Did a merchant mariner abandon Virginia domicile by taking an indefinite out-of-state job and using motels or a training center between voyages?

Subject

Merchant Seamen: Virginia domiciled not completely abandoned

Plain-English summary

Virginia held that the merchant mariner remained a Virginia domiciliary resident in 2009. He had accepted indefinite employment in another state and established a local post-office box, but when not at sea he stayed at the employer's training center or in motels rather than establishing a permanent abode there.

His Virginia ties continued. He remained registered to vote in Virginia, married a Virginia resident who stayed in the state, returned periodically to visit her, gave her power of attorney over his Virginia affairs, and kept a Virginia driver's license that he renewed in 2011. He also used a Virginia address on his federal return.

To change domicile, he had to both abandon Virginia with no intent to return and acquire a new domicile through presence and an intent to remain permanently or indefinitely. After weighing all circumstances, the Department found he had not completed the first step.

Result: the 2009 assessment was upheld.

What this means for you

• Work in another state, even for an indefinite period, does not alone change domicile.
• Temporary lodging and a post-office box may be weaker evidence than a permanent residence.
• Spouse location, voter registration, delegated affairs, return addresses, visits, and driver's-license actions all matter.
• Renewing a Virginia license is a strong indicator because the application certifies Virginia residency.

Common questions

Q: Did being at sea prevent Virginia domicile?
A: No. The issue was whether he abandoned Virginia and established a new domicile elsewhere, not how much time he spent aboard ship.

Q: Was the out-of-state job irrelevant?
A: No. It supported his claim, but the Department found the remaining Virginia ties and lack of a permanent new abode more persuasive.

Q: Can someone keep a Virginia license after changing domicile?
A: The ruling said it is possible, but obtaining or renewing the license is a strong indicator of Virginia intent.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-45

Original ruling text

March 28, 2014

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you seek correction of the Virginia individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2009. 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. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. When no response was received, the Department issued an assessment.

The Taxpayer subsequently contacted the Department to assert that the assessment was invalid because he had become a resident of * (State A) after obtaining employment there in 2008. Under review, the Department determined that the Taxpayer was taxable as a domiciliary resident of Virginia because he had retained a Virginia driver's license, filed his federal income tax return using a Virginia address and failed to provide sufficient information to support a change of domiciliary residency to State A. The Taxpayer appeals the assessment, contending he was a resident of State A during 2009.

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

The Taxpayer has provided some evidence of his intent to establish domicile in State A in 2008. The Taxpayer's State A employer has verified that the Taxpayer has been employed for an indefinite period as a merchant mariner since May 2008. The Taxpayer has also established a local post office box. The Taxpayer, however, never established a permanent place of abode in State A because he stayed either at the company's training center or motels when not at sea.

The Taxpayer also performed several activities consistent with retaining domicile in Virginia. He continued to hold a Virginia voter's registration. In addition, he married a Virginia resident in 2008. The wife remained in Virginia, and the Taxpayer returned periodically to visit her. The Taxpayer has given his wife power of attorney to handle his affairs in Virginia. He also maintained his Virginia driver's license, which he renewed in September 2011.

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 Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains 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 (12/9/2002).

The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. After carefully weighing all of the evidence, I find that the Taxpayer did not successfully abandon his Virginia domicile in 2008. As such, the Taxpayer remained a Virginia domiciliary resident for the 2009 taxable year.

Accordingly, the assessment for the 2009 taxable year is upheld. An updated bill, with interest accrued to date, will be mailed to the Taxpayer shortly. No further interest will accrue provided the outstanding balance is paid within 30 days from the date indicated on the revised bill.

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/1-5434948155.M