Was an out-of-state college student a Virginia resident for tax purposes after maintaining a Virginia abode for more than 183 days in 2012?

Subject

Taxpayer maintained a place of abode for more than 183 days in Virginia during 2012 and was subject to tax as a resident.

Plain-English summary

The taxpayer attended college in Virginia during the spring and fall 2012 semesters and returned to her home state for the summer. She argued that she remained domiciled in the other state.

Virginia agreed that college students often retain their prior domicile. But domicile is only one route to resident taxation. A person is also an actual Virginia resident by maintaining a place of abode in the Commonwealth for an aggregate of more than 183 days during the year.

The spring and fall semester pattern made it likely that the taxpayer maintained a Virginia abode for more than 183 days. She was therefore likely taxable as a Virginia resident even if her legal domicile remained elsewhere.

The assessment had been estimated from the best information available. Virginia gave the taxpayer 30 days to file a 2012 individual return and supporting material so the liability could be adjusted; otherwise the assessment would stand.

Common questions

Can a student keep an out-of-state domicile but still owe tax as a Virginia resident? Yes. The actual-resident rule independently applies when a Virginia abode is maintained for more than 183 days.

Did the ruling conclusively count every day? It said the semester facts made it likely the threshold was met and allowed a final return and documentation period.

Citations and references

• Va. Code §§ 58.1-111 and 58.1-302.
• P.D. 82-39 and P.D. 11-121.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-14

Original ruling text

March 2, 2016

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, 2012. I apologize for the delay in responding to your appeal.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia individual income tax return for the 2012 taxable year. A review of the Department's records showed the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if her income was subject to Virginia income tax. When a response was not received, the Department issued an assessment. The Taxpayer filed an appeal, contending she attended a Virginia college but was domiciled in * (State A) during the taxable year at issue.

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.

It has been the Department's experience that college students rarely establish domicile where they attend college. See Public Document (P.D.) 82-39 (4/2/1982) and P.D. 11-121 (6/30/2011). Thus, while the Taxpayer lived most of the year in Virginia, she could retain her State A domicile.

As indicated above, however, an individual may be subject to tax as a Virginia resident simply by maintaining a place of abode in the Commonwealth for more than 183 days. In this case, the Taxpayer spent the spring semester at college in Virginia, returned to State A for the summer, and returned to school for the fall semester. Under these circumstances, it is likely the Taxpayer maintained a place of abode for more than 183 days in Virginia during 2012 and was subject to tax as a resident.

The assessment was made based on the best information available pursuant to Va. Code § 58.1-111. The Taxpayer may have information that better represents her Virginia income tax liability for the year at issue. Therefore, the Taxpayer will be granted one last opportunity to file a 2012 Virginia individual income tax return. All documentation should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161­7203, Attention: *. Upon receipt, the documentation will be reviewed and the assessment will be adjusted, as appropriate. If the documentation is not received within the allotted time, the assessment will be considered to be correct as issued and collection actions may result.

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/1-6101057862.D