Did a military spouse remain a Virginia resident in 2003 after leaving her job and home to establish a household and employment abroad?

Subject

Military spouse established foreign domicile and was not a 2003 Virginia resident

Plain-English summary

Virginia found that the military spouse abandoned her Commonwealth domicile when she moved abroad in 2001 and was not a resident in 2003. She had established Virginia domicile after following her husband to a duty station in 1999.

For the overseas move, she ended her Virginia employment, vacated the residence, removed her child from Virginia schools, and established a permanent home abroad. She enrolled the child there, obtained a driving permit, and took employment with no evidence that it was temporary.

Some ties remained: possessions stayed in Virginia storage, and she kept a Virginia driver's license obtained shortly before departure. But she did not renew it until 2006, after returning to Virginia. The retained license did not outweigh the complete move.

Virginia analyzed her domicile separately because the military-member protection then cited did not apply to spouses. On her own facts, she had no Virginia domicile or more-than-183-day actual residence in 2003. The assessment was abated.

What this means for you

• A military spouse's domicile was separately analyzed under the law applied to 2003.
• Ending work and housing, moving family, and establishing indefinite employment and a permanent home elsewhere strongly support abandonment.
• Retaining stored property or an old license does not always control.
• Later military-spouse legislation may change the analysis for newer years.

Common questions

What actions showed foreign domicile?

Leaving the Virginia job and home, moving the child, establishing housing, school, driving permission, and employment abroad.

Did the Virginia license defeat the claim?

No. It was retained but not renewed until after she returned.

What happened to the 2003 assessment?

It was abated.

Citations and references

• Va. Code §§ 58.1-302 and 46.2-323.1.
• 50 U.S.C. § 574, as cited in the ruling.
• Virginia Public Documents 86-219, 96-207, 02-33, 96-293, 05-92, 05-150, 02-149, and 00-151.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-39

Original ruling text

April 8, 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 assessment issued to * (the "Taxpayer") for the 2003 taxable year.

FACTS

The Taxpayer is a foreign national granted permanent residency status in 1987 in * (State A). She moved often to follow her husband, a domiciliary resident of (State B) on active duty in the military, as he was assigned to various temporary duty stations in the United States and abroad. The Taxpayer moved to Virginia in 1999 when her husband was transferred to a duty station in Virginia. In 2001, the husband was transferred to a duty station in ** (Country A). The Taxpayer moved to Country A, but returned to Virginia when the husband was transferred back to the United States in 2004.

As a result of information obtained from the Internal Revenue Service (IRS), the Department issued an individual income tax assessment to the Taxpayer for the 2003 taxable year. The Taxpayer contests the assessment, asserting that she was not a domiciliary resident of Virginia for the 2003 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 the permanent place of residence of a taxpayer and the place to which he intends to return even though 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. 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 Virginia domiciliary resident, therefore, working in other parts of the country or in another country 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.

In the case of individuals who engage in temporary work assignments overseas, the Department has ruled that such activities indicate an intent to abandon Virginia domicile is lacking. See Public Document (P.D.) 86-219 (11/3/1986), P.D. 96-207 (8/26/1996), and P.D. 02-33 (3/13/2002). The Soldiers and Sailors Civil Relief Act of 1940 (the "Act") (50 U.S.C. § 574) provides that military and naval personnel do not abandon their legal domicile solely by complying with military orders that station them in a different state or country whether permanently or temporarily.

The Act does not apply to the spouses of military and naval personnel for the years in question. In P.D. 96-293 (10/18/1996), the Department found that a military spouse was considered an actual resident of Virginia, subject to Virginia individual income taxation as a resident, because he resided in Virginia for more than 183 days during the taxable year. Further, the Department has ruled that residency status of a taxpayer requires analysis separate from their military spouse. See P.D. 05-92 (6/9/2005) and P.D. 05-150 (9/8/2005).

Thus, the Department must examine all the facts and circumstances regarding the military spouse in order to determine the domiciliary residence of such individual. When the spouse moves to follow military personnel to a new duty station he will generally abandon his former permanent place of abode, leave his employer, take or abandon personal property, and move his family. The spouse will establish a new permanent place of abode near the new duty station, enroll children in school, and seek employment of an indeterminate duration. The spouse will generally comply with jurisdictional authorities with regard to driving permits, vehicle registrations, voting registrations, and education requirements. The spouse will also change social, charitable, and church associations. Moreover, the military member and the spouse move with no assurance that they may move back to a former duty station. Under the circumstances, it seems reasonable to conclude that a military spouse will establish domicile in Virginia when following military personnel to Virginia and abandon Virginia domicile when following them to the next duty station. To do otherwise would require the Department investigate whether a military spouse had established domicile and abandoned domicile at every duty station prior to coming to Virginia.

In this case, the Taxpayer performed a number of actions consistent with abandoning her Virginia domicile and acquiring a domicile in Country A. In 2001, the Taxpayer moved with her spouse when he was transferred to a temporary duty station in Country A. She ended her Virginia employment and vacated her Virginia residence. She established a permanent place of abode in Country A and found employment there. There is no evidence that her employment in Country A was temporary. Possessions remaining in Virginia were held in storage in Virginia. While overseas, she obtained a special driver's license from the military.

Just before moving to Country A in 2001, the Taxpayer obtained a Virginia driver's license because her license from a previous state was set to expire. 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 Taxpayer retained her Virginia driver's license while she lived in Country A, she did not renew it until 2006 after she had moved back to Virginia.

When the husband was transferred to a duty station in * (State C) in 2004, the Taxpayer returned to Virginia rather than accompany her husband to the new duty station. The Taxpayer remained in Virginia until their child graduated from school, then moved to back to State B in 2007. The Taxpayer filed Virginia income tax returns as a resident for the 2004 through 2006 taxable years.

Based on the available information, the Taxpayer established her domicile in Virginia in 1999. When the spouse was transferred to a new duty station in Country A, the Taxpayer accompanied him there and engaged in actions to abandon her Virginia domicile. She relinquished her Virginia abode, left her Virginia employer, took her child out of the Virginia school system and moved to Country A. There, she established a permanent place of abode, enrolled her child in school, obtained a permit to drive in Country A, and engaged in employment of an indeterminate duration. Further, when she moved to Country A, there is no indication of any knowledge, plan or intent to move back to Virginia.

After considering all of the facts and circumstances of this particular case, I find the evidence is sufficient to show that the Taxpayer had intended to establish domicile outside Virginia in 2001, did not maintain a Virginia domicile while outside of Virginia during 2003, and that she did not return until 2004 when she changed her domicile back to Virginia. While such a move was temporary because it was dependent on her husband's military assignment, her actions clearly indicate that she lacked intent to move back to Virginia once her husband's tour of duty in Country A concluded. As such, the Taxpayer was neither a domiciliary or actual resident of Virginia during the 2003 taxable year. Accordingly, the assessment issued for the 2003 taxable year has been abated.

The Code of Virginia sections and public documents 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,

Janie E. Bowen

Tax Commissioner

AR/1-2284543225.E