Did an out-of-state return and voter registration overcome evidence from a Virginia driver's license and vehicle registrations?

Plain-English summary

Virginia upheld the taxpayer's 2007 domiciliary-resident assessment because the available evidence did not prove that his domicile was in the other state. He produced an out-of-state resident income-tax return and voter-registration card and said he visited family property in Virginia on weekends.

Against that evidence, he surrendered his other-state driver's license and obtained a Virginia license in March 2007, renewed it in 2010, and maintained two vehicles and a trailer registered in Virginia. Virginia law required a license applicant to certify Virginia residency, making a new or renewed license a strong indicator of domiciliary intent.

The Department requested more documentation and later a domicile questionnaire. The taxpayer supplied neither. Because an assessment was presumed correct and the taxpayer bore the burden of proving it wrong, Virginia found no basis to abate it.

What this means for you

• Domicile is decided from the full record, not one declaration or document.
• A new or renewed Virginia driver's license strongly signals Virginia residency intent.
• Vehicle registrations can reinforce the domicile inference.
• Answer domicile questionnaires with complete, consistent supporting records.

Common questions

Q: Does keeping a Virginia driver's license always establish domicile?
A: No. The ruling said a person can establish domicile elsewhere despite retaining one, but obtaining or renewing it is strong evidence.

Q: What evidence supported the other state?
A: A resident income-tax return and voter-registration card.

Q: Why did the assessment remain?
A: The taxpayer did not provide the additional information needed to carry his burden of proof.

Citations and references

• Va. Code §§ 58.1-205, 58.1-219, 58.1-302, and 58.1-1826.
• Va. Code § 46.2-323.1.
• Virginia Public Documents 00-151 (August 18, 2000) and 02-149 (December 9, 2002).

Subject

Virginia domicile

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-171

Original ruling text

September 30, 2011

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 taxable year ended December 31, 2007.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that third-party financial documents for the 2007 taxable year were sent to the Taxpayer at a Virginia address. A review of the Department's records indicated that the Taxpayer had not filed a Virginia individual income tax return. Responding to an inquiry by the Department, the Taxpayer provided documents showing that he was registered to vote and filed an individual income tax return in * (State A). Under audit, the Department discovered that the Taxpayer had obtained a Virginia driver's license in March 2007. Information obtained concerning the Taxpayer's domicile was inconclusive. As a result, the Department issued an assessment to the Taxpayer as a

domiciliary resident of Virginia.

The Taxpayer appeals the assessment, contending he was a resident of State A during 2007.

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 or country, 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.

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 domicile.

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 Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer has provided documents indicating he was a resident of State A during the taxable year at issue. The information provided as evidence of his domicile in State A include a copy of his taxabIe year 2007 State A individual income tax return, filed as a resident, and a copy of a State A voter registration card. The Taxpayer states that he visited family property in Virginia on weekends and had some mail delivered to that Virginia address.

The Taxpayer also engaged in a number of activities indicative that he was domiciled in Virginia. The Taxpayer surrendered his State A driver's license and obtained a Virginia driver's license in March 2007. He renewed the Virginia license in 2010. In addition, he maintained two vehicles and a trailer registered in Virginia during 2007.

Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." 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 the applicant is a Virginia resident. A 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 they retain a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or 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).

By letter dated June 27, 2010, the Department requested the Taxpayer to provide additional documentation to support his claim. When no response was received, the Department requested completion of a domicile questionnaire in February 2011. To date, the Taxpayer has not provided the requested information.

Virginia Code § 58.1-219 allows the Department the authority to investigate any books and records of a taxpayer in order to ascertain the proper tax liability. Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer to show that the Department's assessment is erroneous. Further, Va. Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to the taxpayer's willful failure or refusal to provide the Department with necessary information as required by law.

The Taxpayer has not provided the information requested during the audit and the pending appeal to substantiate his claim that he was not a domiciliary resident of Virginia during the taxable year at issue. Therefore, there is no basis to adjust or abate the assessment.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4593613233.E