Did new evidence show that a taxpayer who moved to Virginia in late October 2012 was only a part-year resident?

Subject

Taxpayer was subject to tax as a part-year resident for the taxable year.

Plain-English summary

Virginia reconsidered P.D. 16-61 after an individual supplied new documentation showing when he moved from another state to Virginia.

The new evidence showed that he left his job and former domicile and moved to Virginia after his wife's death, in late October 2012. Those facts established abandonment of the prior domicile and acquisition of Virginia domicile at that time, rather than at the beginning of the year.

As a part-year resident, he was taxable on income and Virginia modifications attributable to his Virginia-resident period. Personal exemptions and any Virginia standard deduction were prorated for the number of resident days.

Because the existing assessment used the best information available, Virginia directed him to file Form 760PY within 30 days. The Department would then adjust the assessment to the more accurate part-year liability.

Citations and references

• 23 VAC 10-20-165 F.
• Va. Code §§ 58.1-303 and 58.1-111.
• P.D. 16-61 and P.D. 14-67.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-170

Original ruling text

August 29, 2016

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek reconsideration of the Department's determination letter issued as Public Document 16-61 (4/20/2016) to * (the “Taxpayer”) for the taxable year ended December 31, 2012.

FACTS

In P.D. 16-61, the Department upheld an assessment issued to the Taxpayer based on a finding that the Taxpayer was subject to Virginia income tax for the 2012 taxable year. The Taxpayer has requested that the Department reconsider its determination, asserting that he was a resident of * (State A) prior to moving to Virginia. While admitting he withdrew funds from a 401K plan after he moved, the Taxpayer asserts the remainder of his income was earned while he resided in State A.

DETERMINATION

Reconsideration

Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer's request for reconsideration must meet one of the four following requirements:

1. The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner's misstatement of the facts presented or a clarification of the original facts presented in the taxpayer's administrative appeal;

2. The law upon which the original determination is based has been changed by legislation, court decision or other authority effective for the tax period(s) at issue;

3. The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or

4. The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the Department, and the additional evidence or documentation could produce a result different from the original determination.

With his request for redetermination, the Taxpayer has provided additional documentation to show he moved into Virginia from State A. The documentation indicates the Department may have made its determination in P.D. 16-61 based on inaccurate or incomplete facts.

Domicile

As indicated in P.D. 16-61, the Department determines a taxpayer's intent to change their domiciliary residence through the information provided. The taxpayer has the burden of proving that he or she has both abandoned his or her old domicile with an intent not to return to it and acquired a new domicile in another place with an intent to remain there permanently or indefinitely.

The Taxpayer acknowledges that he changed his domicile when he moved to Virginia. However, he argues he did not move into Virginia until October 2012. The new information confirms the Taxpayer left his job in State A and moved to Virginia after the death of his wife.

Part-Year Residents

Virginia Code § 58.1-303 provides that a person who becomes a resident of Virginia is subject to taxation during the period in which he or she is a Virginia resident and is taxed as a resident only for the portion of the year that he or she resides in Virginia. Accordingly, Virginia taxable income is computed by determining income, deductions, subtractions, additions and modifications attributable to the period of residence in Virginia. In addition, a part-year resident may claim a portion of his Virginia personal exemptions, but the exemptions will be prorated based upon the number of days that the taxpayer was a Virginia resident. Further, a part-year resident may claim a prorated Virginia standard deduction if he claims the standard deduction for federal income tax purposes. See Public Document (P.D.) 14-67 (5/20/2014).

CONCLUSION

Based on the information, the Taxpayer took sufficient steps to abandon his State A domicile and acquire domiciliary residence in Virginia in late October 2012. Accordingly, the Taxpayer was subject to tax as a part-year resident for the 2012 taxable year.

The assessment at issue was made based on the best information available to the Department pursuant to Va. Code § 58.1-111. The Taxpayer may have additional information that more accurately reflects his Virginia taxable income. Accordingly, the Taxpayer is hereby requested to file a part-year Virginia resident individual income tax return (Form 760 PY) for the 2012 taxable year to more accurately reflect his Virginia income tax liability.

The Taxpayer should file the requested return within 30 days of the date of this letter. Please mail the return and payment for the corresponding liability to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attention: *, P.O. Box 27203, Richmond, Virginia 23218-7203. A copy of this determination letter should be attached to the return. Once the return is received, it will be processed and the assessment will be adjusted accordingly. If the return is not filed within the allotted time, the assessment will be adjusted based on the information available and collection action will resume.

The Code of Virginia sections and public document 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/1-6328146765.B