Were out-of-state domiciliaries who stayed in their Virginia home more than 183 days for medical reasons Virginia residents?

Plain-English summary

Virginia treated the couple as actual residents during the portions of 2008 and 2009 when they lived in their Virginia home for more than 183 days, even though their domicile remained in another state. They had changed domicile away from Virginia in 2005 but kept a Virginia house for visits.

The couple said the wife's medical condition caused the extended stays and that they never intended to become Virginia domiciliaries again. Virginia accepted that they took no additional steps showing a domicile change, but involuntary presence could still create actual residency.

Because they were actual residents for only part of each year, Virginia allowed part-year returns rather than treating them as full-year residents. The existing assessments were based on the best information available. The couple received 30 days to file part-year returns so the Department could adjust the assessments to their Virginia-period income.

What this means for you

• Domicile and actual residency are separate Virginia tax concepts.
• A medical or otherwise involuntary stay can still count toward actual residency.
• Maintaining a Virginia abode and exceeding 183 days can trigger resident filing duties.
• If assessed on estimates, file complete part-year returns with records of dates and income.

Common questions

Q: Did the couple move their domicile back to Virginia?
A: No. The ruling found no additional steps showing that intent.

Q: Why were they still Virginia residents?
A: They maintained a Virginia home and lived in Virginia for more than 183 days in each year.

Q: Were they treated as full-year residents?
A: No. They were permitted to file part-year returns for their actual periods of Virginia residency.

Citations and references

• Va. Code § 58.1-303(A).
• Virginia Public Documents 89-160 (May 22, 1989), 00-68 (May 10, 2000), 00-180 (October 5, 2000), and 07-105 (July 2, 2007).

Subject

Taxpayers continued to maintain a home in Virginia f

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-177

Original ruling text

October 24, 2011

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 your clients, * (the "Taxpayers"), for the taxable years ended December 31, 2008 and 2009.

FACTS

The Taxpayers, a husband and wife, changed their domicile from Virginia to * (State A) in 2005. The Taxpayers continued to maintain a home in Virginia for the purpose of visiting friends and relatives.

The Department received information from the Internal (Revenue Service (IRS) that tax information statements were mailed to the Taxpayers at their Virginia address for the 2008 and 2009 taxable years. The Taxpayers did not file Virginia individual income tax returns. The Department requested additional information from the Taxpayers in order to determine their residency status for the taxable years at issue. Based on the information provided by the Taxpayers, the Department determined the Taxpayers were actual residents of Virginia for the 2008 and 2009 taxable years and issued assessments.

The Taxpayers appeal the assessments, contending they exceeded the mandated 183 days solely because of the wife's medical condition and did not intend to become residents of Virginia. In the alternative, the Taxpayers assert that for the purposes of computing their Virginia taxable income, they should be treated as part-year residents for both years in question.

DETERMINATION

The Department has previously ruled that individuals are actual residents of Virginia when they reside involuntarily in Virginia for more than 183 days. See Public Document (P.D.) 00-68 (5/10/2000), P.D. 00-180 (10/05/2000) and P.D. 07-105 (07/02/2007). Virginia Code § 58.1-303 A provides that a person who becomes a resident of Virginia is subject to taxation during the period of Virginia residency. When a Taxpayer maintains a place of abode in Virginia for more than 183 days, but less than the full year, he may file as a part­-year resident of Virginia. See P.D. 89-160 (05/22/1989).

In this instance the Taxpayers lived in Virginia for more than 183 days during each of the 2008 and 2009 taxable years. However, neither the husband nor the wife took any additional steps indicating an intent to change their domicile to Virginia in either 2008 or 2009. Because the Taxpayers were actual residents for only a part of the 2008 and 2009 taxable years, they would be permitted to file part-year returns.

The assessments were made based on the best information available to the Department. The Taxpayers may have additional information that more accurately reflects their taxable income. The Taxpayers may file Virginia part-year individual income tax returns for the 2008 and 2009 taxable years to more accurately reflect their Virginia income tax liability.

The Taxpayers should file the requested returns within 30 days of the date of this letter. Please send the returns to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23218-7203, Attention: *. Once the amended returns are received, they will be processed and the assessments will be adjusted accordingly. If such returns are not filed within the allotted time, the assessments will be upheld and collection action will resume.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4710865680.D