Did an other-state return and surrender of a Virginia license prove that a taxpayer changed domicile before 2009?

Plain-English summary

Virginia kept the 2009 assessment in place because the taxpayer did not provide enough evidence to prove a completed change of domicile. Federal information returns had been sent to a Virginia address, and the Department issued an assessment after its initial information request went unanswered.

The taxpayer later showed that she filed a 2009 resident return in another state and surrendered her Virginia driver's license in August 2008. Those facts supported her position, but they did not provide the full evidence Virginia had requested about abandoning Virginia and establishing a permanent home in the new state.

Because a Virginia assessment is presumed correct and the taxpayer bears the burden of proof, the assessment remained due and payable. The Department allowed one final 30-day period to provide the previously requested records before upholding the assessment and resuming collection.

What this means for you

• An other-state return and license change are helpful but may not prove the entire domicile timeline.
• A domicile change requires both abandonment of Virginia and actual establishment of a new permanent or indefinite home.
• Respond fully to Department information requests; incomplete records can preserve the assessment and limit later court relief.
• Organize housing, presence, employment, family, voting, licensing, and property evidence for the year at issue.

Common questions

Q: What evidence supported the taxpayer?
A: Her 2009 other-state return and the August 2008 surrender of her Virginia driver's license.

Q: Why was that not enough?
A: She did not supply the remaining requested information needed to establish the full domicile change.

Q: Was there another chance to respond?
A: Yes. The Department granted 30 days to provide the missing evidence.

Citations and references

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

Subject

Taxpayer has failed to provide the necessary information to prove establishment of domicile in another State.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-87

Original ruling text

June 10, 2013

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, 2009. I apologize for the delay in responding to your appeal.

FACTS

The Department received information from the Internal Revenue Service (IRS) that the Taxpayer received federal information returns at a Virginia address. The Department requested additional information from the Taxpayer in order to determine if her income was taxable in Virginia. When no response was received, the Department issued an assessment for additional tax and interest. The Taxpayer appeals the assessment, contending she has been a permanent resident of * (State A) since the 2008 taxable year.

DETERMINATION

Domicile

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 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 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 or 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 Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer contends she changed her domicile to State A in 2008. The Taxpayer provided a copy of a 2009 State A income tax return reporting all income and withholding tax to State A. In addition, Virginia Department of Motor Vehicle records indicate the Taxpayer surrendered her Virginia driver's license in August 2008.

The Department contacted the Taxpayer during the 2007 and 2008 taxable years regarding her Virginia domicile. The Taxpayer continued to maintain connections in Virginia during the 2009 taxable year. By letter dated August 31, 2012, the Department requested the Taxpayer provide sufficient information to ascertain her domiciliary status. As of the date of this letter, the Taxpayer has failed to provide the necessary information to prove she abandoned her Virginia and established domicile in State A.

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 she was not subject to income tax in Virginia. Accordingly, the 2009 assessment remains due and payable.

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 assessment was attributable to a taxpayer's willful failure or refusal to provide the Department with necessary information as required by law.

The Taxpayer, however, will be granted one last opportunity to provide the information required to support her claim. The previously requested documentation must be provided within 30 days from the date of this letter. Please send the requested information to the Department's Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attn: *. If the information is not received within the allotted time, the Department's assessment will be upheld and collection actions may resume.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions 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/1-5087340510.D