If my employer relocates me out of state and I later separate from my spouse who stays in Virginia, have I abandoned my Virginia domicile?

Plain-English summary

A taxpayer appealed a 2019 Virginia income tax assessment, arguing he had become a resident of another state ("State A") after his employer relocated him there. Unlike a similar case decided the same general period (P.D. 23-46, where the taxpayer lost), the Commissioner here found the taxpayer did prove he'd abandoned his Virginia domicile.

To change domicile, a taxpayer must prove both abandonment of the old domicile (with no intent to return) and establishment of a new one (physical presence plus intent to stay permanently or indefinitely) -- the burden is on the taxpayer, and no single factor decides the case. This taxpayer was promoted by his employer in June 2018 and required to relocate to State A; he initially commuted (staying in motels during the week, returning to Virginia on weekends) but began leasing a State A residence in September 2018. He and his wife planned to buy a home in State A (a purchase contract was signed in March 2019), but the couple separated in August 2019, with the wife remaining at the Virginia home while the taxpayer stayed in State A. He obtained a State A driver's license and registered to vote there.

He did retain some Virginia connections: while the divorce was pending, he was required to keep a Virginia-registered vehicle for his wife's use, retained ownership of the Virginia home she lived in, and kept a Virginia driver's license he didn't surrender until February 2023. But the Commissioner found these retained ties were incidental to the ongoing divorce proceedings -- support obligations and property arrangements tied to the separation -- not evidence that he intended to remain a Virginia domiciliary. A court order in the divorce case confirmed he'd moved to State A for career reasons and wanted his family to join him there, and his continued presence in State A throughout the separation and divorce further supported his intent to make it his new permanent home. Weighing everything together, the Commissioner found he'd abandoned Virginia domicile and established a new one in State A as of 2018, and abated the assessment.

What this means for you

Employees relocated by their employer

A genuine employer-driven relocation, backed up with a new lease, a new driver's license, and new voter registration, is strong evidence of an intended permanent move -- even if you commute or maintain a temporary living situation at first. Converting from a motel/commute arrangement to a signed lease, as this taxpayer did, is the kind of concrete step that supports establishing a new domicile.

People going through separation or divorce while living in a different state than their spouse

Ties to your old state that exist purely because of the divorce process itself (court-ordered vehicle registration for your spouse's use, retained title to a marital home while proceedings are pending) are not automatically treated the same as ties that reflect your own personal intent to stay. This ruling distinguishes "incidental to the divorce" connections from connections that would show you meant to remain a domiciliary.

Accountants and tax professionals handling residency changes during a divorce or separation

Compare this ruling with P.D. 23-46 (a taxpayer who lost a similar-looking claim). The key difference here was context: a documented employer relocation, a signed lease converting a temporary stay into a real one, new-state license and voter registration, and a court record confirming the career-driven move -- versus continued voting in the old state in the other case, which the Department treats as especially strong evidence against abandonment. When advising a client, focus on affirmatively documenting the new domicile (license, registration, lease/purchase) and be able to explain any retained old-state ties as incidental to something else (like a pending divorce), not personal intent.

Common questions

Q: Does getting a new out-of-state driver's license and voter registration matter more than what I keep in Virginia?
A: Based on this ruling, obtaining a new state's license and voter registration are meaningful affirmative evidence of establishing a new domicile. Retained Virginia ties can still be outweighed if they're shown to be incidental to something else (here, divorce-related obligations) rather than a sign of intent to stay.

Q: Why did this taxpayer win when a similar-looking taxpayer in P.D. 23-46 lost?
A: The taxpayer here obtained a new driver's license and voter registration in the new state and never voted in Virginia during the disputed period; the taxpayer in P.D. 23-46 got neither a new license nor voter registration in either subsequent state, and actually voted in Virginia after claiming to have left. Actual voting in the old state was treated as very strong evidence against abandonment in that case.

Q: Does keeping a Virginia driver's license for years after moving hurt a domicile-change claim?
A: It's a factor, but not necessarily fatal -- here, the Commissioner found the totality of the evidence (employer relocation, lease, new license/registration in State A, divorce-related reasons for retained Virginia ties) supported the domicile change despite the retained Virginia license.

Q: Can another relocated employee rely on this ruling?
A: No. A Virginia Ruling of the Tax Commissioner is based on the specific facts presented and binds the Department only as to that taxpayer. Another person's specific mix of retained and new-state connections would need its own analysis.

Citations and references

Statutes and public documents:

• Va. Code § 58.1-302 (defines a domiciliary resident and an actual (183-day) resident)
• Va. Code § 46.2-323.1 (a Virginia driver's license is issued only to Virginia residents)
• P.D. 00-151 (8/18/2000); P.D. 02-149 (12/9/2002) -- cited on the weight of a retained Virginia driver's license

Source

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

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, 2019.

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 2019 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 upon the Taxpayer’s response, 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 that person and the place to which that person intends to return even though 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 engaged in a number of actions consistent with establishing residency in State A. In June 2018, The Taxpayer, a Virginia resident, was promoted by his employer and was required to relocate to the employer’s State A office. He initially stayed in motels during the week and returned to Virginia on weekends, but eventually began leasing a State A residence in September 2018. At the time of the promotion, the Taxpayer and his wife planned to purchase a residence in State A and a purchase contract was executed in March 2019. However, the couple separated in August 2019 with the wife chose to remain at the Virginia residence while the Taxpayer continued to reside in State A. The Taxpayer also obtained a State A driver’s license and registered to vote in State A during this time period.

The Taxpayer, however, also maintained a number of connections with Virginia. As of the date this appeal was filed, the Taxpayer’s divorce proceedings were still ongoing. While the divorce was pending, the Taxpayer was required to maintain ownership of a vehicle registered in Virginia for the wife’s use. He also continued to retain ownership of the Virginia residence in which the wife lives. He made support payments from which the wife was required to pay the costs of owning both the vehicle and the home. In addition to these connections, the Taxpayer kept a Virginia driver’s license which he did not surrender until February 2023.

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 court order stipulates that the Taxpayer moved to State A for purposes of his career, and it appears that he wanted his family to leave Virginia to reside with him in there. In addition, the fact that the Taxpayer has remained in State A during the separation and divorce proceedings is further evidence of his intent to make State A his new permanent residence. While the Taxpayer maintained some connections with Virginia, these connections largely remained as a consequence of the divorce proceedings.

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 abandoned his Virginia domicile and established domicile in State A in 2018. Accordingly, the assessment issued for the taxable year ended December 31, 2019, will be abated.

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/4496.B

Related Documents

00-151

02-149