Did new evidence about an out-of-state home and Virginia mailing arrangements prove that a taxpayer abandoned Virginia domicile for 2007?

Subject

Reconsideration evidence did not prove abandonment of Virginia domicile

Plain-English summary

Virginia refused to change its prior conclusion that the taxpayer remained a Virginia domiciliary resident in 2007. A domicile change required both a permanent move away from Virginia and acquisition of a new domicile intended to last permanently or indefinitely. The taxpayer bore the burden of proving both steps.

The taxpayer had lived in another state after marrying, but she continuously maintained and renewed a Virginia driver's license and registered vehicles in Virginia in 1994, 2004, and 2005. She was also constructing a Virginia residence and used a Virginia post office box for financial statements and utility bills connected to the out-of-state house.

Her additional evidence included an occupancy certificate for the Virginia residence and assertions about the layout and use of the out-of-state home. The Department found the home evidence inconclusive and held that a permanent abode elsewhere was not enough when the broader record failed to show permanent abandonment of Virginia. The taxpayer was again directed to file a 2007 Virginia resident return.

What this means for you

• A new residence elsewhere does not change domicile unless the old domicile is also abandoned.
• Renewing a Virginia driver's license and registering vehicles in Virginia are strong evidence of continued Virginia intent.
• Construction of a Virginia residence can weigh against a claimed permanent move away.
• Explanations for Virginia mailing arrangements matter, but the Department evaluates the full pattern rather than one reason in isolation.
• Reconsideration requires evidence strong enough to change the earlier factual conclusion.

Common questions

Did the taxpayer's out-of-state house establish a new domicile?

No. The Department found the submitted information about that house inconclusive and focused on the complete record.

Why did the driver's license matter?

The taxpayer kept it current and renewed it as required for Virginia residents, which the ruling treated as evidence of retained domicile.

Was a permanent Virginia home required for Virginia domicile?

No. The ruling said a permanent place of abode is an indicator, but not required when other evidence shows no intent to move away permanently.

What was the final filing instruction?

The taxpayer was told to file a 2007 Virginia resident return within 30 days or the assessment would be upheld and collection could resume.

Citations and references

• Va. Code § 58.1-302.
• Robert H. Talley v. Commonwealth of Virginia, 127 Va. 516, 103 S.E. 612 (1920).
• State-Planters Bank v. Commonwealth of Virginia, 174 Va. 289, 6 S.E.2d 629 (1940).
• Virginia Public Documents 11-120, 02-148, and 99-158.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-86

Original ruling text

May 24, 2012

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This is in response to your request for reconsideration of the determination letter, issued as Public Document (P.D.) 11-120 (6/30/2011), to * (the "Taxpayer") for the taxable year ended December 31, 2007.

FACTS

In P.D 11-120, the Department determined that the Taxpayer was a domiciliary resident of Virginia and subject to Virginia individual income tax in the 2007 taxable year. The Taxpayer contests a number of the findings made by the Department and has provided additional documentation concerning her claim that she was a domiciliary resident of * (State A).

DETERMINATION

As indicated in P.D. 11-120, consideration may be given to the individual's expressed intent, conduct, and all attendant circumstances in determining 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.

In numerous cases, Virginia courts have held that changing domicile is a two-step process. First, a person must intend to permanently move away from one domicile. Second, the person must acquire a new domicile where he intends to remain permanently or indefinitely. See Robert H. Talley v. Commonwealth of Virginia , 127 Va. 516, 103 S.E. 612 (1920) and State-Planters Bank, v. Commonwealth of Virginia , 174 Va. 289, 6 S.E.2d 629 (1940). An individual will be considered to have retained his old domicile until a new domicile is established. The burden of proving a change in domicile lies with the individual alleging the change.

In this case, the Taxpayer was a Virginia resident in 1993 before marrying her husband and moving to State A. Accordingly, the Taxpayer must show that she intended to both permanently move from Virginia and remain indefinitely in State A.

Driver's License and Vehicle Registrations

After relocating to State A, the Taxpayer continued to maintain her Virginia driver's license. In fact, she has kept her Virginia license current, renewing it as required for Virginia residents. See P. D. 02-148 (12/09/2002).

In addition, the Taxpayer registered motor vehicles in Virginia in 1994, 2004 and 2005. The Taxpayer contends the vehicles were registered in Virginia because of security concerns in State A, and in anticipation of completing the construction her Virginia residence.

Permanent Place of Abode

The Taxpayer asserts that she was a permanent resident of the house in State A and did not have a permanent place of abode in Virginia during the taxable years at issue. In addition, the Taxpayer has provided a copy of the occupancy certificate to support her contention that construction on the Virginia residence was not complete until the 2009. The Taxpayer indicates that the State A house was a multi-family residence in which the basement was rented a separate living unit.

Property tax records from State A indicate that the house was classified as a single family unit and no building permits were requested to make additions to its original structure. As such, the Department finds the information concerning the State A house to be inconclusive. Further, while a permanent place of abode is an indication of an individual's intent, it is not required when sufficient evidence indicates that such individual did not intend to permanently move away from Virginia. See P.D. 99-158 (6/21/1999).

Post Office Box

The Taxpayer contends that she used a Virginia post office box to prevent identity theft and to receive sensitive correspondence. As evidence, the Taxpayer provided copies of financial statements and utility bills for the State A residence that were received at the Virginia post office box.

Virginia Code § 58.1-302 sets forth factors to be used in determining one's 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.

CONCLUSION

The Taxpayer was a domiciliary resident of Virginia prior to relocating to State A. Based on the preponderance of evidence, I find that the Taxpayer failed to abandon her Virginia domicile. Accordingly, I must conclude that the Taxpayer was a domiciliary resident of Virginia for the 2007 taxable year.

The Taxpayer again is advised to file a 2007 Virginia income tax return as a resident in order to more accurately reflect her Virginia income tax liability. The return should tie submitted to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond Virginia 23261-7203, Attention *, within 30 days from the date of this letter. If the return is not received, the Department's assessment will be upheld and collection actions may resume.

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

Sincerely

Craig M. Burns

Tax Commissioner

AR/1- 4844531406.D