When did a taxpayer on out-of-state and foreign job assignments successfully abandon Virginia domicile?

Plain-English summary

Virginia upheld the taxpayer's 2007 resident assessment but abated the 2008 and 2009 assessments. The evidence showed a new foreign domicile beginning in 2008, not earlier.

In 2005, the taxpayer resigned from a job in another state, moved to Virginia to stay with friends and family, obtained a Virginia driver's license, and established a Virginia mailing address. Although he kept voter registration in the former state and lacked a permanent home or job anywhere, those actions showed he abandoned the former domicile and acquired Virginia domicile.

He returned to the former employer in 2006, first moving back temporarily and then accepting a temporary assignment in one foreign country. Merely leaving Virginia and taking temporary work did not prove he had established a new permanent domicile for 2007. He also retained the Virginia license.

The taxpayer was later permanently assigned to a position in another country and established a permanent place of abode there. Virginia found that sufficient to abandon Virginia domicile beginning with 2008.

The Department therefore left P.D. 11-79 and the 2007 assessment unchanged, but abated the 2008 and 2009 assessments. It warned that a Virginia driver's license and Virginia mail connections could prompt future residency inquiries.

What this means for you

• Domicile must be evaluated year by year when assignments and living arrangements change.
• Temporary employment and merely moving away do not establish a new domicile.
• A permanent assignment plus a permanent home can support a change.
• Driver's licenses, mailing addresses, and voting ties remain important evidence.

Common questions

Q: Why did Virginia treat him as domiciled here in 2007?
A: His out-of-state and foreign arrangements were temporary, and he had not documented a new permanent domicile.

Q: What changed for 2008?
A: He received a permanent foreign assignment and established a permanent home there.

Q: Which assessments were abated?
A: 2008 and 2009; the 2007 assessment was upheld.

Citations and references

• Va. Code § 58.1-302.
• P.D. 11-79 (May 26, 2011).

Subject

Taxpayer failed to demonstrate the clear intent to abandon his Virginia domicile

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-211

Original ruling text

December 13, 2012

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter seeking reconsideration of the Department's determination letter, issued to * (the "Taxpayer") as Public Document (P. D.) 11-79 (5/26/2011) for the taxable year ended December 31, 2007. You also ask for the correction of an individual tax assessment issued to the Taxpayer for the taxable years ended December 31, 2008 and 2009.

FACTS

In P.D. 11-79, the Department upheld the assessment issued to the Taxpayer on the basis that the Taxpayer failed to demonstrate the clear intent to abandon his Virginia domicile because he retained connections with Virginia and the job assignments were temporary. Subsequent to the issuance of P.D. 11-79, the Department issued an assessment of individual income tax for the 2008 and 2009 taxable years on the basis that the Taxpayer was a Virginia domiciliary resident. The Taxpayer requests a redetermination of P.D. 11- 79 and appeals the 2008 and 2009 assessments, contending he never intended to establish Virginia domiciliary residency.

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 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 this burden, the Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

In 2005, the Taxpayer resigned from his employer in * (State A) for personal reasons and moved to Virginia to stay with friends and family. While in Virginia, he obtained a Virginia driver's license and established a Virginia mailing address.

The Taxpayer argues that he wanted to take a leave of absence from his employer, and he did not intend to leave his State A employment. According to the Taxpayer, company policy did not permit such an absence for personal reasons. No matter the reason, the Taxpayer resigned his position in 2005 and left State A to come to Virginia without any assurance that the State A employer would hire him back.

The Taxpayer also asserts that he stayed at various locations while in Virginia and never established a permanent place of abode and, therefore, could not have established domicile in Virginia. The Department must examine all the facts and circumstances regarding an individual's residency in order to determine the domiciliary residence of such individual.

Based on the facts, the Taxpayer did not have a permanent place of abode or employment anywhere. Although he retained his voting registration in State A, he obtained a Virginia driver's license, lived in Virginia and established a Virginia mailing address. Based on these facts, the Department must conclude that the Taxpayer changed his domicile to Virginia when he abandoned his State A domicile in 2005.

When the Taxpayer was rehired by the State A employer in 2006, he temporally moved back to State A and then onto * (Country A). The information provided indicates that the Country A assignment was temporary and the Taxpayer was later transferred to a permanent assignment in *** (Country B).

Other than moving out of Virginia, the Taxpayer has provided no documentation that he established domicile outside Virginia during the 2007 taxable year. He continued to retain his Virginia driver's license, availing himself of the rights and privileges of Virginia citizenship.

The evidence also shows that the Taxpayer was subsequently permanently assigned to a position in Country B, where he has established a permanent place of abode. Accordingly, I find that the Taxpayer successfully abandoned his Virginia domicile beginning with the 2008 taxable year.

In accordance with this determination, the assessments for the 2008 and 2009 taxable years will be abated. While the Department concedes the residency issue for these taxable years, the Taxpayer should be aware that continuing connections with Virginia, such as possession of a Virginia driver's license and receiving mail at a residence in Virginia, will likely continue to result in future contacts by the Department with respect to the situs of the Taxpayer's domicile. As in any determination, a change in the facts and circumstances could result in a change in the Department's determination in subsequent taxable years.

Based on the facts presented, I find no basis to change my determination in P.D. 11-79 regarding the 2007 taxable year. Accordingly, the assessment for the 2007 taxable year is upheld. The Taxpayer will receive an updated bill with interest accrued to date. The Taxpayer should remit payment within 30 days from the date of bill to avoid the accrual of additional interest.

The Code of Virginia section and public documents 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 * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4826078248.B