Was a taxpayer domiciled in Virginia for 2005 because he had obtained a Virginia driver's license and registered to vote?

Subject

Taxpayer was not a resident of Virginia.

Plain-English summary

A taxpayer was not a Virginia resident in 2005 despite holding a Virginia driver's license and being registered to vote. He had moved to another country in 2003, where his child lived and attended school.

The taxpayer owned no Virginia real or tangible property, reported self-employment income to the IRS as foreign earned income, and used his foreign home as his mailing address. Those facts supported continued domicile abroad.

The Virginia license and voter registration pointed the other way. The taxpayer said he had obtained the license while considering a Virginia move that did not happen. He later renewed it during a 2008 visit, but the Department found that he had not intended to establish Virginia domicile during the 2005 year at issue.

Virginia concluded that he remained domiciled in the foreign country and abated the assessment.

What this means for you

• A Virginia driver's license is strong domicile evidence but is not automatically decisive.
• Family residence, property, income reporting, mailing address, and actual intent all matter.
• The relevant question is domicile during the specific tax year.
• A taxpayer must still provide enough evidence to overcome a residency assessment.

Common questions

What was the strongest evidence for Virginia domicile?

The Virginia driver's license, together with voter registration.

What outweighed those ties?

The taxpayer's foreign home and family life, lack of Virginia property, foreign income reporting, and lack of intent to establish Virginia domicile in 2005.

What happened to the assessment?

It was abated.

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. 10-181

Original ruling text

August 16, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek abatement of the individual income tax assessment issued to you * (the Taxpayer) for the 2005 taxable year.

FACTS

The Department received information from the Internal Revenue Service (IRS) that suggests the Taxpayer may be required to file a Virginia individual income tax return for 2005. Because there was no return on file, the Department requested additional information from the Taxpayer. When no response was received, the Department issued an assessment against the Taxpayer. The Taxpayer appeals the assessment, contending he was a resident of the * (Country A) in 2005 and not required to file a Virginia income tax return.

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 and the place to which he intends to return even through 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. Are 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 the world 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 or domicile.

The Department concedes that it may be difficult to ascertain whether a taxpayer intends to return to Virginia. 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 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 has performed several actions consistent with establishing domicile in Country A. The Taxpayer moved to Country A in 2003. His child resides in Country A and attends school in Country A. In addition, the Taxpayer contends that he owns no, real or tangible property within Virginia. The Taxpayer reported his self-employed income to the lnternal Revenue Service as foreign earned income, and used his Country A residence as his mailing address. The Taxpayer is registered to vote, but contends he did not request an update of information for voting purposes.

The Taxpayer also took steps indicating an intent to establish domicile in Virginia. He obtained a Virginia driver's license in November 2003 and registered to vote. The driver's license was to expire November 2008. The Taxpayer renewed the license in October 2008 while visiting Virginia. He contends it was his intent to move to Virginia but his employment option failed and he stayed in Country A. The Taxpayer failed to surrender his driver's license and renewed it in 2008.

Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." The Department has ruled that obtaining or renewing a Virginia licenses 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 they retain a Virginia driver's license. See P.D. 00-151 (8/18/2000).

The strongest evidence that would indicate the evidence of a Virginia domicile is the maintaining of a Virginia driver's license. The Taxpayer attests that he did not intend to establish Virginia domicile by obtaining a driver's license. The evidence at hand shows that the Taxpayer remained a domiciliary resident of Country A and did not intend to establish a domiciliary residence here during the taxable years at issue.

Based on the preponderance of evidence as noted above, I find that the Taxpayer did not abandon his domicile in Country A in 2005. Accordingly, the assessment will be abated.

The Code of Virginia sections 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,

Linda Foster

Deputy Tax Commissioner

AR/1-4170717916.D