Was a missionary domiciled in Virginia because she kept a Virginia driver's license, voter registration, bank account, and mailing address?

Subject

Missionary established foreign domicile despite retaining Virginia ties

Plain-English summary

Virginia abated a 2006 residency assessment after finding that a missionary employee was domiciled in the foreign country where she lived and worked. Before moving abroad in 2004, she sold her home and automobile in another state and shipped her remaining property overseas or stored it there. She then established a permanent home in the foreign country, obtained an international driver's license, and remained employed by the church there through 2006 and beyond.

The taxpayer had also created significant Virginia ties while arranging for her parents and a legal representative to handle matters during her absence. She opened a Virginia bank account, sent certain tax documents to the representative's Virginia address, obtained a Virginia driver's license, registered to vote, and later renewed the license in 2009.

The Commissioner found those contacts concerning but insufficient to outweigh the complete evidence of foreign domicile for 2006. The assessment was abated, and the payment already applied to it was refunded with interest.

What this means for you

• Changing domicile requires abandoning the former domicile and acquiring a new one with intent to remain permanently or indefinitely.
• Employment, a permanent home, movement or sale of property, and continuing life abroad supported the taxpayer's position.
• A Virginia driver's license, voter registration, bank account, or financial mailing address can signal Virginia domicile but is not automatically decisive.
• Using Virginia connections for convenience or representation should be documented because the Department may ask about them.
• The ruling warned that continuing Virginia ties could trigger future domicile inquiries and that changed facts could change the result.

Common questions

Did the Virginia driver's license make the taxpayer a Virginia resident?

No. The Commissioner treated it as a serious connection but agreed that the complete record established foreign domicile in 2006.

Why were tax documents sent to Virginia?

The taxpayer had appointed a Virginia legal representative to handle matters, including federal tax filings, while she was overseas.

What evidence supported the foreign domicile?

She sold her former home and car, moved or stored her remaining property, established a permanent home abroad, obtained an international license, and continued working there.

What was the final result?

Virginia abated the assessment and refunded the payment with applicable interest.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-114

Original ruling text

July 1, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This is in response to your letter in which you appeal the individual income tax assessment issued to your client, * (the "Taxpayer"), for the taxable year ended December 31, 2006. I apologize for the delay in this response.

FACTS

The Department received information from the Internal Revenue Service (IRS) that tax documents for the 2006 taxable year were sent to the Taxpayer at a Virginia address. Additional information indicated the Taxpayer maintained a Virginia driver's license and was also registered to vote in Virginia. The Department requested additional information in order to determine the Taxpayer's residence for that taxable year. When sufficient evidence was not provided, the Department issued an assessment. The Taxpayer appeals the assessment, contending she has been an employee of a missionary organization in * (Country A) since 2004 and has established her domicile there.

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 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 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.

Prior to 2004, the Taxpayer was a domiciliary resident of * (State A) when she accepted a position with a church in Country A. In 2004, she sold her automobile and home in State A and had her remaining personal property either shipped to Country A or placed in storage in State A.

In July 2004, the Taxpayer moved to Country A, where she established a permanent place of abode and obtained an international driver's license. The Taxpayer remained employed with the church in Country A through 2006 and, in fact, remains on staff currently.

Before leaving the United States, however, the Taxpayer developed a number of connections with Virginia in June 2004 that could indicate an intention of establishing domicile in the Commonwealth. While visiting her parents who were Virginia residents, she appointed a legal representative to handle certain matters (including filing federal income tax returns) while she was overseas. She also opened a bank account in Virginia that was available to the legal representative and instructed that certain tax documents be sent to the legal representative. In addition, because her State A driver's license was set to expire, the Taxpayer obtained a Virginia driver's license and registered to vote in Virginia.

One of the contacts with Virginia retained by the Taxpayer is of particular concern. The Taxpayer obtained a Virginia driver's license in 2004, which she renewed in 2009. The Taxpayer states she maintained the Virginia driver's license as a convenience for her regular visits to the United States and to see her parents in Virginia. The Taxpayer contends that in light of the other facts and circumstances in this case, these actions are not sufficient to demonstrate that she established a Virginia domicile in 2006. I agree.

After reviewing all the evidence in this case, I find that the Taxpayer was a domiciliary resident of Country A for the 2006 taxable. Accordingly, the assessment at issue will be abated and the payment previously applied against the assessment will be refunded with applicable interest.

While the Department concedes the Taxpayer's Country A residency for the taxable year at issue, the Taxpayer should be aware that continuing connections with Virginia, such as possession of a Virginia driver's license, using a Virginia address for primary financial documents, or other indicators of a permanent residence in Virginia, will likely continue to result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. See also Public Document (P.D.) 00-151 (8/18/2000) and P.D. 02-149 (12/09/2002). As in any situation, a change in the facts and circumstances could result in a change in the Department's determination in subsequent taxable years.

The Code of Virginia sections and public documents 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 Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda Foster

Deputy Tax; Commissioner

AR/1-3829617034.E