Were spouses full-year Virginia residents for 2006 even though one did not obtain Virginia employment until October?

Subject

Taxpayers were domiciliary residents of Virginia

Plain-English summary

Virginia upheld a full-year 2006 resident assessment. The married couple filed a part-year return because they said the husband did not obtain Virginia employment until October. Virginia focused instead on domicile—the permanent home a person intends to return to.

The husband obtained a Virginia driver's license in 2004. The couple leased a Virginia apartment in September 2005, filed a 2005 Virginia part-year return, moved to another Virginia apartment in 2006, and had a Virginia-registered vehicle. The wife obtained a Virginia driver's license in 2006.

Their only evidence of another state connection was a 2006 part-year return. They did not show a permanent home, indefinite employment, registered property, or driver's licenses in another state during 2006. Their need to move periodically for work did not establish a new permanent or indefinite domicile elsewhere.

What this means for you

• Domicile does not begin only when Virginia employment begins.
• Licenses, housing, vehicle registration, prior returns, and out-of-state ties are evaluated together.
• A part-year return in another state does not by itself prove a Virginia domicile was abandoned.
• The taxpayer bears the burden of establishing a domicile change.

Common questions

Were the taxpayers physically in Virginia all year?

The ruling decided domiciliary residency based on their established Virginia ties and failure to prove a new domicile elsewhere; domicile can continue even during periods away.

What was the result?

The 2006 assessment was upheld.

Citations and references

• Va. Code § 58.1-302.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-58

Original ruling text

April 13, 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 "Taxpayers") for the taxable year ended December 31, 2006. I apologize for the delay in responding to your appeal.

FACTS

The Taxpayers, a husband and wife, filed a Virginia part-year income tax return for the 2006 taxable year. Under review, the Department determined the Taxpayers were domiciliary residents of Virginia for the entire taxable year and issued an assessment. The Taxpayers filed an appeal, contending they filed a part-year resident return because they did not obtain employment in Virginia until October 2006.

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 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 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.

The Department concedes that it is difficult to know whether a taxpayer intends to return to his or her original domicile. The Department determines a taxpayer's intent through the information provided. In this case, the Taxpayers have the burden of proving that they established domicile in another state and abandoned their Virginia domicile. If the evidence is inadequate to meet this burden, the Department must conclude that the Taxpayers intended to maintain the Virginia domicile.

The Taxpayers performed a number of actions consistent with obtaining and maintaining a domicile in Virginia. The husband obtained a Virginia driver's license in 2004. In September 2005, the Taxpayers leased an apartment in Virginia and filed a part-year Virginia return for the 2005 taxable year. They moved to another apartment in Virginia in 2006. The wife obtained her Virginia driver's license in 2006. They also had an automobile registered in Virginia in 2006.

The only evidence provided showing a connection with another state is a 2006 part year return filed with * (State A). The Taxpayers indicate that the nature of the husband's occupation necessitates that they move periodically in order to follow job opportunities. However, the Taxpayers cannot show that they established a permanent place of abode, engaged in employment for an indefinite period of time, registered property, or obtained drivers' licenses in any other state during 2006.

Based on the evidence, the Taxpayers were domiciliary residents of Virginia for the 2006 taxable year. Accordingly, the assessment for the 2006 taxable year is upheld.

A schedule showing the current balance due is enclosed. Payment of the balance due should be sent to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attention: *. No additional interest will accrue provided the outstanding balance is paid within 30 days from the date of this letter.

The Code of Virginia sections cited, along with other reference documents, are available on-line in the Tax Policy Library section of the Department's website, located at www.tax.virginia.gov. If you have any questions about this determination, you may contact * at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-3829616626.E