Did a taxpayer change Virginia domicile in June 2005 after moving to State A for a non-temporary job while retaining a Virginia driver's license?

Subject

Move for a State A job established a June 2005 domicile change

Plain-English summary

Virginia found that the taxpayer changed domicile to State A in June 2005 and should file a part-year return. He ended his Virginia rental, rented a State A residence, registered his car there, and accepted State A employment.

The job was not shown to be temporary. Although he moved back to Virginia in March 2006, the short duration did not negate his intent at the time of the move.

He retained a Virginia driver's license renewed shortly before leaving. Virginia treated licensing as strong domicile evidence, but simply keeping the license under these facts did not outweigh the State A home, job, and vehicle registration. The part-year return was due within 30 days, after which Virginia would adjust the assessment.

What this means for you

• A genuine employment move can establish a new domicile even if it lasts less than a year.
• Housing, employment, and vehicle registration supported the change.
• Retaining a Virginia license was adverse but not automatically decisive.
• A midyear domicile change required a Virginia part-year resident return.

Common questions

Did moving back in March 2006 prove the State A move was temporary?

No. Virginia found no indication that the employment was temporary when accepted.

Why was the change date June rather than May?

The ruling tied the change to the taxpayer ceasing the Virginia rental and commencing the State A residence in June.

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. 09-80

Original ruling text

May 26, 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 assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2005.

FACTS

The Department received information from the Internal Revenue Service that the Taxpayer received income in 2005 while a Virginia resident. The Taxpayer did not file a 2005 Virginia income tax return. As such, the Taxpayer was assessed individual income tax for the 2005 taxable year.

In June 2005, the Taxpayer ceased renting a Virginia residence and commenced renting a residence in * (State A) after he accepted a position for employment there. The Taxpayer registered his car in State A, but kept a valid Virginia driver's license.

The Taxpayer appeals the assessment and states he changed his Virginia domicile to State A in May 2005. He moved back to Virginia in March 2006. The Taxpayer contends that in 2005 the majority of his income was earned in State A, and he paid income tax on this income in State A.

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. For a person to change domiciliary residency to another state or country, that person must intend to abandon his 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 his 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 his 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 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 concedes that it is difficult to know whether a taxpayer intends to return to Virginia. 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 Virginia domicile. If the information is inadequate to meet his or her burden, the Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer took several actions to establish domicile in State A. He established a permanent place of abode, registered his car and obtained employment in State A. Although, the Taxpayer moved back to Virginia in less than 9 months, there is no indication that his employment in State A was a temporary assignment.

The only evidence that the Taxpayer may have intended to retain his domicile in Virginia was the fact that he retained his Virginia driver's license after renewing it in April 2005. Virginia Code § 46.2-323.1 states, "No driver's license . . . shall be issued to any person who is not a Virginia resident." The Department has ruled that obtaining or renewing a Virginia license is a strong indicator of an individual's intent to be a domiciliary resident of Virginia. See Public Document (P.D.) 02-149 (12/09/2002). The Department has also 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). In this case, the Taxpayer renewed his Virginia driver's license just before moving to State A. Thus, although the Taxpayer did not obtain a State A driver's license, he did not make a positive statement of intent to keep his Virginia domicile by simply maintaining his Virginia license.

The preponderance of evidence shows that the Taxpayer took sufficient steps to change his Virginia domicile in June 2005. Accordingly, the Taxpayer must file a 2005 part-year Virginia resident return with the Department within 30 days from the date of this letter. Please send the return to the Virginia Department of Taxation, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia, 232261-7203, Attn: *. Once the part-year return has been filed, the assessment will be adjusted accordingly.

The Code of Virginia sections 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 * at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2586801310.B