Did a retiree change his domicile from Virginia by maintaining a home, voter registration, and resident returns in another state?

Subject

Retiree did not prove that he abandoned his established Virginia domicile

Plain-English summary

Virginia found that the taxpayer remained a domiciliary resident for 2005 and 2006. He had originally lived in State A but established a Virginia home, employment, driver's license, and vehicle registration while working for a Virginia university. After retiring in 1985, he maintained homes in Virginia, State A, and State B.

The taxpayer pointed to his State A residence, voter registration dating to 1976, and State A resident income tax returns. Virginia noted that those connections had existed while he was also living and working in Virginia, so they did not by themselves show that he later abandoned Virginia domicile.

He continued to own a Virginia home, register a vehicle in Virginia, and hold a Virginia driver's license that he renewed in September 2004. Because changing domicile requires both abandoning the old domicile and acquiring a new one with an intent to remain, the Department found that he had not taken sufficient additional steps after retirement.

What this means for you

• Spending fewer than 183 days in Virginia does not end domiciliary residence; the 183-day rule concerns actual residence.
• A previously established Virginia domicile continues until the taxpayer proves both abandonment and acquisition of another domicile.
• Longstanding out-of-state voting and tax filings may carry less weight if they coexisted with strong Virginia ties.
• Renewing a Virginia driver's license is strong evidence of Virginia intent because applicants certify residency.

Common questions

Was the taxpayer an actual resident under the 183-day rule?

The ruling focused on domiciliary residence. He spent fewer than 183 days in both Virginia and State A during the years at issue.

Did his State A voter registration establish State A domicile?

No. It was one factor, but it had existed during years when he maintained his Virginia home, employment, and license.

What did Virginia require next?

The taxpayer was directed to file Virginia returns for 2005 and 2006 to claim allowable adjustments and for later years in which he retained Virginia domicile.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-7

Original ruling text

January 13, 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 assessments issued to * (the "Taxpayer") for the taxable years ended December 31, 2005 and 2006. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer was originally a resident of * (State A). In the 1960's, he began working for a Virginia university and acquired a residence in Virginia. He obtained a Virginia driver's license and registered automobiles in Virginia. The Taxpayer retired from the university in 1985.

During the taxable years at issue, the Taxpayer maintained homes in Virginia, State A, and * (State B). He filed individual income tax returns in State A as a resident. He also continued to hold a Virginia driver's license and had an automobile registered in Virginia. The Taxpayer spent less than 183 days in both Virginia and State A in 2005 and 2006.

Under audit, the Department determined the Taxpayer was a domiciliary resident of Virginia, and an assessment was issued for the 2005 and 2006 taxable years. The Taxpayer contests the assessments, asserting that upon his retirement he reestablished State A as his domicile.

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 express 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.

You contend that the Taxpayer has performed several actions consistent with acquiring a State A domicile. He maintained a residence in State A, has been registered to vote in State A since 1976, and filed State A resident income tax returns through the taxable years at issue. All of these actions, however, occurred during years in which the Taxpayer maintained a permanent place of abode in Virginia, was employed in Virginia, held a Virginia driver's license, and spent most of his time in Virginia.

The Taxpayer has also performed several actions consistent with maintaining a Virginia domicile. He has maintained a permanent place of abode and owned an automobile registered in Virginia. The Taxpayer also held a Virginia driver's license that he renewed in September 2004.

With regard to maintaining a 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." While renewing his driver's license may have been for purposes of convenience, doing so is a strong indicator of an intent to maintain a Virginia domiciliary residence. 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 they retain a Virginia driver's license. See P.D. 00-151 (8/18/2000).

Although the Taxpayer established connections with State A, he clearly established domicile in Virginia while working full time at the university. Further, the evidence indicates that the Taxpayer took no additional steps to change his domicile to State A when he retired. Based on the information provided, I find that the Taxpayer failed to take sufficient steps to change his Virginia domicile for the 2005 and 2006 taxable years.

Inasmuch as the Department's assessments were based on the information available, the Taxpayer should file Virginia income tax returns in order to reflect any allowable adjustments for the 2005 and 2006 taxable years. In addition, the Taxpayer should file returns for subsequent taxable years in which he retained his Virginia domicile. The returns should be sent to: Virginia Department of Taxation, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attn: *, within 45 days from the date of this letter. If the returns are not received within the allotted time, the assessments will be considered correct as issued and collection action will commence.

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 Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2602937634.B