Did owning a Virginia vacation home, registering a car, and obtaining a Virginia driver's license make the taxpayer domiciled in Virginia?

Subject

Virginia connections did not displace the taxpayer's State A domicile

Plain-English summary

Virginia concluded that the taxpayer remained domiciled in State A for 2004. The Department had initially assessed him because federal information returns used a Virginia address and he owned a Virginia house, registered a car there, and obtained a Virginia driver's license.

Those facts strongly suggested Virginia domicile, especially because a Virginia license application required certification of Virginia residency. But the taxpayer showed that the Virginia property and vehicle were for vacations and that he obtained the license for convenience.

The broader record showed he never abandoned State A: he maintained a permanent home, employment connection, vehicle registrations, voting residence, and a driver's license there, and consistently returned there when in the United States on business. Virginia therefore reversed the domiciliary conclusion for 2004, while warning that additional Virginia ties could change the result in later years.

What this means for you

• Owning a Virginia home and car did not automatically establish domicile.
• Obtaining a Virginia driver's license was a strong adverse fact because it required a residency certification.
• The taxpayer still had to prove that the prior State A domicile was never abandoned.
• Employment, permanent abode, voting, licensing, and vehicle ties supported the State A conclusion.

Common questions

Did the Virginia driver's license decide the case?

No. It was strong evidence, but Virginia weighed it against all of the taxpayer's continuing State A ties.

Why does the page's official metadata appear inconsistent?

The Department's public subject label says Virginia domicile, but the ruling body's determination says the taxpayer remained domiciled in State A.

Citations and references

• Va. Code §§ 46.2-323.1 and 58.1-302.
• P.D. 00-151 and 02-149.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-107

Original ruling text

June 24, 2009

Re: § 58.1-1821 Application: Individual Income Tai;

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, 2004. I apologize for the delay in this response.

FACTS

The Department obtained information from the Internal Revenue Service (IRS) indicating the Taxpayer received third-party annual information returns at an address in Virginia. In addition, the Taxpayer purchased a home in Virginia in 1998, obtained a Virginia driver's license in 2002, and registered an automobile in Virginia. As a result, the Department determined the Taxpayer was a domiciliary resident of Virginia, and an assessment was issued for the 2004 taxable year. The Taxpayer contests the assessment, asserting that he was an actual resident of * (Country A) and a domiciliary resident of *** (State A) during 2004.

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Va. 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 actually reside elsewhere. 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 person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is subject to Virginia taxation.

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, sites of real and 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 of the facts and circumstances of the particular case. A simple declaration is not sufficient to establish domicile.

The Department concedes that it is difficult to know whether a taxpayer intends to return to his or her original domicile. The Department determines a taxpayer's intent through the information provided. In this case, the Taxpayer has the burden of proving that he maintained his domicile in State A and did not change his domicile to Virginia. If the evidence is inadequate to meet this burden, the Department must conclude that the Taxpayer intended to obtain a Virginia domicile.

The Taxpayer took a number of actions indicating an intent to establish domicile in Virginia. He purchased a house and maintained automobiles registered in Virginia. In addition, the Taxpayer's federal income tax return showed a reference to a Virginia address as a primary residence. The Taxpayer also obtained a Virginia driver's license in 2002.

The Taxpayer submits that he purchased the house in Virginia and one in * (State B) as vacation homes. The records provided indicate these houses were used for vacation purposes only. The automobile registered in Virginia was also used only during visits to the house in Virginia.

The Taxpayer claims that he obtained the Virginia driver's license while on vacation in Virginia. He chose to obtain a Virginia license rather than return to State A to renew that state's license as a matter of convenience.

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 a statement that certifies that the applicant is a Virginia resident. A person providing a false statement is subject to punishment under the laws of the Commonwealth.

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 (12/09/2002).

Although the Taxpayer took a number of steps consistent with those considered sufficient to establish domicile in Virginia, the evidence indicates he never abandoned his domicile in State A. The Taxpayer was employed by a State A employer, to whose location he consistently returned when in the United States on business. He has continued to maintain a permanent place of abode, automobile registrations, voting residence, and a driver's license in State A. Accordingly, the Taxpayer did not establish domicile in Virginia in 2002 and remained a domiciliary resident of State A in 2004.

The Taxpayer should be aware, however, that any additional connections with Virginia (obtaining a Virginia driver's license, using a Virginia address for primary financial documents, registering to vote in Virginia, or other indicators of a permanent residence in Virginia) could change this determination for subsequent taxable years.

The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2409267041.E