Did retaining an unrenewed Virginia driver's license make a Foreign Service officer and spouse Virginia domiciliaries after they left the state?

Subject

Unrenewed driver's license alone did not preserve Virginia domicile

Plain-English summary

Virginia abated a 2004 resident-income-tax assessment because a Foreign Service officer and spouse had abandoned their Virginia domicile, and an unrenewed Virginia driver's license was their only remaining state connection. The couple had established Virginia domicile after moving there in 2001 for the officer's work, leasing an apartment, obtaining licenses, and registering vehicles.

Their facts changed in late 2003. The officer transferred to an overseas post, the couple gave up the Virginia apartment, the spouse moved to another state, and their vehicles were sold or moved outside Virginia.

The officer retained a Virginia driver's license while abroad but did not renew it. Virginia treats obtaining or renewing a state license as strong domicile evidence, yet a retained license is not conclusive by itself. With no other Virginia connection for 2004, neither spouse remained a Virginia domiciliary.

Virginia canceled the assessment but warned that future Virginia ties—such as renewing a license, obtaining a home, registering to vote, or registering vehicles—could change the result for later years.

What this means for you

• A past Virginia domicile can be abandoned through concrete changes in residence, property, vehicles, and family location.
• Retaining a Virginia driver's license is important evidence but is not automatically decisive.
• Renewing the license would be stronger evidence of continued Virginia domicile than merely holding an unexpired license.
• Domicile determinations are year-specific and can change as state connections change.

Common questions

Had the couple ever established Virginia domicile?

Yes. Virginia found their 2001 move, employment, apartment, licenses, and vehicles consistent with establishing domicile then.

Why did the 2004 assessment fail?

By 2004, the officer's unrenewed driver's license was their only Virginia connection, while their residence and vehicles had moved elsewhere.

Was the assessment merely adjusted?

No. Virginia abated the 2004 individual income tax assessment.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-149

Original ruling text

July 26, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the Virginia individual income tax assessment issued to* (the "Taxpayers") for the taxable year ended December 31, 2004. I apologize for the delay in responding to your letter.

FACTS

The Taxpayers, a husband and a wife, moved to Virginia from * (State A) in 2001 at the request of his employer, the United States Department of State. The couple remained in Virginia until the husband was transferred to an overseas post in July 2003 as a foreign service officer. The spouse moved to *** (State B) after the Taxpayer was transferred.

The Department obtained information from the Internal Revenue Service (IRS) indicating that the Taxpayers may have been responsible for filing a 2004 taxable year Virginia individual income tax return. When the Taxpayers failed to respond to the Department's inquiry, an assessment was issued. The Taxpayers appealed the assessment, contending that they did not live in Virginia during the 2004 taxable year and were not subject to Virginia income taxation 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 an individual or the place to which he intends to return even though he may actually reside elsewhere. An actual resident of Virginia means an individual who, for an aggregate of more than 183 days of the taxable year, maintains a place of abode within Virginia, whether domiciled in Virginia or not.

In determining domicile, consideration may be given to an 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 an individual's domicile. An individual'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 domiciliary residency.

The information at hand does not show actions supporting retention of the Taxpayers' domicile in State A. The husband states that State A remained as his home because of his training status. However, the Taxpayers performed several actions supporting a change in domicile to Virginia in 2001. The husband obtained employment in Virginia, purchased an automobile, and obtained a Virginia driver's license. The Taxpayers also established a permanent place of abode by leasing an apartment in Virginia and purchased and registered three motor vehicles in Virginia. Further, the Taxpayers were actual residents of Virginia during the 2001 through 2003 taxable years.

The Taxpayers performed several actions consistent with abandoning their Virginia domicile in late 2003. When the husband was transferred to Country A by his employer, the Taxpayers relinquished their Virginia apartment and the wife left Virginia and established her domicile in State B. They sold one of the motor vehicles, shipped one to Country A, and one was taken by the wife to State B.

For the 2004 taxable year, the only connection the Taxpayers had with Virginia was the husband's Virginia driver's license. Virginia Code § 46.2-323.1 states, "No driver'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 (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has ruled that obtaining or renewing a Virginia license is a strong indicator of an individual's intent to be a domiciliary resident of Virginia. See Public Document (P.D.) 02-149 (12/09/2002). The Department has also found that an individual may successfully establish a domicile outside Virginia even if a Virginia driver's license is retained. See P.D. 00-151 (8/18/2000). In this case, although the husband retained his Virginia driver's license while he lived in Country A, he did not renew it.

Based on the evidence presented, I find that neither the husband nor the wife were domiciliary residents of Virginia for the 2004 taxable year. Therefore, the individual income tax assessment issued for the 2004 taxable year has been abated.

The Taxpayers should be aware, however, that any additional connections with Virginia (renewing a Virginia driver's license, establishing a permanent place of abode, registering to vote, registering motor vehicles, or other indicators of a permanent residence in Virginia) could change this determination for subsequent taxable years.

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 about this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda Foster

Deputy Tax Commissioner

AR/1-2409266989.E