Did a taxpayer successfully abandon Virginia domicile after moving to another state for work?

Plain-English summary

Virginia found that the taxpayer abandoned Virginia domicile and established domicile in State A during 2014. He began working there, leased a residence, obtained a State A driver's license, registered his vehicle and registered to vote, and continued living there after 2014.

His only retained Virginia connection was a mailing address used for tax documents and refunds. He said he spent no days in Virginia during the year. Considering the complete facts, Virginia abated the resident income tax assessment.

Common questions

Did filing a part-year State A return prevent the domicile change? No. Virginia relied on the taxpayer's broader conduct and continuing residence.

Was keeping a Virginia mailing address decisive? No. It was explained as a delivery convenience and was the only remaining Virginia contact.

Citations and references

• Va. Code § 58.1-302

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-70

Original ruling text

May 2, 2018

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, 2014.

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 2014 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 his income was taxable in Virginia. When a response was received indicating the Taxpayer filed a part-year resident income tax return in * (State A) because he might not remain indefinitely in State A, the Department determined Taxpayer to be a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was an actual resident of State A.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia 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 has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer took a number of actions consistent with establishing domicile in State A. He began employment in State A, and had State A taxes withheld from his pay. In addition, he leased a personal residence, registered his vehicle, and registered to vote in State A. He also obtained a State A driver's license. The Taxpayer has continued to reside in State A since 2014.

The Taxpayer's only retained contact with Virginia was the address to which his tax reporting documents were mailed. According to the Taxpayer, this was done to allow for the receipt of tax refunds, which cannot be sent to a post office box. Further, he asserts he did not spend a single day in Virginia during the 2014 taxable year. The Taxpayer did not maintain any other connections with Virginia.

After carefully considering the information presented, the Department finds that the Taxpayer abandoned his Virginia domicile and established a new domicile in State A in 2014. Therefore, he was not taxable as a domiciliary resident of Virginia for the 2014 taxable year. Accordingly, the assessment will be abated.

The Code of Virginia section cited is 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/1532.A