Did Virginia finally uphold a 2008 residency assessment against a student who lived in two other states but kept a Virginia driver's license?

Plain-English summary

Virginia left the 2008 assessment unchanged but gave the student one final chance to prove out-of-state domicile. She said she lived in two other states while attending college full time and had paid taxes to both, but submitted no documentation supporting those claims.

She had held a Virginia driver's license since May 2005 and renewed it in June 2010. A Virginia license did not make an out-of-state domicile impossible, but the ruling treated obtaining or renewing one as a strong indicator of intent to retain Virginia domicile.

The Department had requested evidence in May 2011 and January 2012. Because none was supplied, the student had not overcome the assessment's presumption of correctness.

The Commissioner allowed one more 30-day period to submit the requested information. The published ruling therefore did not finally resolve domicile on a complete evidentiary record.

Common questions

Q: Did attending college outside Virginia automatically change domicile?
A: No. The taxpayer still had to prove physical presence and intent to establish a new permanent home.

Q: Did the Virginia driver's license decide the case by itself?
A: No, but it was a strong Virginia-domicile indicator.

Citations and references

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

Subject

No objective evidence to claim not a resident of Virginia for taxable year.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-113

Original ruling text

July 17, 2012

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 you * (the "Taxpayer") for the taxable year ended December 31, 2008.

FACTS

The Department received information from the Internal Revenue Service (IRS) that tax documents for the 2008 taxable year were sent to the Taxpayer at a Virginia address. The Department requested additional information from the Taxpayer in order to determine her domicile. When the Taxpayer did not respond to the information request, the Department issued an assessment. The Taxpayer appeals the assessment, contending she was not a resident of Virginia for the 2008 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.

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 or 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 states she lived in two states during the 2008 taxable year, * (State A) and *** (State B), where she attended college as a full time student. The Taxpayer contends she paid state taxes to both State A and State B in 2008, but she offers no documentation to substantiate this claim.

Motor vehicle reports indicate the Taxpayer held a Virginia driver's license since May 2005 and renewed her license in June 2010. 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 letters dated May 18, 2011 and January 27, 2012, the Department requested information to verify the Taxpayer's claim of domicile outside Virginia. The Taxpayer has provided no objective evidence that she was domiciled in another state during the year at issue.

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 he was not subject to income tax in Virginia. In this case, the Taxpayer has provided no objective evidence to show that the Department's assessment is erroneous.

Because the Taxpayer has failed to furnish information requested, there is no basis to revise the assessment. I will, however, grant the Taxpayer one more opportunity to provide the information requested to substantiate her claim that she was not a domiciliary resident of Virginia during the 2008 taxable year. The documentation must be provided within 30 days from the date of this letter. Otherwise, the Taxpayer should remit payment of tax and interest within 30 days to avoid the accrual of additional interest. Please send the requested information or payment to the Department's Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attn: *.

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 Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1-4862344075.D