Did a couple establish domicile outside Virginia despite keeping a historic Virginia home, mail address, and old driver's licenses?

Subject

Couple proved a 2003 domicile change despite retaining Virginia ties

Plain-English summary

Virginia found that the couple established a new domicile outside the Commonwealth by the end of 2003 and abated their 2005 assessment. The husband began working in the other state in 2002, and the couple bought a permanent home there in July 2003.

They retained meaningful Virginia ties. Their historic Virginia home was not rented, they returned roughly every other week for maintenance and family visits, and the husband used its address for tax documents and credit-card statements. Both had renewed Virginia driver's licenses in December 2003.

The other-state ties ultimately carried more weight. The couple spent 280 days there and 85 days in Virginia during 2005. The Virginia license renewals showed they were still Virginia domiciliaries when renewed, but they did not renew again. When contacted in 2008, they surrendered the licenses, obtained licenses in the other state, and registered to vote there.

Virginia treated domicile change as a process rather than a single event. Despite some unfinished steps and continuing Virginia ties, the permanent home and more substantial connection to the other state proved an intent to remain there permanently or indefinitely. The 2005 assessment was removed.

What this means for you

• Retaining a Virginia house or mailing address does not automatically prevent a domicile change.
• Employment, a permanent new home, time spent, licenses, voting, and overall conduct are considered together.
• Renewing a Virginia license is strong evidence of Virginia intent at that time, but later conduct can show a completed change.
• Day counts supported the result here but domicile still turned on the complete facts.

Common questions

How many days did the couple spend in each state during 2005?

They spent 280 days in the other state and 85 days in Virginia.

Why did they keep the Virginia home?

They cited concerns about its historical designation, maintenance needs, and visits to the husband's parents.

What happened to the 2005 assessment?

It was abated.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-80

Original ruling text

May 18, 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, 2005. I apologize for the delay in responding to your letter.

FACTS

Information provided to the Department by the Internal Revenue Service showed that the Taxpayers, a husband and wife, used a Virginia address to receive third-party information returns for the 2004 and 2005 taxable years. Based on this evidence and information subsequently provided by the Taxpayer, the Department determined the Taxpayers were domiciliary residents of Virginia, and assessments were issued for the 2004 and 2005 taxable years.

The Taxpayers filed a Virginia resident income tax return for the 2004 taxable year; therefore, the assessment for that taxable year has been abated. However, the Taxpayers contend that they were domiciliary residents of * ("State A") during the 2005 taxable year, and were not subject to individual income tax in Virginia. As such, the Taxpayers request abatement of the assessment for the 2005 taxable year.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. Code § 58.1-302. Domiciliary residence means the permanent place of residence of a taxpayer or the place to which he or she intends to return even though he or she may actually reside elsewhere. For an individual to change 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 person is physically present with the intention to remain there permanently or indefinitely.

A Virginia domiciliary resident who has not abandoned his Virginia residency continues to be subject to Virginia taxation. An actual resident of Virginia means an individual who, for an aggregate of more than 183 days of the taxable year, maintained a place of abode within Virginia.

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 Department concedes that it is difficult to know whether an individual intends to return to Virginia. The individual has the burden of proving abandonment of his or her Virginia domicile. If the information is inadequate to meet this burden, the Department will conclude that he or she intended to return to Virginia.

The Taxpayers performed a number of actions that are consistent with retaining a domicile in Virginia. They maintained a permanent place of abode in Virginia. The Virginia home was not rented because of concerns about maintaining its historical designation. In fact, the Taxpayers returned approximately every other week to perform maintenance and to use it for a stopping-off point for visits to the husband's parents.

The husband also admits using a Virginia address to receive tax information returns and credit card statements. He states that, while living in temporary housing in State A, he needed a street address as his primary address in order to use his employer's credit card. Mail delivery, however, was only available through a post office box due to his proximity to the local post office in State A. Because of the regularity with which the husband traveled to Virginia, he had mail delivered to the home in Virginia.

The Taxpayers also renewed their Virginia drivers' licenses in December 2003. 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 a statement that certifies that the applicant is a Virginia resident. AP. D. 10-80 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 or she retains a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, 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). The Taxpayers renewed driver's licenses in 2003, but were merely retaining them in 2005 because they did not subsequently renew them.

The Taxpayers also performed actions indicative of obtaining a domicile in State A. The husband obtained employment in State A in 2002, whereupon he moved to State A. In July 2003, they purchased a home in State A. The Taxpayers spent 280 days in State A and only 85 days in Virginia during the 2005 taxable year. Further, upon being contacted by the Department in 2008, the Taxpayers surrendered their Virginia drivers' licenses, obtained State A drivers licenses and registered to vote in State A.

The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. The facts in this case show that Taxpayers were still domiciliary residents of Virginia in 2003 when they renewed their driver's licenses. That same year, however, they established a permanent place of abode in State A. Although continuing to receive mail and maintaining a home in Virginia continued to show ties to the Commonwealth, the Taxpayers clearly established more substantial ties to State A by the end of 2003. Thus, while some steps were not completed in 2003, it is my determination that the Taxpayers have met their burden of proving that they intended to acquire another domicile with the intention to remain there permanently or indefinitely in 2003. Accordingly, the outstanding assessment for the 2005 taxable year has been abated.

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

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2329090348.E