Did the taxpayer prove that she had abandoned Virginia domicile during 2008?

Plain-English summary

Virginia abated the taxpayer's 2008 income-tax assessment because she proved that she had abandoned Virginia domicile and established domicile in another state. She showed employment, resident income-tax returns, and voter registration in the other state.

The retained Virginia driver's license and the Virginia address on her 2008 federal return counted against her. But she explained that the return was filed after she moved to Virginia in 2009, and the Department found that the complete record established her non-Virginia domicile during 2008.

Virginia cautioned that continuing connections such as vehicle registration, Virginia addresses on primary financial documents, or a reinstated Virginia driver's license could prompt future residency inquiries. The taxpayer reinstated her Virginia license in 2012, which the Department called a strong indication of intent to establish Virginia domicile then.

What this means for you

• Changing domicile requires both abandoning the old home without intent to return and establishing a new permanent or indefinite home elsewhere.
• Employment, resident tax returns, voter registration, property, family connections, licenses, and addresses all matter.
• A Virginia driver's license is strong evidence of Virginia intent, but it is not automatically decisive.
• Evidence must be tied to the particular tax year; later moves or filings do not necessarily establish the earlier year's domicile.

Common questions

Q: Did keeping a Virginia driver's license automatically make the taxpayer a Virginia resident?
A: No. It was a significant factor, but the Department weighed it with all other evidence.

Q: Why did the Virginia address on the federal return not control?
A: The taxpayer explained that the 2008 return was filed only after she moved to Virginia in 2009.

Q: What happened to the 2008 assessment?
A: Virginia abated it.

Citations and references

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

Subject

Taxpayer demonstrated her intent to abandon Virginia as her domicile

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-43

Original ruling text

March 29, 2013

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, 2008. I apologize for the delay in responding to your letter.

FACTS

The Department received information from the Internal Revenue Service (IRS) that the Taxpayer may have income subject to Virginia income tax. The Department requested information to verify whether the Taxpayer was subject to Virginia income tax. When the Taxpayer failed to respond, an assessment was issued based on the information available to the Department. The Taxpayer appeals the assessment, contending she was not a resident of Virginia during the 2008 taxable year and should not be subject to Virginia's income tax.

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 another country who has not abandoned his Virginia residency continues to be subject to Virginia taxation.

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.

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.

The Taxpayer performed a number of actions to show she established domicile in * (State A) during the taxable year at issue. The Taxpayer provided evidence that she obtained employment, filed resident income tax returns, and registered to vote in State A. While the Taxpayer used a Virginia address when filing her 2008 federal income tax return, she contends that all 2008 income tax returns were filed after she moved to Virginia in 2009.

In addition to using a Virginia address when filing her 2008 federal income tax returns, the Taxpayer held a Virginia driver's license from November 2006 until it expired in December 2011. 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).

Based on the information and evidence provided, the Taxpayer has successfully demonstrated her intent to abandon Virginia as her domicile during the 2008 taxable year. As such, the assessment will be abated.

The Taxpayer should be aware, however, that continuing connections with Virginia, such as maintaining vehicle registrations and using a Virginia address for primary financial documents, or other indicators of a permanent residence in Virginia, will likely continue to result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. For example, the Taxpayer reinstated her Virginia driver's license in April 2012, a strong indication that she intends to establish her domiciliary residence in Virginia. Because the determination of residency is dependent on all attendant facts and circumstances, a change in such facts could result in a change in the Department's determination in subsequent taxable years.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules, and Decisions 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/1-5020153264.D