I moved from Virginia to Puerto Rico to live there permanently, but I kept my Virginia driver's license — did I really change my domicile, or does Virginia still tax me?

Plain-English summary

A rare taxpayer win in Virginia's domicile line: the Department abated a 2019 income tax assessment after concluding the taxpayer had genuinely changed his domicile from Virginia to Puerto Rico before the year began.

How the case arose. The IRS passed the Department information suggesting the taxpayer should have filed a 2019 Virginia return. He hadn't. After reviewing the information he provided, the Department first concluded he was taxable as a Virginia domiciliary resident; he appealed, contending he was a resident of Puerto Rico.

Why Puerto Rico status alone doesn't settle it. The ruling walks through the federal-Puerto Rico framework: a bona fide resident of Puerto Rico must meet a presence test (more than 183 days in Puerto Rico), have no tax home outside Puerto Rico, and have no closer connection to the U.S. than to Puerto Rico (IRC § 937). Full-year bona fide residents generally exclude Puerto Rico-source income from federal taxable income (IRC § 933) and get a Puerto Rico credit for U.S. taxes paid (P.R. Laws tit. 13 § 30201). The taxpayer filed a 2019 Puerto Rico resident return and no federal return — but that is not determinative of state domicile. For income tax, Puerto Rico functions more like another country than a state, and its residency tests "are not substitutes" for Virginia's two-pronged domicile-change standard (P.D. 13-89).

Virginia's standard. A domicile change requires (1) actual abandonment of the old domicile with intent not to return, and (2) acquisition of a new domicile by personal presence plus intent to remain permanently or indefinitely (Cooper's Adm'r v. Commonwealth, 121 Va. 338, 347 (1917)); the burden is on the individual (23 VAC 10-110-30 B 3), assessed through the familiar factor list — property, licenses, vehicle registration, voter registration, employment, family — with no single factor dispositive.

The facts that won. The taxpayer moved to Puerto Rico in December 2018 intending to live there permanently with his partner, a Puerto Rico native who owned a business there. He began working in Puerto Rico in January 2019 in employment of indefinite duration, leased two residences there from January 2019 through March 2020, and filed his 2019 Puerto Rico return from his Puerto Rico address. He returned to Virginia in March 2020 only because of COVID-19 workplace disruptions.

The license wrinkle. He kept a Virginia driver's license and a vehicle registered at a family member's Virginia home. Virginia law bars issuing a license to non-residents and makes applicants certify Virginia residency (Va. Code § 46.2-323.1), and obtaining or renewing a Virginia license is a "strong indicator" of retained Virginia domicile (P.D. 02-149). But a retained license doesn't by itself defeat a domicile change (P.D. 00-151) — and this taxpayer never renewed while away (a duplicate copy was issued during the period), didn't drive in Puerto Rico, kept the license for visits to Virginia family and friends, and left the car in Virginia for family members to use.

Result: the totality of the factors showed the domicile change to Puerto Rico happened before the 2019 taxable year, so the 2019 assessment was abated.

What this means for you

Moving to Puerto Rico (or anywhere) from Virginia

Your Puerto Rico tax status — even a filed Puerto Rico resident return and IRC § 933 exclusion — does not automatically end Virginia domicile. Virginia applies its own two-part test: abandon Virginia and establish the new home with presence plus indefinite intent. Build the record the way this taxpayer did: a genuine reason to move, indefinite employment there, leased or owned housing, and a life actually lived in the new place.

Keeping a Virginia driver's license after a move

It's a risk factor, not an automatic loss. The line this ruling draws: renewing or newly obtaining a Virginia license while claiming to live elsewhere is a strong indicator you never left (that's what helped sink the taxpayer in another 2025 ruling in this corpus, where a COVID-era returnee renewed his license and voted in Virginia); merely retaining an unexpired one — with a sensible explanation and no Virginia driving life — can be outweighed by strong new-home ties.

A pandemic return doesn't undo a completed change

The taxpayer came back to Virginia in March 2020 because of COVID-19 workplace disruptions. Because his domicile change was complete before 2019, the later return didn't retroactively defeat it for the year at issue.

Common questions

Q: The taxpayer filed a Puerto Rico return and no federal return. Why wasn't that enough by itself?
A: Because Puerto Rico's bona-fide-residency tests (presence, tax home, closer connection) overlap with — but are not substitutes for — Virginia's domicile-change standard. The Department decided the case on the Virginia two-prong test and the factor analysis, not on his Puerto Rico filing position.

Q: What evidence established the new Puerto Rico domicile?
A: Personal presence plus indefinite intent: a December 2018 move to live permanently with his partner (a Puerto Rico native with a business there), work in Puerto Rico from January 2019 of indefinite duration, two leased residences from January 2019 through March 2020, and a Puerto Rico resident return filed from his Puerto Rico address.

Q: Didn't keeping the Virginia driver's license and a Virginia-registered car prove he never left?
A: No. Renewing or obtaining a license is a strong indicator of Virginia domicile, but he only had a duplicate copy issued — he didn't renew — and he explained he didn't drive in Puerto Rico and used the license on family visits. The car stayed with Virginia family. Against the weight of his Puerto Rico ties, those retained connections didn't control.

