What Virginia return was required when a taxpayer moved into the state and established domicile in August 2011?

Subject

August 2011 move required a Virginia part-year return

Plain-English summary

The taxpayer was a Virginia part-year resident beginning in August 2011. Before then he lived in another state; the evidence showed that domicile changed when he moved to Virginia.

Part-year taxable income included income and Virginia adjustments attributable to the residence period. Personal exemptions and the standard deduction could be prorated under the stated rules.

Result: the taxpayer received 30 days to file Form 760PY. Virginia would then adjust the nonfiler assessment.

What this means for you

• Use a part-year return when you establish Virginia domicile midyear.
• Report income attributable to the Virginia-residence period.
• Preserve records proving the move date and income timing.
• Filing the actual return can replace an estimated assessment.

Common questions

Q: Was the taxpayer a full-year Virginia resident?

A: No. Residence began in August.

Q: Was the assessment amount final?

A: Not if the requested part-year return was timely filed.

Citations and references

• Va. Code §§ 58.1-302 and 58.1-303.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-183

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 correction of the individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2011.

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 2011 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 to determine if his income was subject to Virginia income tax. When the Taxpayer did not respond to the information request, the Department issued an assessment. The Taxpayer filed an appeal, contending that he only resided in Virginia beginning in August 2011.

DETERMINATION

Residency

Virginia Code § 58.1-302 sets forth two classes of residents, a domiciliary resident and an actual resident. 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.

The Taxpayer asserts that he moved to Virginia in August 2011. Prior to relocating to Virginia, the Taxpayer resided in * (State A). Based on the evidence, the Taxpayer changed his domiciliary residence to Virginia in August 2011. Therefore, the Taxpayer was not a resident of Virginia for the entire 2011 taxable year.

Part-Year Residents

Virginia Code § 58.1-303 provides that a taxpayer who becomes a resident of another state during the taxable year is subject to taxation for the period in which he was a Virginia resident. Accordingly, Virginia taxable income is computed by determining income, deductions, subtractions, additions and modifications attributable to the period of residence in Virginia. In addition, part-year residents may claim a portion of their Virginia personal exemptions, but the exemptions will be prorated based upon the number of days that the taxpayer was a Virginia resident. Further, part-year residents may claim a prorated Virginia standard deduction if they claim the standard deduction for federal income tax purposes.

Because the Taxpayer changed his domiciliary residence to Virginia in August 2011, he would be considered to be a part-year resident under Virginia law. An individual who moved into Virginia during a taxable year would file a part-year return (Form 760 PY). As such, the Taxpayer should file a 2011 Form 760 PY and report only the income he received while residing in Virginia.

The requested return should be filed within 30 days of the date of this letter and mailed to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23216-7203, Attention: *. Once the return is received, it will be processed and the assessment will be adjusted accordingly. If such return is not filed within the allotted time, the assessment will be considered to be correct and collection action will resume.

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/1-5996298853.M