Does taking a job in another state for one year end Virginia domicile when the taxpayer keeps Virginia ties and shows little evidence of establishing a new permanent home?

Plain-English summary

The IRS alerted Virginia that a taxpayer might have needed to file a 2015 Virginia return. When the taxpayer did not answer the Department's information request, Virginia assessed tax. He appealed, saying he had moved to another state for employment.

The Department upheld Virginia domiciliary residency. An out-of-state W-2 showed employment, but the taxpayer provided little evidence that he established a permanent or indefinite home there. He also kept his Virginia driver's license and filed Virginia resident returns for the years immediately before and after 2015.

Virginia's two residency tests

Va. Code § 58.1-302 recognizes:

• A domiciliary resident, whose permanent home is Virginia and who intends to return even while living elsewhere; and
• An actual resident, who maintains a Virginia place of abode for more than 183 days during the year.

To change domicile, a taxpayer must prove both actual abandonment of Virginia with no intent to return and acquisition of a new domicile through physical presence plus intent to remain permanently or indefinitely. The person claiming the change bears the burden of proof.

Why the out-of-state job was not enough

The taxpayer said he relocated to State A for work and supplied a W-2 from a State A employer. He did not provide other documentation showing conduct consistent with establishing a new domicile there.

His Virginia ties pointed the other way:

• He filed Virginia resident returns for the years immediately before and after 2015.
• He retained the Virginia driver's license renewed in March 2013.
• His circumstances fit the Department's repeated view that temporary employment outside Virginia, without more, generally does not show abandonment of Virginia domicile.

Physical absence alone does not end domicile. Considering the limited State A evidence and continuing Virginia connections, the Department concluded he remained taxable as a Virginia resident for 2015.

What this means for you

• A job and W-2 in another state may be insufficient. Domicile depends on the complete pattern of conduct, not employment alone.
• You must prove two changes at the same time: abandonment of Virginia and establishment of a new permanent or indefinite home.
• Driver's licenses and return filings matter. Keeping a Virginia license and filing Virginia resident returns around the disputed year can undermine a claimed move.
• Answer information requests. When a nonfiler does not provide requested facts, the Department may assess based on the information available.

Common questions

Q: If I work outside Virginia all year, am I automatically no longer domiciled in Virginia?

A: No. You must also show that you abandoned Virginia with no intent to return and established a new domicile where you intended to remain permanently or indefinitely.

Q: Was the taxpayer physically in Virginia during 2015?

A: The ruling says he may not have been, but physical absence did not end domicile because he retained Virginia connections and showed little evidence of a new State A domicile.

Q: What evidence hurt the taxpayer?

A: His Virginia driver's license, Virginia resident returns for the surrounding years, and lack of documentation beyond the State A job and W-2.

Citations and references

• Va. Code § 58.1-302 — domiciliary and actual residency
• Related Virginia rulings cited on temporary employment and domicile: P.D. 86-219, P.D. 94-353, P.D. 96-207, P.D. 02-33, P.D. 05-8, P.D. 10-134, P.D. 15-142

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 19-88

Original ruling text

August 15, 2019

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, 2015.

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 2015 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 not received, the Department issued an assessment. The Taxpayer appeals, contending he was a 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 indicates that he relocated to State A to pursue employment, and provided a W-2 from a State A employer as evidence. No other documentation has been provided to show any other action consistent with changing his domicile during 2015.

The Taxpayer also maintained his connections with Virginia. He filed Virginia resident income tax returns for the years immediately preceding and following the 2015 taxable year. The Taxpayer also retained his Virginia driver’s license, which was renewed in March 2013. While the Taxpayer has provided evidence that he obtained employment outside of Virginia, the Department has repeatedly ruled that individuals generally lack the intent to abandon their Virginia domicile when they engage in temporary employment outside of the Commonwealth. See Public Document (P.D.) 86-219 (11/3/1986), P.D. 94-353 (11/23/1994), P.D. 96-207 (8/26/1996), P.D. 02-33 (3/13/2002), P.D. 05-8 (2/1/2005), P.D. 10-134 (7/12/2010) and P.D. 15-142 (6/30/2015).

Once established, an individual’s domicile does not necessarily require physical presence in order to be maintained. While the Taxpayer may not have been physically located in Virginia during the 2015 taxable year, he maintained a number of the types of connections with Virginia indicative of an individual who intended to return to Virginia even though he resided elsewhere. Coupled with the fact that the Taxpayer has shown little evidence he intended to establish domicile in State A, the Department cannot grant the Taxpayer’s request for the abatement of the assessment of Virginia individual income tax for the taxable year ended December 31, 2015.

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/1912.A

Related Documents

86-219

94-353

96-207

02-33

05-8

10-134

15-142