Did a taxpayer abandon Virginia domicile in July 2005 despite retaining a Virginia home and some vehicle registrations?

Subject

Move and declared intent established a July 2005 domicile change

Plain-English summary

Virginia concluded that the taxpayer abandoned Virginia domicile and became domiciled in State A in July 2005. He moved into a State A residence that month and reported the same change date on his Virginia part-year return.

His later conduct supported the declaration: he opened a State A post-office box and utilities, surrendered his Virginia driver's license, obtained a State A license, registered to vote there, and resigned from a Virginia charity board.

Some Virginia ties continued, including a Virginia residence until 2007 and vehicle registrations. Virginia nevertheless weighed the whole record and gave greater weight to the declared intent tied to the affirmative July move. The 2005 and 2006 resident assessments were abated and refunds ordered.

What this means for you

• Changing domicile requires both abandoning Virginia and establishing a new permanent or indefinite home elsewhere.
• A move tied to a clearly declared date can be an important affirmative event.
• Licensing, voting, utilities, property, vehicles, and organizational ties all matter.
• Retaining some Virginia connections did not defeat the change on these facts.

Common questions

Did the taxpayer's declaration alone establish the change?

No. Virginia relied on the actual July move and later conduct supporting the declared intent.

Did keeping a Virginia home until 2007 prevent the change?

No. The Department considered that fact but found the overall evidence established State A domicile in July 2005.

Citations and references

• Va. Code § 58.1-302.
• P.D. 05-96, cited for a declared change date supported by an affirmative event.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-111

Original ruling text

July 16, 2009

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessments issued to * (the "Taxpayer") for the taxable years ended December 31, 2005 and 2006.

FACTS

The Taxpayer was a resident of Virginia at the beginning of 2005. In 2005, the Taxpayer and his partners purchased four residences in * (State A). According to an affidavit, the Taxpayer moved into one of the State A residences in July 2005. Shortly thereafter, he opened a post office box in State A. The Taxpayer surrendered his Virginia driver's license and voter registration and acquired a State A driver's license and registered to vote in State A in December 2005. The Taxpayer set up accounts with utilities in State A for the State A properties. In January 2006, the Taxpayer resigned from the board of a Virginia charity. The Taxpayer had three vehicles registered in Virginia. He registered one of the vehicles in State A in December 2006 and another one in April 2007. The third vehicle has been continuously registered in Virginia. The Taxpayer sold his Virginia residence in August 2007.

The Taxpayer filed a Virginia part-year resident income tax return reporting his change of domicile to State A in July 2005. He filed a nonresident Virginia income tax return for 2006. Upon audit, the Department determined the Taxpayer was a resident of Virginia for 2005 and 2006 and assessed additional tax. The Taxpayer has paid the assessments, but contends he changed his domicile from Virginia to State A in July 2005.P. D. 09-111

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.

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 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 residency.

The Department determines a taxpayer's intent through the information provided. The taxpayer has the burden of proving that he or she has abandoned his or her original domicile. If the information is inadequate to meet this burden, the Commissioner must conclude that the taxpayer did intend to return to his or her original domicile.

In the instant case, the Taxpayer's actions clearly indicate that he changed his domicile from Virginia to State A. The issue, however, is the date at which he successfully changed his domicile to State A.

The Department acknowledges that a change in domicile occurs as part of a process in which no single factor is dispositive. A person's true intention must be determined with reference to all of the facts and circumstances of the particular case. The Department will give more weight to a taxpayer's declared intent attached to an affirmative event for determining the exact date of separation from Virginia. In Public Document (P.D.) 05-96 (6/10/2005), the Department concluded that a taxpayer's declaration made on part-year Virginia return was supported by an affirmative event of transferring to a job in another state.

The Taxpayer declared his intent on his 2005 part-year return and moved to a State A residence in July 2005. Following his move, the Taxpayer obtained a State A driver's license and surrendered his Virginia license. Based on this evidence, I must conclude that the Taxpayer successfully abandoned his Virginia domicile and became a domiciliary resident of State A in July 2005. Accordingly, the assessments of Virginia income tax for the 2005 and 2006 taxable years have been abated and refunds will be issued shortly.

The Code of Virginia sections and public document cited 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 regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-273993128.B