Did ten years of indefinite foreign residence establish a new domicile despite a Virginia home, license, and absentee voting?

Subject

Taxpayer successfully abandoned his domicile in Virginia

Plain-English summary

A taxpayer successfully abandoned Virginia domicile and established a new domicile abroad despite retaining a Virginia home, driver's license, and voting connections. He moved with his family in 1997 for work, lived in an employer-provided apartment, sold his vehicles, and by 2006 had lived and worked in the foreign country for ten years.

The taxpayer's employment there was indefinite. His family had become official residents and planned to obtain citizenship. Those facts showed physical presence and intent to remain permanently or indefinitely.

Several Virginia ties pointed the other way. The family kept a Virginia home for vacations and family visits, the taxpayer spent two weeks there in 2006, renewed his Virginia driver's license that year, and voted by absentee ballot in federal elections. The ruling warned that a Virginia license certifies residency and that voter-registration status matters, although federal law permits certain overseas voters to vote at their last U.S. domicile.

Weighing all circumstances, Virginia found that the taxpayer had changed domicile in 1997 and was not a Virginia domiciliary resident in 2006. The assessment was abated. The Department cautioned that the continuing home, license, and voting ties could trigger future inquiries if facts changed or remained ambiguous.

What this means for you

• Domicile depends on the full pattern of residence, work, family life, property, licensing, and intent.
• Long-term indefinite residence and official status abroad can outweigh significant Virginia ties.
• Renewing a Virginia driver's license is a strong contrary indicator and may carry separate legal consequences.
• Overseas absentee voting does not necessarily prove current Virginia domicile; registration status and federal voting rules matter.

Common questions

How long had the taxpayer lived abroad by 2006?

Ten years, beginning in 1997.

Did keeping a Virginia home prevent the domicile change?

No. The home was used for visits, and the foreign residence and employment evidence carried greater weight on these facts.

Did the ruling approve retaining the Virginia driver's license?

No. It treated renewal as evidence of Virginia intent and warned about false residency statements to DMV.

What happened to the 2006 assessment?

It was abated.

Citations and references

• Va. Code § 58.1-302.
• Va. Code §§ 24.2-101, 46.2-323.1, and 46.2-348.
• 42 U.S.C. §§ 1973ff-1 and 1973ff-6(5), as cited in the ruling.
• Virginia Public Document 02-149.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-203

Original ruling text

September 1, 2010

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 your client, * (the "Taxpayer"), for the taxable year ended December 31, 2006. I apologize for the delay in responding to your letter.

FACTS

In 1997, the Taxpayer accepted a position with his United States employer located in * (Country A). In 2003, he took an additional position with a Country A employer. During the 2006 taxable year, the Taxpayer remained an employee of the United States employer and the Country A employer.

The Taxpayer and his family moved to an apartment in Country A, which was provided by the United States employer as part of the Taxpayer's compensation package. The Taxpayer sold his motor vehicles when he moved to Country A.

The home in Virginia was maintained and used by the Taxpayer and his family when they returned to the United States to visit family and for vacations. The Taxpayer and his wife both retained Virginia driver's licenses, and voter registrations.

Under audit, the Department concluded that the Taxpayer was a domiciliary resident of Virginia for the 2006 taxable year and issued an assessment. The Taxpayer appeals the assessment, contending he is employed in Country A for an indefinite period of time, has established a permanent place of abode, and has incurred time and expense to obtain a long-term residency card from Country A.

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. For an individual to change his domiciliary residency to another state, that individual must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that individual must acquire a new domicile, where that individual is physically present with the intention to remain there permanently or indefinitely. 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 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, situs 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 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 performed a number of actions that support a change in domicile. He established a permanent place of abode in Country A. The Taxpayer worked in Country A under contract for an indefinite period. By 2006, the Taxpayer had been living and employed in Country A consistently for 10 years. In addition, the Taxpayer and his family have become official residents of Country A, and plan to obtain citizenship in Country A.

The Taxpayer also retained a number of ties with Virginia. The Taxpayer and his wife continued to own a home in Virginia, to which they returned when visiting extended family. The Taxpayer returned to Virginia for two weeks during 2006. The Taxpayer also maintained a Virginia driver's license that was renewed in 2006, and continued to vote in national elections by absentee ballot, The Taxpayer states that he maintained the Virginia driver's license as a convenience for the family's annual summer vacations to Virginia.

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).

While renewing his driver's license may have been for purposes of convenience for the Taxpayer, doing so demonstrates an intent to eventually return to Virginia. Providing a false statement to DMV concerning status as a Virginia resident may result in penalties imposed under Va. Code § 46.2-348. Further, voting in United States elections would appear to contradict the Taxpayer's stated intention of becoming a citizen of Country A.

Further, an individual qualified to vote in Virginia must be a resident of the precinct in which they offer to vote. See Va. Code § 24.2-101. Federal law, however, requires states to establish procedures in order to permit absentee voting in federal elections for certain overseas voters. See 42 U.S.C. § 1973ff-1. Under 42 U.S.C. § 1973ff-6(5), an overseas voter must be permitted to vote in the last place in which such individual was domiciled before leaving the United States. To comply with federal law, the Virginia Board of Elections (VBE) has established procedures allowing overseas voters to be eligible for a temporary voter registration in order to vote in elections.

The Department considers an individual's voter registration along with an individual's expressed intent, conduct, and other attendant circumstances in making a determination as to whether such individual is, a domiciliary resident of Virginia. While a Virginia voter registration would be considered as an indication of intent to establish or retain domicile in Virginia, a temporary voter registration issued by the VBE could show an intent to reside outside Virginia.

In this case, the Taxpayer indicates that he has only voted in federal elections using absentee ballots. The information provided with the Taxpayer's request is not sufficient to show whether the husband holds a permanent or temporary registration. The Taxpayer is advised to verify his voter registration status with the VBE.

After carefully considering all the facts in this case, I find that the Taxpayer successfully abandoned his domicile in Virginia and obtained a new domiciliary residence in Country A in 1997. Accordingly, the Taxpayer was not a domiciliary resident of Virginia for the 2006 taxable year. The assessment issued to the Taxpayer for the taxable year ended December 31, 2006 will be abated.

While the Department concedes the Taxpayer's Country A residency for the taxable year at issue, the Taxpayer should be aware that continuing connections with Virginia, such as possession of a Virginia driver's license, participating in elections as a registered Virginia voter, owning a home in Virginia, or other indicators of a permanent residence in Virginia, will likely continue to result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department's determination in subsequent taxable years.

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 Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Acting Tax Commissioner

AR/1-3915304508.C