My spouse and I moved to another state for a multi-year teaching job we intended to be permanent, but we stayed with family there and kept our Virginia home, license, and voter registration -- does that defeat our domicile change?

Plain-English summary

The IRS flagged that this taxpayer might have owed a 2018 Virginia return. When he didn't file one after the Department's request, an assessment was issued based on the best information available. He appealed, arguing he and his wife had genuinely relocated to "State A," where he'd accepted a university professorship with a two-and-a-half-year contract (with the option for annual extensions) that they intended to be permanent -- a plan cut short only when the pandemic ended his job in 2020.

Virginia's domicile test requires a taxpayer to prove two things happening at the same time: abandoning the old domicile with no intent to return, AND acquiring a new one through actual physical presence plus intent to stay permanently or indefinitely. This ruling shows a taxpayer can lose on either half, and here the facts undercut both. On the "new domicile" side, the couple didn't get their own home in State A -- they lived in the husband's brother's house during the school year. On the "abandoned Virginia" side, the couple kept their Virginia home and returned to it every summer break (and again for good once the State A job ended), the husband kept and renewed his Virginia driver's license in 2018, kept Virginia vehicle registrations, and -- most damaging of all -- stayed registered to vote in Virginia and actually cast absentee ballots in both the 2018 and 2020 elections.

Virginia treats obtaining a voter registration and actually voting as very strong evidence that someone considers Virginia their domicile, based on a century-old Virginia Supreme Court case (Coopers Adm'r v. Commonwealth) still cited today. Combined with the failure to ever establish an independent household in State A, the Department found the couple hadn't abandoned Virginia domicile even if they sincerely intended the move to be permanent when they made it -- good intentions alone, without the concrete steps (your own residence, cutting Virginia ties) the Department expects to see, aren't enough. The assessment was upheld, though the Department confirmed the taxpayer could claim a Virginia credit for the income tax he'd already paid to State A on his professor's salary.

What this means for you

Couples or individuals taking a multi-year job assignment elsewhere while staying with family there

Living in a relative's home instead of establishing your own residence in the new location is a real weakness in a domicile-change claim -- it can look like you never actually "acquired" a new domicile in the legal sense, separate from any doubts about whether you abandoned your old one.

Anyone who kept voting in Virginia while claiming to have moved away

This is treated as very strong evidence you still consider Virginia your domicile. If you genuinely intend to abandon Virginia domicile, cancel your Virginia voter registration and register in your new state instead -- continuing to vote in Virginia elections undercuts an otherwise sympathetic domicile-change story.

Taxpayers whose planned permanent move gets cut short by unforeseen circumstances

A sincere intent for a move to be permanent, even one interrupted by something outside your control (here, a pandemic-related job loss), doesn't retroactively establish domicile if you never took the concrete steps -- your own residence, cutting Virginia ties like voting and driver's licenses -- that would have proven it during the years actually at issue.

Common questions

Q: Do I need to buy or rent my own place in a new state to establish domicile there, or can I stay with family?
A: Staying with a relative instead of establishing your own residence is a real factor working against a domicile-change claim in this ruling -- it raises doubt about whether you truly "acquired" a new domicile through independent physical presence, separate from the question of whether you abandoned your old one.

Q: Does voting in Virginia while living elsewhere for work automatically make me a Virginia domiciliary?
A: It's treated as very strong evidence of continued Virginia domicile, based on longstanding Virginia Supreme Court precedent -- not automatically dispositive on its own, but a serious factor, especially combined with other retained Virginia ties like a home, license, and vehicle registrations.

Q: If my out-of-state job ends unexpectedly and I move back to Virginia, does that undo an otherwise successful domicile change?
A: This ruling doesn't say that -- it addresses whether the domicile change was ever established in the first place during the years the job was ongoing, based on the taxpayer's actual living arrangements and retained Virginia ties, not on the fact that the job later ended.

Citations and references

• Va. Code § 58.1-302 (domiciliary resident and actual resident defined)
• Va. Code § 46.2-323.1 (driver's license applicants must certify Virginia residency)
• Va. Code § 24.2-101 and Article II, Section 1 of the Constitution of Virginia (voter residency requirements)
• Coopers Adm'r v. Commonwealth, 121 Va. 338, 93 S.E. 680 (1917) (voting in Virginia is strong evidence of domicile)
• Va. Code § 58.1-332(A) (credit for income tax paid to another state)
• P.D. 97-301 (7/7/1997) (credit limited to the lesser of tax paid to the other state or Virginia tax on the same income)
• Va. Code § 58.1-111 (assessment based on best information available)
• Va. Code § 58.1-312(A) (Department may assess underreported tax at any time for unfiled or fraudulent returns)
• P.D. 00-151 (8/18/2000) and P.D. 02-149 (12/9/2002) (driver's license retention/renewal factors in a domicile analysis)

Subject

Residency: Domicile - Failure to Established New Domicile or Abandon Virginia Credit: Tax Paid to Another State

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-137

Original ruling text

September 20, 2022

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond 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, 2018.

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 2018 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. After reviewing the information submitted, the Department determined that he was a domiciliary resident of Virginia and requested that he file a 2018 Virginia resident income tax return. When no return was received, the Department issued an assessment based on the available information. The Taxpayer appeals, contending he was a resident of * (State A).

DETERMINATION

Domicile

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 has abandoned his Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he intended to remain indefinitely in Virginia.