Q: What happened to the assessment?
A: Abated in full. The Department found the domicile change to Puerto Rico occurred before the 2019 taxable year, so he wasn't taxable as a Virginia resident for 2019.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-1821 — administrative appeal (application for correction) to the Tax Commissioner
• Va. Code § 58.1-302 — domiciliary resident and actual resident (more than 183 days) defined
• Va. Code § 46.2-323.1 — Virginia driver's licenses issued only to Virginia residents; residency certification
• 23 VAC 10-110-30 B 3 — burden of proof and factors for domicile changes
• IRC § 937 — bona fide resident of Puerto Rico (presence, tax home, closer connection)
• IRC § 933 — exclusion of Puerto Rico-source income for full-year bona fide residents
• P.R. Laws tit. 13 § 30201 — Puerto Rico credit for U.S. taxes paid

Authorities the Department relied on (described here, not linked): Cooper's Adm'r v. Commonwealth, 121 Va. 338, 347 (1917) (two-part test for changing domicile); P.D. 13-89 (6/10/2013) (Puerto Rico residency tests are not substitutes for the domicile-change standard); P.D. 00-151 (8/18/2000) (a retained Virginia license doesn't preclude establishing domicile elsewhere); P.D. 02-149 (12/9/2002) (obtaining or renewing a Virginia license is a strong indicator of retained Virginia domicile).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-32

Original ruling text

March 5, 2025

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 on the information provided, the Department concluded that he was taxable as a domiciliary resident of Virginia. The Taxpayer appealed, contending he was a resident of Puerto Rico.

DETERMINATION

Taxation of United States Citizens Residing in Puerto Rico

An individual is considered a bona fide resident of Puerto Rico if they meet a presence test (including residing in Puerto Rico for more than 183 days during the tax year), they did not have a tax home outside Puerto Rico for any part of the tax year, and they did not have a closer connection to the United States (or another foreign country) than to Puerto Rico during any part of the tax year. Special rules apply to individuals who move to or from Puerto Rico during the tax year. See Internal Revenue Code (IRC) § 937.

United States citizens who are bona fide residents of Puerto Rico are required to file federal income tax returns if, among other things, they have income from sources outside Puerto Rico. Income from sources within Puerto Rico would generally be exempt from the federal taxable income if the individuals were bona fide residents of Puerto Rico for the entire taxable year. See IRC § 933. In addition, taxpayers who are bona fide residents of Puerto Rico receive a credit on their Puerto Rico income tax return for taxes paid to the United States. See P.R. Laws tit. 13 § 30201.

In this case, the Taxpayer filed a 2019 Puerto Rico income tax return on the basis that he was a resident of Puerto Rico. He did not file a federal income tax return. This action, however, is not determinative as to whether or not the Taxpayer remained a domiciliary resident of a state in the United States. The fact that a Puerto Rico taxpayer can receive a credit for United States federal income tax paid means that, at least with regard to income tax, Puerto Rico is treated more like another country than a state. In addition, the tests used to determine Puerto Rico tax residency, namely the 183 day test, the tax home test, and the closer connection test, while they may involve factors that overlap with domicile, are not substitutes for the two-pronged standard that must be met in order for there to be a change of domicile. See Public Document (P.D.) 13-89 (6/10/2013).

Virginia 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. 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 continues to be subject to Virginia taxation even if they work in another state or country. 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 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. See Cooper's Adm’r v. Commonwealth , 121 Va. 338, 347 (1917). The burden of proof that an individual has abandoned or failed to establish domicile in Virginia rests with the individual. See Title 23 of the Virginia Administrative Code (VAC) 10-110-30 B 3.

The determination of whether a change of domicile has occurred is highly dependent on the facts and circumstances of the individual case, and no single factor is dispositive. Factors to be considered include, but are not limited to, the following:

sites of real and tangible property, location of savings and checking accounts, motor vehicle registration and licensing, motor vehicle operator’s license, voter registration, membership in clubs and civic groups, place of business, profession or employment, charitable contributions, location of schools attended by children, length of time of residence, place of birth and marriage, residence of family, reason for abandoning or acquiring domicile, and, in the case of a minor or married person, domicile of parents, husband, or wife and/or children.

The Taxpayer was an actual and domiciliary resident of Virginia before he moved to Puerto Rico in December 2018. He explains that he intended to live there permanently with his partner who was a native of Puerto Rico and owned a business there. The Taxpayer began working in Puerto Rico in January 2019 and leased two residences there from January 2019 through March 2020. He filed a 2019 Puerto Rico resident return using his Puerto Rico address. His employment in Puerto Rico was for an indefinite duration, and he explains that he only returned to Virginia because of workplace disruptions brought about by the start of the COVID-19 pandemic in March 2020.

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. The Taxpayer did not renew the Virginia license while he was in Puerto Rico, but he did have a duplicate copy issued during that time period.

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 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 he did not obtain a Puerto Rico driver’s license because he did not drive in Puerto Rico and that he retained his Virginia license to use while he was in Virginia visiting family and friends. He states that his vehicle remained in Virginia and was used by family members.

CONCLUSION

The Department acknowledges that a determination of a change in domicile is evidenced by a process in which no single factor is dispositive. After carefully considering the information provided, the Department finds that the totality of the factors considered shows that the Taxpayer successfully changed his domicile from Virginia to Puerto Rico prior to the 2019 taxable year. Accordingly, the assessment issued to the Taxpayer for the taxable year ended December 31, 2019, will be abated.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public documents cited are available at 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 and Legal Affairs, Tax Adjudication and Resolution Division, at or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4958.X

Related Documents

00-151

02-149

13-89