Did a taxpayer living abroad remain a Virginia resident in 2009 because she kept a Virginia license and voter registration?

Plain-English summary

Virginia found that the taxpayer was not a Virginia resident in 2009 and ordered the paid assessment abated and refunded. She had abandoned Virginia domicile and established domicile in another country by 2005.

The taxpayer moved abroad for graduate school in 2002, completed the program in 2003, and continued living and working there. She sold her Virginia residence when she left and sold her Virginia-registered vehicle after deciding in 2005 to remain abroad permanently. She later became a citizen of that country in 2010.

Virginia considered contrary ties. She retained Virginia voter registration, used it for an absentee ballot in the 2008 federal election, and renewed a Virginia driver's license in February 2009. But she had not voted in a Virginia local election since 2002, and federal law allowed an overseas voter to vote through the last U.S. domicile. She said she kept the driver's license to rent cars while visiting family.

Under Va. Code § 58.1-302, changing domicile required abandoning the former domicile without intent to return and acquiring a new domicile through presence and intent to remain permanently or indefinitely. After weighing the full record, the Department found the foreign domicile established by 2005.

The paid claim filed under Va. Code § 58.1-1824 was treated as a merits appeal under § 58.1-1821. The Department warned that renewing a Virginia driver's license or adding other Virginia ties could change the result for later years.

What this means for you

• Domicile turns on the total evidence, not one document or declaration.
• Selling a home and vehicle, long-term work, continuous residence, and citizenship can support abandonment of Virginia domicile.
• A Virginia driver's license is a strong contrary indicator and creates its own residency-compliance issue.
• Overseas federal-election voting may be evaluated differently from voting in Virginia local elections.

Common questions

Q: Did the Virginia driver's license make her a resident automatically?
A: No, but the Department treated it as a serious indicator and weighed it against the other evidence.

Q: Did absentee voting prevent a domicile change?
A: No. The ruling distinguished temporary overseas registration for a federal election from Virginia local voting.

Q: What happened to the 2009 assessment?
A: It was abated, and a refund was ordered.

Citations and references

• Va. Code §§ 58.1-1821, 58.1-1824, 58.1-302, 24.2-101, and 46.2-323.1.
• 42 U.S.C. §§ 1973ff-1 and 1973ff-6(5), as cited in the 2014 ruling.
• Virginia State Board of Elections Policy 2009-005.
• P.D. 82-39, P.D. 02-149, and P.D. 11-121.

Subject

Taxpayer was not a resident for the taxable year/ Not required to file a tax return.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-141

Original ruling text

August 13, 2014

Re: § 58.1-1824 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, 2009. I note the assessment has been paid. I apologize for the delay in responding to your appeal.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2009 taxable year. A review of the Department's records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if her income was taxable in Virginia. When the Department did not receive a response, it issued an assessment. The Department collected the assessment. The Taxpayer appeals, contending she was a resident of the * (Country A) during the 2009 taxable year.

DETERMINATION

Protective Claim

Virginia Code § 58.1-1824 permits any person who has paid an assessment of taxes administered by the Department of Taxation to file a protective claim for refund within three years of the date of an assessment. Pursuant to the authority granted the Tax Commissioner under Va. Code § 58.1-1824, a protective claim for refund can be held pending the outcome of another case before the courts or the claim may be decided based upon its merits pursuant to Va. Code § 58.1-1821. As permitted by statute, the Taxpayers' request has been treated as an appeal under Va. Code § 58.1-1821.

Residency

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 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. 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 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, situs of real or 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 the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.

The Department determines a taxpayer's intent through the information provided A taxpayer has the burden of proving that he or she abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

In this case, the Taxpayer moved to Country A to attend graduate school in 2002. It has been the Department's experience that college students rarely establish domicile where they attend college. See Public Document (P.D.) 82-39 (4/2/1982) and P.D. 11 -­ 121 (6/30/2011). The Taxpayer, however, has provided evidence of her intent to establish domicile in Country A after she completed her graduate program in 2003. The information provided indicates that the Taxpayer remained in Country A and has lived and worked there continuously since that time. By 2010, she became a citizen of Country A.

The Taxpayer also retained some connections to Virginia. She held a Virginia voter's registration which she used to vote by absentee ballot in the 2008 election. The Department has found voter registration statutes do not precisely mirror residency as it applies to income tax. Under Va. Code § 24.2-101, an individual qualified to vote in Virginia must be a resident of the precinct in which he offers to vote. This statute requires a resident to have both legal domicile and a place of abode in Virginia. For Virginia voting purposes, domicile is determined by the intention of the individual, supported by an individual's factual circumstances. See State Board of Elections (SBE) Policy 2009-005.

Federal law, however, requires states to establish procedures in order to permit absentee voting in federal elections for certain overseas voters. See 42 U.S.C. § 1973ff-1. Under 42 U.S.C. § 1973ff-6(5), an overseas voter must be permitted to vote in the last place in which such individual was domiciled before leaving the United States. To comply with federal law, the Virginia Board of Elections (VBE) has established procedures allowing overseas voters to be eligible for a temporary voter registration in order to vote in elections. In this case, the information provided indicates that the Taxpayer voted by absentee ballot in the 2008 federal election but had not voted in any Virginia local election since 2002.

The Taxpayer also continued to hold a Virginia driver's license. Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." In fact, this section states that every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has ruled that obtaining or renewing a Virginia license is a strong indicator of an individual's intent to be a domiciliary resident of Virginia. See P.D. 02-149 (12/09/2002). In this case, the Taxpayer retained her Virginia driver's license and renewed it in February 2009.

Although the Taxpayer retained some connections with Virginia, she also performed several actions indicating an intent to abandon her Virginia domicile. When she left Virginia in 2002 to attend graduate school in Country A, she sold her Virginia residence. In addition, she states that when she decided to remain in Country A permanently in 2005, she sold her vehicle, which was registered in Virginia.

The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. Of particular concern is the fact that the Taxpayer retained her Virginia driver's license and renewed it in February 2009. The Taxpayer, however, states that she kept the Virginia driver's license as a convenience so she could rent a car when visiting family in the United States. After carefully weighing this fact against the other evidence presented, I find that the preponderance of evidence shows that the Taxpayer abandoned her Virginia domicile as of 2005. I also find that the Taxpayer had established domicile in Country A by that time. As such, the Taxpayer was not a resident of Virginia for the 2009 taxable year and was not required to file a Virginia income tax return. Accordingly, the assessment issued to the Taxpayer for the 2009 taxable year will be abated and a refund will be issued.

The Taxpayer should be aware, however, that any additional connections with Virginia such as renewing a Virginia driver's license could change this determination for subsequent taxable years. In addition, the Taxpayer should be aware that Virginia law does not permit nonresidents to obtain Virginia driver's licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law.

The Code Of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules & 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/1-5604599791.M