I moved out of Virginia years ago for work, but my spouse and kids stayed in our Virginia home, I kept renewing my Virginia driver's license and voter registration, and I even teleworked from Virginia during the pandemic while still filing returns in my new state -- am I still a Virginia domiciliary resident?

Plain-English summary

The Department, tipped off by IRS information, determined that a taxpayer who hadn't filed a 2018 Virginia return was actually a Virginia domiciliary resident, and assessed him for that year (crediting tax he'd paid to State A). He appealed, arguing he wasn't a Virginia resident in 2018 and had no Virginia-source income.

The taxpayer's move history. He lived and worked in Virginia until December 2017, when he took a new job in State B and leased a residence there through February 2018. He returned briefly to Virginia in March 2018, then took a new job offer in State A -- living and working there ever since, leasing (and later, in 2020, buying) a home there, and filing State A resident returns since 2018.

Why Virginia residency mattered regardless of where his income came from. Even setting aside domicile, it's well established that a state can tax all of a resident's income, wherever earned (New York ex rel. Cohn v. Graves, 300 U.S. 308 (1937)) -- so if the taxpayer had remained a Virginia resident, his State A income would still be taxable by Virginia (with a credit for tax paid to State A).

The Virginia ties that mattered most. His spouse and children stayed in Virginia, and he visited them regularly. He co-owned the Virginia home with his spouse and stayed there during visits. He kept two vehicles registered in Virginia. He'd held a Virginia voter registration since 2007 and voted in Virginia in 2020. And critically, he maintained a Virginia driver's license -- reissued in August 2018, just months after his claimed relocation, and renewed again in January 2022 -- and during the COVID-19 pandemic, he said he primarily teleworked from the Virginia residence, even while continuing to file as a State A resident.

The driver's-license doctrine, explained in more depth here than in similar rulings. Only Virginia domiciliary residents (or those treated as residents after 6+ months' physical presence) can hold a Virginia license; genuine nonresidents must use their home state's license instead (Va. Code §§ 46.2-323.1, 46.2-307, 46.2-100). Someone who has lived in Virginia over six months can get a Virginia license based purely on physical presence, without necessarily being a domiciliary resident -- so a single license alone isn't conclusive. But once it's clear someone has established Virginia domiciliary residency, a later renewal of that license -- especially while physically absent from the state -- is treated as very strong evidence of intent to remain domiciled, because the renewal can no longer be explained by mere physical presence. The Department treated the taxpayer's August 2018 reissuance and January 2022 renewal exactly that way. Likewise, voting in Virginia is treated as conclusive evidence the voter considered Virginia their domicile at the time, since Virginia's Constitution requires domicile (not just residence) to vote (Va. Const. art. II, § 1; Cooper's Adm'r v. Commonwealth, 121 Va. 338 (1917)).

The taxpayer's explanations didn't overcome the pattern. He said he kept the Virginia license because he didn't drive in State A, that his spouse and child drove the Virginia-registered vehicles, and that he renewed his license and voted in Virginia only because he "happened to be" there at the time. The Department found that when someone genuinely intends a permanent change of domicile, they normally register vehicles, get a new license, and register to vote in the new state -- retaining Virginia connections instead suggests the person wasn't certain about truly abandoning Virginia.

Outcome. Weighing everything -- especially the license renewals, ongoing voter registration and voting, and the taxpayer's own pandemic telework from the Virginia residence -- the Department found the taxpayer hadn't proven he'd abandoned Virginia domicile as of 2018, and upheld his status as a Virginia domiciliary resident, while confirming he could claim a credit for tax actually paid to State A.

(Similar domicile disputes, both also decided in this period, are P.D. 24-17 and P.D. 24-28-0 -- in each, a retained Virginia driver's license and/or voter registration defeated a claimed out-of-state domicile change.)

What this means for you

Anyone who's relocated for work but still visits, votes, or renews a license in Virginia

Renewing (not just holding onto an old) Virginia driver's license, or actually voting in Virginia, well after your claimed move date is treated as very strong evidence you haven't abandoned Virginia domicile -- far stronger than simply failing to update paperwork.

