Could a taxpayer undo her 2009 Virginia resident return without clearly documenting where she lived and established domicile?

Plain-English summary

Virginia treated the taxpayer as a full-year resident because she did not clearly prove where she lived or established domicile in 2009. She registered to vote in another state in October 2008, used that state's address on her federal return, and obtained that state's identification card in July 2009.

But she kept a Virginia driver's license until October 2009, filed a Virginia resident return, and continued Virginia wage withholding. Her employer was within commuting distance of both Virginia and the other state, and she did not document an income-tax return or permanent home in the other state—or a permanent home in Virginia.

The Department found that she could have been a resident of either state or a part-year resident of both. Because the evidence did not overcome the presumption that the Virginia assessment was correct, the Department relied on her full-year Virginia return. It allowed 30 days for one last submission before the assessment became final and collection resumed.

What this means for you

• A claim that a Virginia return was filed by mistake needs evidence showing the taxpayer's actual residence and domicile.
• Voting, identification, licensing, withholding, tax returns, housing, and commuting facts can point in different directions.
• The taxpayer bears the burden of proving a Virginia assessment wrong.
• Failing to provide requested records can prevent administrative or judicial relief.

Common questions

Q: Did the Department conclusively find the taxpayer lived in Virginia all year?
A: It found the available evidence unclear, but treated her as a resident because she filed a full-year Virginia return and did not carry her burden.

Q: What key documentation was missing?
A: Clear proof of where she resided, including a permanent place of abode and other-state tax filing evidence.

Q: Could the assessment still change?
A: Yes, if she submitted adequate additional information within 30 days.

Citations and references

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

Subject

The information provided fails to clearly indicate where the Taxpayer resided in 2009.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-88

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 Taxpayer filed a 2009 Virginia income tax return. The Department adjusted the Virginia return based on the federal data and issued an assessment for additional tax and interest. The Taxpayer appeals the assessment, contending she did not work or reside in Virginia during the 2009 taxable year and the Virginia return was filed in error.

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 the taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country or another country who has not abandoned his Virginia residency continues to be subject to Virginia taxation.

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.

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.

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.

The Taxpayer performed a number of actions to show she intended to establish

domicile in * (State A). The Taxpayer registered to vote in State A in October

2008 and filed her 2009 federal income tax return with a State A address. In addition, she obtained a State A identification card in July 2009.

Other factors indicate the Taxpayer's intent to continue her domicile in Virginia. The Taxpayer held her Virginia driver's license until October 2009, and filed a Virginia resident income tax return. In addition, the Taxpayer continued to have Virginia income tax withheld from her wages during 2009.

The information provided fails to clearly indicate where the Taxpayer resided in 2009. Her employer was located in * (State B), which is in commuting distance from either State A or Virginia. The employer did not withhold any State A income tax, and the Taxpayer has not documented that she filed a State A income tax return. Further, the Taxpayer has provided no documentation that she established a permanent place of abode in either Virginia or State A.

By letter dated August 31, 2012, the Department requested additional information to determine the Taxpayer's domicile. Although some information was provided, the Taxpayer has failed to furnish sufficient documentation to clearly identify her domiciliary residence in 2009. Based on the Departments review of the evidence available, the Taxpayer could have been a resident of either Virginia or State A or a part-year resident of both states. Without a clear indication of the Taxpayer's intent as evidenced through the requested documentation, the Department must conclude that she was a resident of Virginia as indicated by the filing of a Virginia income tax return as a full year resident.

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

Notwithstanding the above, I will allow the Taxpayer one last opportunity to provide the Department with additional information regarding this matter. This information should be mailed to the Department's Office of Tax Policy, Appeals and Rulings, Post Office Box 27203, Richmond, Virginia 23261-7203, Attn: *. Upon receipt, the documentation will be reviewed to determine if a revision to the assessment is appropriate. If the documentation is not provided within 30 days from the date of this letter, the assessment will be considered correct as issued and collection action will resume.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & 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/1-5179971557.D