Did a taxpayer prove she was domiciled outside Virginia in 2011 without providing the requested objective records?

Subject

One final chance to prove non-Virginia domicile

Plain-English summary

The taxpayer had not proved that the 2011 Virginia residency assessment was wrong. Her federal return used a Virginia mailing address, and she supplied no objective domicile evidence despite two Department requests.

Virginia assessments were presumed correct, placing the burden on the taxpayer. A statement of another-state residence did not establish abandonment of Virginia domicile without supporting conduct and records.

Result: Virginia granted one final 30-day opportunity to submit the requested evidence. Without it, the assessment would be upheld and payable.

What this means for you

• Respond fully to domicile questionnaires and document requests.
• Support intent with licenses, voting, housing, vehicles, employment, and other objective records.
• Mailing addresses can become relevant evidence.
• A final response period is not a finding that the taxpayer won or lost on complete facts.

Common questions

Q: Was domicile finally decided?

A: No. The taxpayer received one last opportunity to prove her claim.

Q: Who bore the burden?

A: The taxpayer, because the assessment was presumed correct.

Citations and references

• Va. Code §§ 58.1-205 and 58.1-302.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-182

Original ruling text

September 24, 2015

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, 2011.

FACTS

The Department received information from the Internal Revenue Service (IRS) that the Taxpayer filed her 2011 federal income tax return using a Virginia mailing 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 she was a resident of * (State A) during the 2011 taxable year.

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 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, situs of real or 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 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. A taxpayer has the burden of proving that he or she abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.

By letters dated March 20, 2015, and June 8, 2015, 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 her 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 she 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 her domicile for the 2011 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 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/1-5979682194.M