Remote/teleworking employees who spend significant time working from a Virginia home after claiming to have moved away

Actually working from Virginia -- even temporarily, like during the pandemic -- while claiming residency elsewhere undercuts your domicile-change argument. The Department will weigh your actual conduct, not just where you file your other-state return.

Families where a spouse and children stay in Virginia while the taxpayer relocates for work

A Virginia family home, spouse, and children remaining behind (and being regularly visited) are facts the Department weighs against an abandoned-domicile claim, even where the taxpayer is genuinely living and working in another state most of the year.

Common questions

Q: Can I hold a Virginia driver's license without being a Virginia domiciliary resident?
A: Sometimes -- if you've lived in Virginia over six months, you can qualify for a license based purely on physical presence. But once you're established as a Virginia domiciliary resident, later renewing that license (especially while living elsewhere) is treated as very strong evidence you still intend to remain domiciled in Virginia.

Q: Does voting in Virginia matter if I'm not physically living there anymore?
A: Yes, significantly. Because Virginia's Constitution requires domicile (not just residency) to vote, the Department treats actually voting in Virginia as conclusive evidence you considered Virginia your domicile at the time you voted.

Q: I teleworked from my old state's home during the pandemic while claiming residency in my new state -- does that matter?
A: It can. Here, teleworking from the Virginia residence during the pandemic, even while continuing to file as a resident of the new state, was cited as part of the pattern undermining the domicile-change claim.

Citations and references

Statutes and constitutional provisions:

• Va. Code § 58.1-301 -- Virginia's conformity to federal terminology/computation, starting from federal adjusted gross income
• Va. Code § 58.1-302 -- domiciliary resident and actual resident defined
• Va. Code §§ 46.2-323.1, 46.2-307, 46.2-100 -- Virginia driver's license residency requirements and the definition of "nonresident"
• Va. Const. art. II, § 1 -- domicile required to vote in Virginia
• Va. Code § 58.1-205 -- Department assessment deemed prima facie correct
• Va. Code § 58.1-332 -- credit for income tax paid to another state
• Va. Code § 58.1-111 -- assessment based on best information available

Cases cited: New York ex rel. Cohn v. Graves, 300 U.S. 308 (1937) (a state may tax all of a resident's income, wherever earned); Cooper's Adm'r v. Commonwealth, 121 Va. 338 (1917) (voting in Virginia as evidence of domiciliary intent).

Prior rulings referenced (described here, not linked): P.D. 00-151 (8/18/2000) -- domicile can be established elsewhere despite a retained VA license; P.D. 02-149 (12/9/2002) -- renewing a VA license is strong evidence against abandonment; P.D. 97-301 (7/7/1997) -- credit limitation formula.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-15

Original ruling text

March 12, 2024

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 information received, the Department determined that the Taxpayer was a domiciliary resident of Virginia but was entitled to a credit for tax paid to * (State A) and issued an assessment accordingly. The Taxpayer appeals, contending he was not a resident of Virginia in 2018 and had no Virginia source income.

DETERMINATION

Taxation of Virginia Residents

Virginia Code § 58.1-301 provides, with certain exceptions, that the terminology and references used in Title 58.1 of the Code of Virginia will have the same meaning as provided in the Internal Revenue Code (IRC) unless a different meaning is clearly required. Conformity does not extend to terms, concepts, or principles not specifically provided in the Code of Virginia . For individual income tax purposes, Virginia “conforms” to federal law, in that it starts the computation of Virginia taxable income (VTI) with federal adjusted gross income (FAGI). Income properly included in the FAGI of a Virginia resident is subject to taxation by Virginia, unless it is specifically exempt as a Virginia modification pursuant to Chapter 3 of Title 58.1 of the Code of Virginia .

It is well established that a state may tax all the income of its residents, even income earned outside the taxing jurisdiction. In New York ex rel. Cohn v. Graves , 300 U.S. 308, 312-313, 57 S. Ct. 466, 467 (1937), the United States Supreme Court explained “[t]hat the receipt of income by a resident of the territory of a taxing sovereignty is a taxable event is universally recognized.” As such, even if the Taxpayer had no Virginia source income, he would have been subject to Virginia income tax if he had been a Virginia resident.

