Did an apartment-complex statement prove that a taxpayer with a Virginia W-2 address was not a Virginia actual resident in 2013?

Subject

The burden of proof is on the Taxpayer to show he was not subject to income tax in Virginia. Taxpayer has failed to meet this burden

Plain-English summary

Virginia upheld the 2013 assessment because the taxpayer did not prove he lived outside Virginia. He was domiciled in State A and said he worked temporarily in State B, but his employer issued a W-2 using a Virginia address.

The Department requested evidence about his residence. He supplied only an apartment-complex statement from State B. His State B returns for 2012 and 2014 said he was not a State B resident, and the 2012 return used a Virginia address.

Because a Virginia assessment is presumed correct, the taxpayer bore the burden of showing he was not a Virginia actual resident. The limited and inconsistent evidence did not meet that burden. Virginia also told him to reevaluate whether returns were required for 2012 and 2014.

What this means for you

• A lease or apartment statement may not be enough to prove where you actually lived for a tax year.
• Addresses and residency positions across W-2s and state returns should be consistent or explained.
• Build a year-specific record showing abode, days present, employment, and other residency facts.

Citations and references

• Va. Code §§ 58.1-205, 58.1-302, and 58.1-312(A).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-181

Original ruling text

September 24, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek a refund of the Virginia withholding payments made on behalf of * (the "Taxpayer") for the taxable year ended December 31, 2013. I apologize for the delay in responding to your request.

FACTS

The Taxpayer, a domiciliary resident of * (State A) was temporarily employed with a company located in the *** (State B) during the 2013 taxable year. The Taxpayer's employer withheld Virginia income tax. The Taxpayer filed a 2013 Virginia part-year resident individual income tax return and allocated all of his income outside of Virginia. The Taxpayer requested full refund of the all Virginia withholding payments. The Department denied the Taxpayer's request for refund and issued an assessment for additional tax and interest. The Taxpayer filed an appeal, contending he never lived or worked in Virginia.

DETERMINATION

Virginia Code § 58.1-302 defines an actual resident of Virginia as a person who, for an aggregate of more than 183 days taxable year, maintained his place of abode within Virginia. Though an actual resident may not be domiciled Virginia, he may be subject to Virginia taxation.

Because his employer issued a Form W-2 to the Taxpayer at a Virginia address, the Department requested evidence concerning the Taxpayer's residency during 2013. The only evidence provided by the Taxpayer was a statement from an apartment complex confirming residency in State B. No other evidence was provided to show he resided in State B.

Because State A does not impose income tax on its residents, the Department requested a copy of his State B return. The Taxpayer provided copies of returns for the 2012 and 2014 taxable years. The Taxpayer used a Virginia address on the 2012 State B return. Further, on both copies, the Taxpayer clearly indicates he was not a resident of State B and requested refunds of the full amount of income tax withheld.

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. Based on the information provided, the Department concludes the Taxpayer has failed to meet this burden. As such, the assessment for the 2013 taxable is up held. An updated bill will be issued shortly, which will include accrued interest. Payment of the assessment should be made within 30 days of the bill date in order to avoid the accrual of additional interest.

In addition, the Taxpayer should reevaluate his residency status for the 2012 and 2014 taxable years to determine if he had a Virginia filing requirement and, if necessary, file the appropriate returns. Under Va. Code 58.1-312 A, the Department may assess underreported tax at any time when a taxpayer fails to file a return or files a false or fraudulent return with the intent to evade tax.

The Code of Virginia sections 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/1-5830984838.D