouse location, work, community membership, travel, and efforts to sell the old home can support the new domicile.
• Temporary employment can still support domicile when short-term contracts are normal in the taxpayer's occupation.

Common questions

Did retaining a Virginia driver's license automatically make the taxpayer a resident?

No. It was an important indicator, but the taxpayer did not renew it during 2006 and the complete record supported the new domicile.

Why did the unsold Virginia home not control?

The home was occupied by the taxpayer's daughter and had been listed for sale, providing legitimate reasons for it to remain in Virginia.

What was the final result?

Virginia found that the taxpayer met his burden and abated the 2006 assessment.

Citations and references

• Va. Code §§ 58.1-302 and 46.2-323.1.
• Virginia Public Documents 00-151, 02-149, and 05-41.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-123

Original ruling text

July 7, 2010

Re: § 58.1-1821 Application: Individual Income

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to your client, * (the "Taxpayer") for the 2006 taxable year.

FACTS

The Taxpayer and his wife were domiciliary residents in Virginia. In March 2005 the wife resigned from her employment and moved to * (State A) to care for her mother. The Taxpayer was seeking employment at that time and accompanied his wife to State A. The Taxpayer continued to seek employment within Virginia and State A.

In January 2006, the Taxpayer accepted a contract position through a temporary agency in State A. This position was scheduled to end in January 2007. The Taxpayer obtained another contract position in Virginia in February 2007. The Taxpayer returned to Virginia to fulfill this assignment, and the position became permanent in March 2008.

Under audit, the Department determined the Taxpayer was a domiciliary resident of Virginia during the 2006 taxable year and issued an assessment. The Taxpayer appeals the assessment, stating that he lived and worked in State A during the 2006 taxable year and should not be required to file an income tax return in 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 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.

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. The taxpayer has the burden of proving that he or she has abandoned his or her original domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that the taxpayer did intend to return to his or her original domicile.

In this case, the Taxpayer performed several actions that support establishing a domicile within State A. He moved to State A, he accepted employment and resided with family in State A. He used his State A residence when filing his 2006 federal income tax return, and he claimed State A as his withholding state on his 2006 W-2s. The Taxpayer received financial documents at his residence in State A, and became a member of a religious organization in State A.

At the same time, a number of the Taxpayer's actions were consistent with maintaining his Virginia domicile. He continued to maintain a home, motor vehicle registrations, a driver's license and voter's registration in Virginia. The Taxpayer also had financial documents mailed to his Virginia address.

The Taxpayer contends his vehicles were not needed while he was in State A, and were used by his daughter. The daughter also remained in the Virginia home while the Taxpayer and his wife resided in State A.

Virginia Code § 46.2-323.1 states, "No drive's license . . . shall be issued to any person who is not a Virginia resident." In fact, this section states that every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles a statement that certifies that the applicant is a Virginia resident. A person providing a false statement is subject to punishment under the laws of the Commonwealth. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver's license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/09/2002). In this case, the Taxpayer did not renew his driver's license in Virginia during 2006.

The Department acknowledges a change in domicile occurs as part of a process in which no single factor is dispositive. The Taxpayer did live and work in State A, and his wife lived in State A. The Taxpayer returned to Virginia only twice during 2006 to attend to family matters. During 2006, the Taxpayer listed his home in Virginia for sale; however, he did not receive an acceptable offer to complete the sale. While the Taxpayer's initial job assignment in State A was temporary, evidence has been presented indicating that is the nature of his field of work.

The Department has found that where there were legitimate reasons for family and property to remain in Virginia, maintaining a home in Virginia may not be considered to be a strong indication of Virginia domicile. See P.D. 05-41 (3/24/2005). In this case, while some steps were not completed during the 2006 taxable year ( e.g. , change state driver's licenses and voter registrations, maintenance of home in Virginia), it is my determination that the Taxpayer has met his burden of proving that he intended to acquire domicile in State A with the intention to remain there permanently or indefinitely in 2006. Accordingly, the assessment for the 2006 taxable year will be abated.

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

Sincerely,

Linda Foster

Deputy Tax Commissioner

AR/1-3975279385.D