Did new school, property, license, and vehicle evidence overturn Virginia's finding that a couple kept Virginia domicile during foreign assignments?

Plain-English summary

A couple asked Virginia to reconsider a ruling that they remained Virginia domiciliaries during temporary assignments in two foreign countries. They offered new school, property, license, and vehicle evidence.

The outcome did not change. Virginia corrected one vehicle-registration fact but found the remaining evidence still failed to prove a new foreign domicile or abandonment of Virginia.

Reconsideration standard

23 VAC 10-20-165(F) permits reconsideration when newly discovered evidence unavailable during the original appeal could produce a different result. The Department reviewed the additional evidence under that standard.

Why the new evidence was insufficient

Children's schooling and Washington, D.C. property did not show intent to stay permanently in either foreign country; a planned D.C. move reinforced the temporary nature of those assignments.

DMV data also showed the licenses were surrendered in February 2017, not early 2016 as claimed, and duplicate Virginia licenses were issued in June 2017. Although no vehicle was registered in Virginia during 2016, that correction did not outweigh the couple's other significant Virginia connections.

What this means for you

• New evidence must be capable of changing the actual domicile analysis.
• Correcting one fact may not alter the result when other ties remain strong.
• Temporary foreign work does not establish permanent or indefinite intent.
• Verify factual claims against official licensing and registration records.

Common questions

Q: Did Virginia ignore the new evidence?

A: No. It reviewed it and corrected the inaccurate 2016 vehicle fact.

Q: Why did the assessments still stand?

A: The couple still failed to prove both a new domicile and abandonment of Virginia.

Citations and references

• 23 VAC 10-20-165(F) — reconsideration
• Va. Code § 58.1-205 — burden of proof
• Prior determination discussed: P.D. 18-161

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 19-38

Original ruling text

April 18, 2019

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you seek reconsideration of Public Document (P.D.) 18-161 (8/22/2018) and correction of the Virginia individual income tax assessments issued to * (the “Taxpayers”) for the taxable years ended December 31, 2015 and 2016.

FACTS

In P.D. 18-161, the Department found that the Taxpayers were domiciliary residents of Virginia and upheld the assessments issued to the Taxpayers for the 2015 and 2016 taxable years. The Taxpayers have asked the Department to reconsider its determination, asserting that the Department’s determination was based on inaccuracies, misinterpretations, and factual errors with regard to their Virginia residency status.

DETERMINATION

Reconsideration

Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, the Department will consider a request for reconsideration if the taxpayer has discovered additional evidence that was not available at the time of the original administrative appeal, and the additional documentation could produce a result different from the original determination. The Taxpayers provided additional evidence related to their domicile, and assert that some of the facts upon which the original determination was based are inaccurate.

Establishing a new domicile

In order to change domicile, a taxpayer must establish that they had personal presence in a new place and a simultaneous intent to remain there permanently or indefinitely. In P.D. 18-161, the Department found that the Taxpayers did not prove their intent to remain permanently or indefinitely in * (Country A) and *** (Country B) because they were there pursuant only to a temporary assignment from the husband’s employer.

The Taxpayers’ additional evidence concerns their children’s school enrollment and real property ownership in Washington D.C. This new information does not contradict any facts relied upon by the Department concerning the temporary nature of their relocation to Country A and Country B. In fact, the Taxpayers’ intent to relocate to Washington D.C. further supports the Department’s finding that the Taxpayers did not intend to stay in Country A and Country B permanently or indefinitely.

Abandoning Virginia domicile

A taxpayer also must establish an intent to abandon their Virginia domicile with no intention of returning to Virginia in order to change their domicile to another place. The Department’s original determination found that the Taxpayers did not prove their intent to abandon their Virginia domicile because they continued to own real property in Virginia, they were both registered to vote in Virginia and the husband voted in the 2016 general election, the husband maintained a Virginia vehicle registration, and they both continued to hold Virginia driver’s licenses. The Taxpayers, however, dispute that they maintained Virginia driver’s licenses or had vehicles registered in Virginia.

Driver’s Licenses

The Department’s original determination found the Taxpayers obtained or renewed their Virginia driver’s licenses in 2012 and 2014, they maintained their licenses throughout the 2015 and 2016 taxable years, and both licenses remain active. The Taxpayers contend that they surrendered their Virginia driver’s licenses in early 2016. They claimed that attached to their reconsideration request was a letter they sent to the Virginia DMV surrendering their licenses, but no such letter was actually provided. Virginia DMV records show that the Taxpayers were issued licenses in 2012 and 2014, surrendered their licenses in February 2017, and were reissued duplicate licenses in June 2017. Based on the available information, there is no reason to believe that the facts relied upon by the Department were inaccurate.

Vehicle Registration

The Department’s original determination found that an automobile was registered in Virginia in the husband’s name in 2015 and 2016. The Taxpayers provided proof of sale for two motor vehicles, one in 2014 and another in 2015. They contend this information proves that they did not have any vehicles registered in Virginia. DMV records confirm that the Taxpayers did not have a vehicle registered in Virginia in 2016. After selling the two previously mentioned vehicles, the Taxpayers did not have any vehicles registered in Virginia until 2017, when a third vehicle was registered in Virginia.

A correction of the misstated Virginia vehicle registration information does not change the result of the Department’s original determination because the Taxpayers continued to maintain significant connections with Virginia. In fact, the Taxpayers’ proof of sale included an email chain in which the Taxpayers assert that their home address is their Virginia residence.

CONCLUSION

As indicated in P.D. 18-161, 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. See Virginia Code § 58.1-205. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayers have not provided sufficient evidence to demonstrate that their income was not taxable or that their assessments should be adjusted. While I recognize a continued disagreement about the validity of these assessments, this letter constitutes the Department’s final determination on this issue. The Taxpayers will receive an updated bill, which will include accrued interest to date.

The Code of Virginia section, regulation, 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/1837C

Related Documents

18-161