Did Virginia finally uphold a 2008 residency assessment when a former service member claimed another domicile but supplied no supporting evidence?

Plain-English summary

Virginia did not finally decide the domicile dispute, but it left the assessment unchanged pending one last evidence deadline. The taxpayer claimed he was domiciled outside Virginia during 2008 and did not become a Virginia resident until after leaving military service in 2009.

The Department had sent information requests in June 2011 and March 2012. By the ruling date, the taxpayer had provided no objective evidence supporting the claimed 2008 domicile.

A tax assessment is presumed correct, and the person claiming a change of domicile bears the burden of showing both abandonment of the old domicile and acquisition of the new one through presence and intent. An unsupported declaration was not enough.

The Commissioner gave the taxpayer a final 30 days to submit the requested domicile documentation. Only if he failed to do so would the assessment be upheld and become due and payable.

Common questions

Q: Did this ruling finally hold that the taxpayer was a Virginia resident in 2008?
A: No. It gave him one final opportunity to provide evidence.

Q: Why was the assessment not revised immediately?
A: The taxpayer had not supplied objective evidence overcoming the assessment's presumption of correctness.

Citations and references

• Va. Code §§ 58.1-205 and 58.1-302.

Subject

Taxpayer has failed to provide the requested information on domicile.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-115

Original ruling text

July 19, 2012

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, 2008. I apologize for the delay in responding to your letter.

FACTS

The Department received information from the Internal Revenue Service (IRS) that third-party financial documents for the 2008 taxable year were sent to the Taxpayer at a Virginia address. The Department requested information to verify whether the Taxpayer was subject to Virginia income tax. When the Taxpayer failed to respond, an assessment was issued based on the available information. The Taxpayer appeals the assessment, contending he was domiciled in * ("State A") during the 2008 taxable year and did not become domiciled in Virginia until September 2009.

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, 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 tine taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the 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 domicile. The Department determines a taxpayer's intent through the information provided. The Taxpayer has the burden of proving that he or she has established or abandoned his or her Virginia domicile.

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 contends he was not domiciled in Virginia until after he was discharged from military service in 2009. The Taxpayer admits that he was a Virginia resident from September 2009 through May 2011 while he attended school.

By letters dated June 29, 2011 and March 15, 2012, the Department requested additional information to ascertain the Taxpayer's domiciliary status for the taxable year at issue. As of the date of this letter, the Taxpayer has provided no objective evidence to substantiate his claim.

Pursuant to Va. Code § 58.1-205, any "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 he was not subject to income tax in Virginia. Because the Taxpayer has failed to provide the requested information, there is no basis to revise the assessment.

I will grant the Taxpayer a final opportunity to provide the requested information regarding his domicile for the 2008 taxable year. Please send the documentation 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 upheld and become due and payable.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4959015978.D