I retired and moved back to the state I lived in before working temporarily in Virginia -- but I still renewed my Virginia driver's license once during that time. Does that block me from proving I'm no longer a Virginia domiciliary?

Plain-English summary

The IRS flagged this taxpayer as someone who might have owed a 2017 Virginia income tax return. She hadn't filed one, and after the Department gathered more information, it concluded she was a Virginia domiciliary resident and issued an assessment. She appealed, arguing she was actually a resident of "State A" -- the state where she had lived and worked before taking a job as a congressional staff member in Virginia, and where she retired to and returned in 2010.

Her ties to State A were extensive and long-running: she bought a home there in 2010, had lived there continuously since, filed State A resident income tax returns, voted there, bought and registered a vehicle there in 2017, and had family and business interests there. Before her Virginia congressional job, she had also lived and worked in State A -- so this wasn't a first-time move, it was a return to a place she'd already called home.

Working against her were two lingering Virginia ties: she still owned a house in Virginia, which she said she used as an occasional second home when visiting friends or attending events (and which she said she intended to sell, though health issues had delayed that), and -- more significantly -- she renewed her Virginia driver's license in 2017. Renewing a Virginia license is normally treated as strong evidence that someone still intends to be a Virginia domiciliary, precisely because Virginia requires license applicants to certify they're Virginia residents. She explained the renewal was really just circumstantial: she happened to be in the area visiting friends when the license was about to expire, and she needed valid ID; the license was set to expire before she'd have returned to State A anyway. She also mentioned longstanding eyesight problems that made it hard for her to pass State A's own vision test for a driver's license -- which the Department noted raised its own doubts about whether she was eligible to hold a license in any state, though that detail didn't change the outcome.

Weighing everything together, the Department found her extensive, longstanding, and continuing ties to State A -- home ownership, voting, tax filings, vehicle registration, family, and business interests, all dating back years before this dispute -- outweighed the renewed Virginia license and the occasional-use Virginia house. It found she intended to and did change her domicile back to State A, and abated the assessment. The Department added a pointed caution, though: taxpayers who retain connections like a Virginia driver's license should expect the Department to ask questions about where they're really domiciled, and knowingly making a false residency statement to get a Virginia license carries its own separate legal penalty.

What this means for you

Retirees or former Virginia workers moving back to a state you lived in before

A prior, well-documented history in your destination state (home ownership, voting, tax filings, family and business ties predating your Virginia stint) is powerful evidence of where your domicile really is, and can outweigh even a renewed Virginia driver's license if you have a specific, credible reason for the renewal.

Anyone who renewed a Virginia driver's license while living elsewhere

Don't assume a single renewal is fatal to your domicile claim, but also don't assume it's harmless -- it's still treated as strong evidence of Virginia domiciliary intent on its own, and the Department flagged that keeping a Virginia license or other Virginia ties will likely draw follow-up questions in any similar case. Be ready to explain, specifically and credibly, why you renewed it.

Anyone tempted to misstate their residency to get or keep a Virginia driver's license

Don't. Virginia law makes it a separate offense, with its own penalties under Va. Code § 46.2-348, to knowingly give DMV a false residency statement -- independent of whatever the tax consequences of your domicile turn out to be.

Common questions

Q: Does owning a second home in Virginia automatically make me a Virginia domiciliary?
A: Not by itself. Here, the taxpayer kept a Virginia house she said she used only occasionally, for visiting friends or events, while intending (though delayed by health issues) to sell it -- and that alone didn't override her much stronger, longstanding ties to her actual domicile state.

Q: I renewed my Virginia driver's license while mostly living in another state -- am I stuck as a Virginia domiciliary?
A: Not necessarily, but expect it to work against you unless you can explain the renewal credibly and you have substantial, well-documented ties elsewhere. Here, a specific, believable explanation (visiting, expiring license, needed for ID) combined with years of much stronger connections to the other state was enough to overcome it.

Q: What happens if I can't actually pass another state's driver's-license eye exam?
A: This ruling didn't resolve that question -- the Department simply noted the taxpayer's eyesight issues raised doubt about whether she could hold a license in either state, without deciding the point, since it wasn't necessary to the domicile determination.

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 § 46.2-348 (penalty for knowingly making a false statement to DMV)
• P.D. 00-151 (8/18/2000) (domicile outside Virginia can be established even while retaining a VA license)
• P.D. 02-149 (12/9/2002) (renewing a VA driver's license is a strong indicator of intent to retain VA domicile)

Subject

Residency: Domiciliary - New Domicile Outside Virginia

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-143

Original ruling text

September 28, 2022

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, 2017.

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 2017 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 her income was taxable in Virginia. After reviewing the information provided, the Department determined that she was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending she 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 has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he intended to remain indefinitely in Virginia.

The Taxpayer has extensive connections with State A. The Taxpayer purchased a residence and has been living in State A since 2010, when she retired from her employment as a staff member for a congressperson from State A. The Taxpayer has filed State A resident income tax returns and has voted in State A since then. In 2017, she also purchased a vehicle and registered it in State A. Prior to the period when she resided in Virginia while working as a congressional staff member, she lived and worked in State A. The Taxpayer has family who live in State A, and she has State A business interests.

The Taxpayer still retained some connections to Virginia as well. She continued to own a house in Virginia. The Taxpayer reports that, since 2010, she used the house as a second home to return to when she was visiting friends or attending special events. The Taxpayer explains that she intends to sell the house, but the process has been delayed because of her health issues. The Taxpayer also renewed her Virginia driver’s license in 2017.

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 Taxpayer explains that she renewed her Virginia license because she was in the area visiting friends, the license was expiring, and she needed it for identification purposes. The Taxpayer states that the license was set to expire before she would have returned to State A. In addition, the Taxpayer reports that she has had many medical issues regarding her eyesight that has made it impossible to pass State A’s eye exam required to receive a State A driver’s license. Her admission raises doubts as to whether she was eligible to hold a driver’s license in any state.

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 greater weight of the evidence, most notably both the Taxpayer’s extensive past and present connections with State A, indicate she had the intent to change her domicile back to State A. Therefore, I find that the Taxpayer was not a domiciliary resident of Virginia for the taxable year ended December 31, 2017. Accordingly, the assessment will be abated.

The Taxpayer should be aware that continuing connections with Virginia, such as retaining a Virginia driver’s license, or other indicators of permanent residence in Virginia will likely result in contacts by the Department inquiring about the situs of the Taxpayer’s domicile. In addition, Virginia law does not permit nonresidents to obtain Virginia driver’s licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law. Any applicant who knowingly makes a false statement to DMV is subject to penalties under Virginia Code § 46.2-348.

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/4114.Y

Related Documents

00-151

02-149