Did a taxpayer's statement that he lived and worked outside Virginia in 2003 justify removing the state's income-tax assessment?

Subject

Residency assessment remained pending proof, with one final 60-day opportunity

Plain-English summary

Virginia had no basis to remove the 2003 income-tax assessment without the residency information it requested, but it gave the taxpayer one final 60-day chance to supply proof. Federal tax documents had been mailed to a Virginia address, and the taxpayer did not answer the Department's initial request before it assessed him.

The taxpayer said he neither lived nor worked in Virginia during 2003 and returned only in 2004. The record nevertheless showed a Virginia driver's license, voter registration, vehicle registration, and the Virginia mailing address. Virginia had twice requested more information about domicile and had received none.

Because an assessment was presumed correct and the taxpayer bore the burden of showing error, the Department kept it in place on the existing record. The ruling did not finally decide that he was a Virginia resident. It invited documents within 60 days and said the Department would review them for a possible revision; without them, the assessment would become correct as issued and collection would resume.

What this means for you

• A statement that you lived elsewhere may not overcome Virginia licenses, registrations, addresses, and tax records.
• Domicile requires evidence of abandoning the old home and acquiring a new permanent or indefinite home.
• Responding to Department information requests matters because the assessment starts with a presumption of correctness.
• This ruling left room for relief only if supporting documents arrived within the stated deadline.

Common questions

Did Virginia conclusively find that the taxpayer was a 2003 resident?

No. It said the available information was insufficient to adjust the assessment.

What Virginia ties appeared in the record?

A driver's license, voter registration, vehicle registration, and a Virginia address receiving federal tax documents.

How much additional time was allowed?

Sixty days from the ruling date.

Citations and references

• Va. Code §§ 58.1-302, 58.1-205, and 58.1-1826.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-92

Original ruling text

June 4, 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, 2003.

FACTS

The Department received information from the Internal Revenue Service (IRS) that tax documents were mailed to the Taxpayer at a Virginia address. The Department requested additional information from the Taxpayer to determine if he was required to file a 2003 Virginia income tax return. When the information was not received, the Department issued an assessment against the Taxpayer.

The Taxpayer appeals the assessment, contending he did not live or work in Virginia during 2003 and did not move back to Virginia until 2004.

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.

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.

The information provided indicates the Taxpayer was employed full time in * (State A). The Taxpayer held a Virginia driver's license and a Virginia voter's registration card. The Taxpayer maintained a motor vehicle registered in Virginia and received tax documents from the IRS at a Virginia address.

By letters dated August 26, 2009 and November 11, 2009, the Department requested additional information to determine the Taxpayer's domicile. As of the date of this letter, the requested information has not been received. Because the Taxpayer has failed to furnish the required information, there is no basis to adjust the assessment for the 2003 taxable year at this time.

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. Further, Va. Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment was attributable to the taxpayer's willful failure or refusal to provide the Department with necessary information as required by law.

Notwithstanding the above, I will allow the Taxpayer one last opportunity to provide the Department with additional information regarding this matter. This information should be mailed to the Department's Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attn: *. Upon receipt, the documentation will be reviewed to determine if a revision to the assessment is appropriate. If the documentation is not provided within 60 days from the date of this letter, the assessment will be considered correct as issued 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 web site. If you have any questions regarding this determination, you may contact * at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-3628657897.D