Did attending college and living in student housing outside Virginia prove that a taxpayer changed domicile for 2006?

Subject

College housing, whether it be in a dorm or apartment, is not considered to be a permanent place of abode

Plain-English summary

A student's move to another state for college did not establish a new domicile on the record he provided, so Virginia's 2006 resident assessment remained in place. The taxpayer said he had not lived in Virginia since 2004 and that all 2006 income was earned in the university's state.

Changing domicile required both abandoning Virginia with no intent to return and physically establishing a new home with intent to remain permanently or indefinitely. The taxpayer asserted that he registered to vote, opened a bank account, used local doctors and dentists, attended church, and kept personal property in the other state, but he supplied no objective proof despite repeated requests.

Virginia generally did not treat college housing—whether a dorm or apartment—or student employment as permanent. The Department also had evidence that the taxpayer received mail in Virginia and held a Virginia driver's license, which was a strong indicator of retained domicile.

Because assessments were presumed correct and the taxpayer had not met his burden, the Department found no basis to revise or abate the assessment. It nevertheless gave him one final 30-day period to submit the requested evidence or file a 2006 Virginia return. A filed return could include a qualifying credit for income tax paid to the other state, supported by that state's return and the taxpayer's W-2.

What this means for you

• Moving away for college does not by itself prove a domicile change.
• Documentary evidence matters more than unsupported statements of intent.
• A Virginia driver's license can strongly indicate continued Virginia domicile, though it is not automatically conclusive.
• A Virginia resident may still claim a qualifying credit for tax paid to another state on earned or business income.

Common questions

Did the Department say students can never change domicile?

No. It said college students rarely establish domicile where they attend school and evaluated this taxpayer's evidence.

What evidence hurt the taxpayer's position?

Virginia mail and a Virginia driver's license, combined with the absence of objective proof of the claimed new domicile.

Was the assessment finally closed with no further opportunity?

No. The taxpayer received one final 30-day opportunity to provide proof or file the 2006 Virginia return.

Citations and references

• Va. Code §§ 58.1-205, 58.1-302, and 58.1-332(A).
• Va. Code § 46.2-323.1.
• Virginia Public Documents 00-151 and 02-149.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-206

Original ruling text

September 7, 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, 2006.

FACTS

The Department received information from the Internal Revenue Service that tax documents for the 2006 taxable year were sent to the Taxpayer at a Virginia address. The Taxpayer did not file a 2006 Virginia individual income tax return. The Department requested additional information from the Taxpayer in order to determine his residence for that taxable year. When the Taxpayer failed to, provide sufficient evidence to document his state of domiciliary residence, the Department issued an assessment to the Taxpayer for individual income tax for the 2006 taxable year.

The Taxpayer appeals the assessment, contending he was a student at a university in * (State A), and has not resided in Virginia since 2004. The Taxpayer asserts that he took sufficient steps to establish residency in State A and all income earned in 2006 was earned 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.

In this case, the Taxpayer moved to State A in order to attend college. It has been the Department's experience that college students rarely establish domicile in the state where they attend college. Further, the Department does not generally consider college housing, whether it be in a dorm or apartment, to be a permanent place of abode. Likewise, employment engaged in by college students tends to be temporary in nature.

The Taxpayer states that he registered to vote, opened a bank account, utilized physicians and dentists, attended church services, and maintained all of his personal property in State A. The Taxpayer has, however, provided no objective evidence to support his assertions or that he took any steps to change his domicile to State A.

Evidence obtained by the Department, however, clearly shows that the Taxpayer received mail in Virginia in 2006 and held a Virginia driver's license. 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. 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).

By letters dated April 28, 2010 and June 1, 2010, the Department requested the Taxpayer provide evidence to support his assertion that he established domiciliary residence in State A. To date, the requested information has not been received.

Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer to show that the assessment is incorrect. The Taxpayer has not met this burden.

Because the Taxpayer has failed to furnish the requested information, there is no basis to revise or abate the assessment issued to the Taxpayer for the 2006 taxable year.

Credit for Taxes Paid to Other States

Virginia Code § 58.1-332(A) allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income. Based on the information provided, the Taxpayer may be eligible for an out-of-state tax credit for the 2006 taxable year. In order to claim the credit, the Taxpayer should file a 2006 Virginia income tax return including a computation of the credit and attach a copy of 2006 State A return and 2006 Form W-2 evidencing State A wages earned and income tax withheld.

CONCLUSION

I will grant the Taxpayer one final opportunity to provide the information previously requested to substantiate his claim or file a 2006 Virginia income tax return. Please send the documentation or tax return within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attention: *. If the requested information is not provided within the allotted time, the assessment will be deemed correct and collection action will resume.

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 website. If you have any questions about this determination, you may contact * at ***.

Sincerely,

Linda D. Foster

Deputy Tax Commissioner

AR/1-4290694764.D