Did a U.S. citizen living abroad become a Virginia domiciliary by using his parents' address and holding a Virginia license, voter registration, property interest, and vehicle?

Subject

Taxpayer living abroad had not established Virginia domicile

Plain-English summary

Virginia abated a 2005 residency assessment because the taxpayer had never established domicile in Virginia. He had lived abroad since moving there from another state in 1970, maintained a permanent home and driver's license abroad, worked there full time, and spent fewer than five days visiting his parents in Virginia during 2005.

The taxpayer did have substantial Virginia connections. Financial documents went to his parents' Virginia address; he became a part owner of their home, was listed on a vehicle registration, obtained a Virginia driver's license, registered to vote, and bought and registered a vehicle in Virginia.

The fuller evidence explained that the home and vehicle interests were added for estate-tax purposes, the purchased vehicle later moved with his parents to another state, and the taxpayer surrendered the Virginia license after learning he was not qualified to hold it. Those facts did not show abandonment of his foreign domicile or creation of a Virginia domicile. Virginia refunded amounts paid toward the assessment.

What this means for you

• Receiving financial mail at a relative's Virginia address does not alone establish Virginia domicile.
• A Virginia driver's license and voter registration are strong indicators, but the complete facts can overcome them.
• Long-term residence, full-time work, a permanent home, and minimal Virginia presence supported the foreign domicile here.
• Property or vehicle interests held for a documented family or estate purpose may carry different weight than personal residential use.
• Incorrect Virginia credentials should be corrected promptly; the taxpayer surrendered the license once he learned he was ineligible.

Common questions

Had the taxpayer ever lived in Virginia?

The evidence indicated that he had not resided in Virginia before or during 2005.

Why did he own part of a Virginia house?

The ruling says he was added to the deed of his parents' home for estate-tax purposes.

Did the Virginia driver's license automatically establish domicile?

No. It was a strong indicator, but the complete record showed continued domicile abroad.

What was the final result?

Virginia abated the 2005 assessment and issued a refund for amounts paid toward it.

Citations and references

• Va. Code §§ 58.1-302 and 46.2-323.1.
• Virginia Public Documents 02-149 and 00-151.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-111

Original ruling text

June 25, 2010

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. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer, a U.S. citizen, has lived in * since moving there from *** (State A) in 1970. The Department received information from the Internal Revenue Service (IRS) indicating that third-party financial documents for the 2005 taxable year were sent to the Taxpayer at a Virginia address. A review of the Department's records indicated that the Taxpayer had not filed a Virginia individual income tax return. The Department requested an explanation or a tax return from the Taxpayer. When no response was received, an income tax assessment was issued based on the information from the IRS.

The Taxpayer appeals the assessment, contending he has never been a domiciliary or actual resident of Virginia. He states that he resided in * (Country A) in 2005, and the address in Virginia was the residence of his parents.

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.

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 information provided with the Taxpayer's appeal indicates that, prior to 2005, the Taxpayer had never resided in Virginia. He performed numerous actions indicative of establishing domicile outside the Commonwealth. He had an established permanent place of abode and a driver's license in Country A. During 2005, he worked in full-time in Country A. During that same year, he visited his parents in Virginia for less than five days. There is no evidence that the Taxpayer abandoned his domicile in Country A during the 2005 taxable year.

The Taxpayer did have connections with Virginia that are indicative of a domicile. In 1998, the Taxpayer became part owner of the home where his parents lived in Virginia. He was also listed on a motor vehicle registration. In 2000, the Taxpayer obtained a Virginia driver's license and registered to vote in Virginia. In 2004, the Taxpayer purchased and registered a motor vehicle in the Commonwealth.

Regarding the Virginia driver's license, Va. 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 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 a Virginia driver's license is retained. See P.D. 00-151 (8/18/2000). Upon becoming aware that he was not qualified to hold a Virginia driver's license, the Taxpayer surrendered the Virginia license.

In addition, a closer look at the evidence reveals that the Taxpayer was added to the deed for the Virginia house and the motor vehicle for estate tax purposes. Also, the motor vehicle he purchased was moved to * (State C) when his parents moved there from Virginia.

After considering all of the facts and circumstances of this particular case, I find that the evidence is not sufficient to show that the Taxpayer established a domicile in Virginia during 2005. Accordingly, the assessment for the 2005 taxable year has been abated. A refund will be issued shortly for amounts paid toward the assessment.

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 * in the Office of Tax

Policy, Appeals and Rulings, at *.

Sincerely,

Linda D. Foster

Deputy Tax Commissioner

AR/1-3721008994.E