Residency

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 lived and worked in Virginia until December 2017 when he moved to * (State B) after accepting a position with a State B employer. He leased a residence in State B through February 2018. He explains that he returned briefly to Virginia in March 2018 and then moved to State A after receiving an employment offer there. He states that he has lived and worked in State A ever since. During this time, he leased two residences, and he later purchased a residence in State A in 2020. He has filed State A resident returns since 2018.

The Taxpayer also retained connections to Virginia. His spouse and children remained in Virginia, and he visited them regularly. He maintained a Virginia driver’s license which was reissued in August 2018 and renewed in January 2022. He owned two vehicles which were registered in Virginia. He has held a Virginia voter’s registration since 2007 and voted in Virginia in 2020. In addition, the Taxpayer continued to co-own a Virginia residence with his spouse where he would stay during his visits to Virginia. Further, during the pandemic, the Taxpayer states that he primarily teleworked from their Virginia residence although he continued to file income tax returns with 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 they retain 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 the individual was physically present in Virginia as an actual resident, but rather on the implication that the individual intended to remain 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 an individual obtains a Virginia voter’s registration and actively votes as a Virginia resident in elections in Virginia to be conclusive evidence that that individual considered Virginia to be their domicile during the time they held and used such registrations.

The Taxpayer explains that he maintained his Virginia driver’s license because he did not drive in State A and that the vehicles registered in Virginia were driven by his spouse and child. The Taxpayer also explains that he renewed his Virginia license in 2022 because he happened to be here visiting when he lost his license. Similarly, he explains that he voted in Virginia because he happened to be here at the time.

Virginia Code § 58.1-205 provides that, in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show he was not subject to income tax in Virginia.

As stated above, a change of domicile requires that an individual prove two elements concurrently: 1) that the individual abandoned the old domicile and had no intent to return to it; and 2) that the individual established a new domicile, which must have been formed by physical presence coupled with the intent to remain permanently or indefinitely. The Department expects that when individuals are seeking a permanent change of domicile, they will normally register vehicles, obtain a new driver’s license, register to vote, and perform other official acts indicating their intent to change domicile. To the extent such connections may be retained with Virginia, it suggests that the individual may not have been certain that they intended to abandon their Virginia domicile. If a permanent change of residence were intended, there would be no need to retain such connections with a former state.

Credit for Taxes Paid to Another State

Virginia Code § 58.1-332 A allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income or gain from the sale of a capital asset.

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). The limitation is computed by multiplying the individual’s Virginia tax liability by a fraction, the numerator of which is the income upon which the other state’s tax is imposed, and the denominator of which is Virginia taxable income. As an actual resident of State A and a domiciliary resident of Virginia, the Taxpayer would be allowed a credit against his Virginia income tax liability for income tax paid to State A to the extent permitted by Virginia Code § 58.1-332.

CONCLUSION

In this case, the Taxpayer’s ongoing connections with Virginia raise significant doubts as to his intent to abandon his Virginia domicile. In particular, using a Virginia voter’s registration to vote and having his Virginia driver’s license reissued and renewed during the period when he was not actually residing in Virginia is significant evidence of domiciliary intent. The Department has stated that a change of domicile occurs as part of a process in which no single factor is dispositive. As such, facts as they existed both before and after the exact taxable year at issue may be instructive as to a taxpayer’s intent over a broader period of time that includes such year.

After carefully reviewing all of the evidence provided, I find that that the Taxpayer has failed to prove that he abandoned his Virginia domicile as of the 2018 taxable year. Therefore, he remained subject to income tax as a domiciliary resident of Virginia. The Taxpayer will, however, be able to claim a credit for the income tax he paid to State A.

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer, however, may have information that better represents his Virginia income tax liability for the taxable year at issue. Therefore, he should file a 2018 Virginia resident income tax return and claim credit for income tax paid to State A to the extent permitted by Virginia Code § 58.1-332. 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 *, Richmond, Virginia 23261, Attention: ***. The return will be reviewed and processed, and the assessment will be adjusted as warranted. If the return is not received within the allotted time, the assessment will be adjusted based on the available information.

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 (804) ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4525.X

Related Documents

00-151

02-149

97-301