I moved out of Virginia and later moved again to a different state, but I never got around to updating my old Virginia driver's license -- am I still on the hook for Virginia income tax?

Plain-English summary

The IRS notified the Department that a taxpayer may have owed a Virginia income tax return for the 2018 taxable year; a records check showed none had been filed. After the Department gathered information, it issued an assessment on the basis that the taxpayer was a Virginia domiciliary resident. The taxpayer appealed, contending he'd already moved his domicile out of Virginia to a different state before 2018 even began.

A documented, contemporaneous timeline made the difference. The taxpayer had leased a residence and worked in State A from September 2017 to September 2020 -- and, importantly, he'd already filed a 2017 Virginia part-year resident return at the time, showing his Virginia residency ending in September 2017. He registered a vehicle in State A while living there. He then moved again in February 2021, for a new job, to State B, where he continued to lease a residence going forward.

His remaining Virginia connections were modest: he still held an old Virginia driver's license, but hadn't renewed it since first moving to State A, and a vehicle remained registered at a Virginia address owned by a family member. Virginia's domicile rules (Va. Code § 58.1-302) require proving both abandonment of the old domicile (with no intent to return) and physical establishment of a new one with intent to stay -- and the Department has held that retaining a Virginia driver's license doesn't by itself defeat a domicile change (P.D. 00-151), though obtaining or renewing one is treated as a strong signal of retained Virginia intent (P.D. 02-149). Because this taxpayer hadn't renewed his license at all since leaving, that factor cut in his favor rather than against him.

Weighing the full picture -- the contemporaneous part-year filing, the vehicle registration in State A, the subsequent genuine move to State B, and the absence of any license renewal -- the Department found the taxpayer's Virginia domicile had ended before the 2018 tax year and abated the assessment.

What this means for you

Anyone who moves out of Virginia and later moves again to a different state

File a part-year resident return at the time of your original move out of Virginia -- this ruling shows that a contemporaneous filing documenting your move can be strong, credible evidence years later if the Department questions a subsequent year's residency, even after you've moved on to a second or third state.

Anyone who's kept an old Virginia driver's license without renewing it after moving away

Not renewing the license matters. This ruling reinforces that the Department distinguishes between simply holding an old, unrenewed license (which doesn't defeat a domicile change) and actively renewing one (which is treated as a strong indicator of retained Virginia intent).

Anyone with a vehicle still registered at a Virginia address owned by a relative

A lingering vehicle registration at a family member's Virginia address didn't prevent this taxpayer from establishing that his domicile had changed -- but it's still a factor the Department will weigh alongside everything else, not something to leave unaddressed if you want a clean record.

Common questions

Q: If I move out of Virginia but never update my old Virginia driver's license, does that mean I'm still a Virginia domiciliary resident?
A: Not necessarily. This ruling confirms the Department's established position (P.D. 00-151) that retaining an unrenewed Virginia driver's license doesn't by itself defeat a domicile change -- though actively renewing it would be treated very differently.

Q: Does filing a part-year Virginia resident return when I first move help me later if the Department questions a subsequent year's residency?
A: Yes, based on this ruling -- the taxpayer's contemporaneous 2017 part-year return documenting his move was cited as supporting evidence when the Department later reviewed his 2018 residency status.

Q: I moved from Virginia to one state, then later moved again to a second state -- does that complicate my domicile claim?
A: Not necessarily, if each move is well documented. This ruling involved exactly that fact pattern (Virginia to State A, then State A to State B), and the taxpayer's Virginia domicile abandonment was still confirmed.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-302 -- defines domiciliary resident and actual resident for Virginia income tax purposes
• Va. Code § 46.2-323.1 -- Virginia driver's license applicants must certify Virginia residency
• Va. Code § 46.2-348 -- penalty for a false residency statement to the DMV

Prior rulings referenced (described here, not linked): P.D. 00-151 (8/18/2000) -- a person can establish domicile outside Virginia even while retaining a Virginia driver's license; P.D. 02-149 (12/9/2002) -- obtaining or renewing a Virginia driver's license is a strong indicator of intent to retain Virginia domicile.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-121

Original ruling text

October 26, 2023

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. Based on the Taxpayer’s response and other information available to the Department, an assessment was issued. 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 that person and the place to which that person intends to return even though they may be residing elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.

The Taxpayer explains that he leased a residence and worked in State A from September 2017 to September 2020. Consistent with the move, he filed a 2017 Virginia part-year resident return indicating a Virginia residence ending date in September 2017. The Taxpayer then moved to * (State B) in February 2021 pursuant to his employment. He leased a residence and continues to reside there. The Taxpayer registered a vehicle in State A while he resided there.

The Taxpayer also retained connections to Virginia. He retained a Virginia driver’s license and had a vehicle registered at a Virginia residence owned by a family member. It does not appear that the Taxpayer has renewed the Virginia license since he first moved to State A.

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 that individual 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 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 changed his domicile from Virginia to State A prior to the 2018 taxable year. Accordingly, the assessment issued to the Taxpayer for the taxable year ended December 31, 2018, will be abated.

While the Department concedes that the Taxpayer was not a resident of Virginia for the taxable year at issue, he should be aware that continuing connections with Virginia, such as possession of a Virginia driver’s license and maintaining vehicle registrations will likely result in future contacts by the Department with respect to the situs of the Taxpayer’s domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department’s determination in subsequent taxable years. In addition, the Taxpayer should be aware that 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 the DMV is subject to penalties under Virginia Code § 46.2-348.

The Code of Virginia sections 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/4491.B

Related Documents

00-151

02-149