In this case, the Taxpayer performed some actions that may have indicated an intent to establish domicile in State A. He accepted employment as a professor at a university in State A, and resided with his wife in his brother’s home in State A during the school year. The Taxpayer’s employment contract was for a term of two and one-half years with an option for annual extensions. The Taxpayer explained that he and his wife intended for the move to State A to be permanent, but that his employment was terminated in 2020 due to the pandemic.

The Taxpayer also maintained significant connections to Virginia. He and his wife continued to own a personal residence in Virginia, which they returned to during his summer breaks in 2018 through 2020. They also returned to this residence to live again once the husband’s State A employment ended. He also continued to hold a Virginia driver’s license, which he renewed in 2018, and Virginia vehicle registrations. In addition, the Taxpayer was registered to vote in Virginia and voted by absentee ballot in 2018 and 2020.

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 Commissioner of 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 fact that an individual has a Virginia driver’s license is one factor to consider, among other possible factors, in any given domicile case. Nonresidents are not permitted to hold Virginia driver’s licenses. See Virginia Code § 46.2-323.1. They are, however, permitted to continue to use their licenses from their home states or countries. See Virginia Code § 46.2-307. For the purposes of Title 46.2 of the Code of Virginia , “nonresident” is generally defined as every person who is not domiciled in the Commonwealth. See Virginia Code § 46.2-100. Thus, in general, an individual must be a domiciliary resident of Virginia in order to hold a Virginia driver’s license.

Individuals who have resided in Virginia more than six months, however, are deemed to be residents for purposes of applying most of the provisions of Title 46.2 of the Code of Virginia , including the driver’s licensing provisions of Title 46.2, Chapter 3 ( Virginia Code § 46.2-300 et seq.). In addition, because an individual who has been physically present and residing in Virginia for more than six months may nevertheless remain a domiciliary resident of another state or country, it may be necessary in such cases to examine additional factors to determine whether a person who has obtained a driver’s license based on physical presence and actual residency in Virginia also intended to become a domiciliary resident of Virginia. However, once it is clear that an individual has established domiciliary residency in Virginia, subsequent renewals of a Virginia driver’s license even while absent from the state will be considered very strong evidence of the individual’s intent to remain a domiciliary resident of Virginia. That is because the basis of the individual’s claim to be entitled to a Virginia driver’s license would no longer be based on the length of time he was physically present in Virginia as an actual resident, but rather on the implication that he remained a domiciliary resident of Virginia.

With regard to eligibility to vote, Article II, Section 1 of the Constitution of Virginia states in relevant part as follows:

In elections by the people, the qualifications of voters shall be as follows: Each voter shall be a citizen of the United States, shall be eighteen years of age, shall fulfill the residency requirements set forth in this section, and shall be registered to vote pursuant to this article.

The residence requirements shall be that each voter shall be a resident of the Commonwealth and of the precinct where he votes. Residence, for all purposes of qualification to vote, requires both domicile and place of abode.

The domicile and place of abode requirement found in the Constitution of Virginia is also reflected in the definition of “residence” or “resident” used in Virginia election statutes. See Virginia Code § 24.2-101. Consistent with the precedent established by the Virginia Supreme Court in Coopers Adm’r v. Commonwealth , 121 Va. 338, 93 S.E. 680 (1917), the Department will consider the fact that a taxpayer obtained a Virginia voter’s registration and voted in elections in Virginia to be very strong evidence that that individual considered Virginia to be his domicile during the time he held and used such registration.

The Taxpayer claims that, when he accepted the position in State A, he and his wife intended to move to State A permanently, but that his employment was terminated in 2020 due to the pandemic. The fact that the Taxpayer did not establish his own residence in State A, however, but rather moved in with his brother and returned to Virginia for university summer breaks raises doubt as to his intent.

As stated above, a change of domicile requires both establishing a new domicile and abandoning the old. These requirements must also be satisfied concurrently. Where an individual retains such substantial indicia of domicile, including a driver’s license, registered vehicles, an active voter’s registration, and a residence in Virginia, the individual simply cannot be said to have evidenced an intent to abandon Virginia as his domicile.

Credit for Taxes Paid to Another State

Virginia Code § 58.1-332 A allows Virginia residents a credit on their Virginia income tax returns for taxes paid to another state provided the income is either earned or business income. Virginia law does not necessarily allow a taxpayer to claim a credit for the total amount of tax paid to another state. Rather, the credit is limited to the lesser of the amount of tax actually paid to the other state or the amount of Virginia income tax actually imposed on the taxpayer on the income earned or derived in the other state. See P.D. 97-301 (7/7/1997).

In this case, the Taxpayer paid individual income tax to State A on wages earned there. Under these circumstances, he may be eligible to claim a credit for taxes paid to State A on his Virginia resident income tax return.

CONCLUSION

The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the Taxpayer remained taxable as a domiciliary resident of Virginia for the 2018 taxable year. Accordingly, the assessment is upheld.

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer may have information that better represents his Virginia income tax liability for the year at issue. Therefore, the Taxpayer should file a 2018 Virginia resident income tax return. In addition to any other information reportable on the Virginia return, it should also include a computation of the credit for tax paid to State A. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161-7203, Attention: *. Upon receipt, the return will be reviewed and the assessment will be adjusted, as appropriate. If the return is not received within the allotted time, the assessment will be adjusted based on the best information available.

Further, in light of this determination, the Taxpayer should reevaluate his residency status for the 2019 and 2020 taxable years to determine if he had a Virginia filing requirement and, if necessary, file the appropriate returns. Under Virginia 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 section and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. 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/4157.X

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