Did a military spouse have to marry or live with the servicemember in their domicile state to receive Virginia's 2009 spouse exemption?

Plain-English summary

Virginia granted the military spouse's 2009 withholding refund. The couple shared State A domicile, and the spouse moved to Virginia only to accompany the servicemember to a duty station.

Beginning with 2009, the Servicemembers Civil Relief Act protected a spouse from losing or acquiring domicile merely by being present with a servicemember under military orders, if both spouses had the same domicile. The spouse could not simply elect that domicile; her own facts had to establish and preserve it.

Here, the spouse had maintained a State A driver's license since 1991 and voter registration since 2001 while accompanying the servicemember on active-duty tours. Those connections showed continued State A domicile. Their marriage in State B did not change the analysis, and Virginia issued the refund.

Common questions

Q: Must a military couple marry in their domicile state?
A: No. Virginia said the wedding location had no bearing on the Act's requirements.

Q: Can a spouse simply choose the servicemember's domicile?
A: No. The spouse must establish and maintain that domicile under the facts and circumstances.

Citations and references

• 50 U.S.C. § 571 et seq. (Servicemembers Civil Relief Act, as cited in the ruling).
• Virginia Tax Bulletins 9-10 and 10-1.
• Virginia Public Documents 05-92 and 05-150.

Subject

The Servicemembers Civil Relief Act (the "Act")

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-16

Original ruling text

March 5, 2012

Re: § 58.1-1824 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek a refund of the Virginia individual income tax withheld for * (the "Taxpayers") for the taxable year ended December 31, 2009. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer and her spouse, a military service member, were domiciliary residents of * (State A). In October 2003, the Taxpayer moved to *** (State B) to marry the service member. In 2008, the Taxpayer accompanied the service member to a Virginia duty station. The Taxpayer filed a claim for refund for the 2009 taxable year for Virginia individual income tax withheld. The Department denied the claim on the basis that the Taxpayer and the service member did not reside in State A as husband and wife.

The Taxpayer filed an appeal, contending that Virginia Tax Bulletin (VTB) 10-1 (1/29/2010) does not require a military spouse to marry a service member in the state where they were domiciliary residents, but only mandates that they maintain the same domicile.

DETERMINATION

The Servicemembers Civil Relief Act (the "Act"), codified at 50 U.S.C. § 571 et seq. , 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 did not apply to the spouses of military and naval personnel before 2009. The Department has ruled that residency status of a taxpayer requires analysis separate from their military spouse. See Public Document (P.D.) 05-92 (6/9/2005) and P.D. 05-150 (9/8/2005).

The Act was amended, effective for 2009 taxable year and thereafter, to provide that a spouse can neither lose nor acquire domicile or residence in a state when the spouse is present in the state solely to be with the service member in compliance with the service member's military orders if the residence or domicile is the same for both the service member and spouse. See VTB 9-10 (11/12/2009) and VTB 10-1.

In VTB 10-1, the Department explained that the domicile of a military spouse must be the same as the service member in order to be exempt from Virginia's income tax. The spouse cannot simply elect to claim the service member's domicile. In order to claim a domicile in another state, the spouse must have (i) resided in the other state with the intent to make a permanent home there, and (ii) not abandoned that domicile when moving to reside with the service member or for any other reason. The determination of a military spouse's domicile requires analysis of the facts and circumstances. The elements that may be examined include:

1. Whether the person claiming exemption is married to a service member who is present in Virginia pursuant to military orders.

2. The service member's domicile.

3. The spouse's domicile and the circumstances in which it was established.

4. The extent to which the spouse has maintained contacts with the domicile.

5. Whether the spouse has taken any action in Virginia that is inconsistent with

maintaining a domicile elsewhere.

In general, the Department will not seek to tax the spouse of a military service member so long as the spouse maintains sufficient connections with service member's domiciliary state to indicate intent to maintain domicile there. Such connections would include obtaining and retaining a driver's license, registering to vote and voting in local elections, registering an automobile, and exercising other benefits or obligations of a particular state. As long as the spouse of a military service member maintains such connections, he or she would be considered to be a resident of the other state even though they work, live, and establish a place of abode in Virginia.

In this case, the Taxpayer moved out of State A, married the service member and accompanied him on his tours of active duty service. The Taxpayer has maintained her State A driver's license since January 1991, and has been registered to vote in State A since August 2001. The evidence shows the Taxpayer's intent to maintain her domicile in State A. The fact that the Taxpayer was married to the service member in State B has no bearing on whether the Taxpayer meets the requirements of the Act. Both the Taxpayer and the service member were domiciliary residents of State A during the 2009 taxable year. Accordingly, the Taxpayer's claim for refund is granted. A refund based on the Taxpayer's claim will be issued shortly.

The public documents cited, along with other reference documents, 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 Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4794014751.D