Did a taxpayer prove he was not a Virginia resident in 2011 after ignoring requests for domicile records?

Subject

One final chance to document non-Virginia domicile

Plain-English summary

The taxpayer had not proved that the 2011 Virginia residency assessment was wrong. He claimed not to have lived in Virginia since 2004, but Department records showed joint Virginia resident returns for 2006-2009, no Virginia returns for 2010-2012, financial documents mailed to a Virginia address, and a Virginia driver's license renewed through 2016.

The taxpayer provided federal and out-of-state returns for other years but no documents establishing his 2011 domicile. He also failed to answer a specific August 2015 information request.

Virginia assessments were presumed correct, placing the burden on the taxpayer. The ruling also warned that willful failure to provide required information can restrict judicial relief.

Result: the Commissioner granted one final 30-day period to return the domicile questionnaire and supporting documents. Without them, the assessment would be upheld and collection could resume.

What this means for you

• A statement that you moved is not enough; supply records for the exact year under review.
• Driver's licenses, prior resident returns, mailing addresses, and out-of-state returns should tell a consistent story.
• Answer Department information requests promptly and completely.
• This ruling left the merits open for 30 days; it was not a final finding that the taxpayer was domiciled in Virginia.

Common questions

Q: What evidence was missing?

A: The taxpayer provided no documentation about his 2011 domicile and did not return the requested questionnaire.

Q: Was the assessment immediately final?

A: No. The taxpayer received one final 30-day opportunity to submit proof.

Q: Who bore the burden?

A: The taxpayer, because a Department assessment was presumed correct.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-222

Original ruling text

December 8, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you request correction of the individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2011. I apologize for the delay in responding to your appeal.

FACTS

The Department received information from the Internal Revenue Service (IRS) that tax documents for the 2011 taxable year were sent to the Taxpayer at a Virginia address. The Department requested additional information from the Taxpayer in order to determine if his income was subject to Virginia income tax. When the Taxpayer did not respond to the information request, the Department issued an assessment for the 2011 taxable year. The Taxpayer appeals the assessment, contending he was not a Virginia resident.

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 has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Tax Commissioner must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer contends he has not resided in Virginia since 2004; however, the Department's records show the Taxpayer filed joint Virginia resident individual income tax returns for the 2006 through 2009 taxable years. The Taxpayer filed no Virginia returns for taxable years 2010 through 2012, but continued to receive financial documents at a Virginia address. In addition, the Taxpayer continued to hold a Virginia driver's license that was renewed in July 2008 and is set to expire in August 2016. DMV records indicate the Taxpayer has maintained an active account since 1996.

The Taxpayer provided a copy of his federal income tax return and his * (State A) income tax returns for the taxable years 2010 and 2013. However, no documentation has been provided with regard to the 2011 taxable year. Furthermore, the 2010 State A return shows a joint filing status, but only the wife's income is reported. The 2013 return shows both the Taxpayer and his wife's incomes were reported to State A.

By letter dated August 26, 2015, the Department requested specific information to confirm the Taxpayer's residency status for the 2011 taxable year. As of the date of this letter, no response has been received. 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 the 2011 assessment is erroneous. The Taxpayer has not provided such proof. In addition, 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.

I will however, grant the Taxpayer one final opportunity to return the domicile questionnaire and provide sufficient documents to support his claim that he maintained a domicile outside of Virginia for the 2011 taxable year. The requested information may be mailed to Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attn: *, P.O. Box 27203, Richmond, Virginia 27203. If the requested information is not received within 30 days from the date of this letter, the assessment will be upheld and collection actions may resume.

The Code of Virginia sections, and public documents 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/1-5979682216.D