Did a lease and claimed out-of-state driver's license prove that a taxpayer had abandoned Virginia domicile for 2014?

Subject

The burden of proving a change of domicile remains with the Taxpayer.

Plain-English summary

The taxpayer said he lived and worked outside Virginia throughout 2014 and supplied a lease and a copy of an out-of-state driver's license. Virginia nevertheless found that he had not provided enough evidence to prove a change of domicile.

Changing domicile required both abandoning the old Virginia domicile with no intent to return and becoming physically present in a new place with intent to remain permanently or indefinitely. The person claiming the change carried the burden of proof, and Virginia evaluated conduct and circumstances rather than accepting a declaration by itself.

Here, Virginia DMV records showed that the taxpayer maintained a vehicle in Virginia and had held a Virginia driver's license since 2012. His federal return also used his mother's Virginia address, which he said he used for important documents. The out-of-state license copy was illegible.

Virginia therefore left the assessment unresolved rather than accepting the claimed move. It gave the taxpayer one final 30-day opportunity to submit adequate domicile documentation; without it, the assessment would be treated as correct and collection could follow.

Common questions

Is living and working in another state enough to change Virginia domicile? Not by itself. The taxpayer must prove abandonment of Virginia domicile and acquisition of a new domicile through presence and intent to remain.

Why did the Virginia driver's license matter? Virginia law requires an applicant to certify Virginia residency, and the Department treats obtaining or renewing a Virginia license as a strong indicator of intent to retain Virginia domicile.

Did Virginia finally uphold the assessment in this letter? It found the evidence insufficient but allowed 30 more days for supporting documentation before the assessment would be considered correct as issued.

Citations and references

• Va. Code §§ 58.1-302 and 46.2-323.1.
• P.D. 00-151, P.D. 02-149, and P.D. 03-47.
• Barbara B. Woods v. Commonwealth, Case No. L 97-422 (Wise County Circuit Court, March 30, 2002).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-31

Original ruling text

March 18, 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, 2014.

FACTS

The Taxpayer filed a 2014 Virginia resident income tax return. The Department issued an assessment for the balance reported on the return. The Taxpayer appeals the assessment, contending that he lived and worked in * (State A) for the entire 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 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.

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 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 residency or domicile.

The Taxpayer appears to have engaged in a number of activities indicating an intent to establish domicile in State A. He states that he moved to State A from * (State B) in February 2014. He has provided a copy of a lease agreement for a property located in State A, and a copy of a State A driver's license as proof that he resided in State A during the 2014 taxable year. The driver's license copy was illegible.

The Taxpayer, however, performed several steps indicative of an establishing domicile in Virginia. While the Taxpayer asserts he did not own an automobile, Virginia Department of Motor Vehicles (DMV) records show, the Taxpayer maintained a motor vehicle in Virginia and has held a Virginia driver's license since November 2012. The license is set expire in January 2017. The Taxpayer's federal income tax return was filed using a Virginia address. The Taxpayer contends his mother resides in Virginia, and he uses her address to receive important documents.

In regard to the driver's license, Virginia Code § 46.2-323.1 states, "No driver's license... shall be issued to any person who is not a Virginia resident." In fact, this section states that every person applying for a driver's license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver's license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver's license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002). In Barbara B. Woods v. Commonwealth , Case No. L 97-422 (March 30, 2002), published as P.D. 03-47 (1/1/2003), the Circuit Court of Wise County indicated the plaintiffs Virginia driver's license was an important connection in establishing a positive or presumptive proof of intention to remain in Virginia for an unlimited time.

As stated above, the burden of proving a change of domicile remains with the Taxpayer. Based on the information provided, the Department finds the Taxpayer has failed to provide sufficient evidence that he was not a domiciliary resident of Virginia during the taxable year at issue.

I will allow the Taxpayer one final opportunity to provide adequate documentation with regard to his domiciliary status in State A. The 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 23161-7203, Attention: *. 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/1-6128805876.D