Can I still prove I abandoned my Virginia domicile if I kept my Virginia driver's license and vehicle registration the whole time I lived in another state?

Plain-English summary

The IRS told Virginia it looked like this taxpayer should have filed a 2018 Virginia income tax return. He hadn't, and when the Department asked for more information, it concluded he was still a Virginia domiciliary resident and assessed tax. He appealed, arguing he had actually become a resident of another state ("State A") by 2018.

The record showed he had lived and worked in Virginia, then took an indefinite-duration job in State A starting in July 2016, leased a home there, and used his State A address on both his employer wage statements and his federal tax returns for 2018 and 2019. He only returned to Virginia in 2021, apparently because of COVID-19 workplace disruptions -- not because he had planned all along to come back.

Working against him: he never switched over his Virginia driver's license, kept a vehicle registered in Virginia (stored at his parents' home), and was still registered to vote in Virginia (though he hadn't actually voted since 2008). Normally, retaining or renewing a Virginia driver's license is treated as strong evidence that someone intends to remain a Virginia domiciliary -- Virginia law requires a driver's license applicant to certify Virginia residency, so keeping the license can look like an ongoing claim of Virginia residency. But the taxpayer explained he simply didn't own or drive a car in State A -- he used public transportation there -- so he never had a practical reason to register a vehicle or switch his license, and the Department found that explanation genuinely reduced how much weight his retained Virginia license and registration should carry.

Weighing everything together -- five years of continuous, indefinite employment in State A, his home there, and his own federal tax filings listing that address -- against the explained (and therefore less damaging) Virginia driver's license and vehicle ties, the Department found he had adequately proven he abandoned his Virginia domicile and established a new one in State A. The assessment was abated.

What this means for you

If you move out of Virginia for a job but keep your Virginia driver's license or vehicle registration

Retaining a Virginia license and vehicle registration is still a real strike against you in any future domicile dispute -- don't assume this ruling gives you a pass. But if you have a genuine, explainable reason you never got around to switching them (for example, you don't own or drive a car in your new state), documenting that reason can help offset the usual weight the Department gives to those unresolved Virginia ties, especially alongside strong, well-documented evidence of your new state ties (a lease, years of work there, your employer's and your own federal filings using that address).

If you're a Virginia auditor or accountant weighing a similar case

This ruling doesn't change the general rule that renewing or retaining a Virginia driver's license is strong evidence of continued domiciliary intent (see P.D. 02-149). It shows that evidence can be outweighed when the taxpayer offers a credible, specific reason the license/registration was never updated (here, no car use in the new state, echoing P.D. 17-147) combined with substantial, well-documented ties elsewhere over a multi-year period.

If you're a dual-status taxpayer worried about double taxation while sorting out your domicile

Even if the Department initially treats you as a Virginia domiciliary while you're also taxed as an actual resident of another state, Virginia law provides a credit for income tax paid to that other state (Va. Code § 58.1-332), so you aren't necessarily taxed twice on the same income while the residency question gets resolved.

Common questions

Q: Does keeping my Virginia driver's license automatically mean I'm still a Virginia domiciliary resident?
A: No single factor is automatically decisive, but keeping (and especially renewing) a Virginia license is treated as strong evidence of continued Virginia domicile. It can be outweighed by other strong, well-documented ties to your new state, particularly if you can explain why the license was never switched.

Q: What made the difference in this case if the taxpayer kept his license and registered vehicle the whole time?
A: He credibly explained he didn't own or drive a car in his new state, so the retained Virginia license and registration weren't really acting on an ongoing basis the way they normally would. That, combined with five years of indefinite employment, a leased home, and consistent use of the new-state address on wage statements and federal tax returns, was enough to meet his burden of proving a genuine domicile change.

Q: Whose burden is it to prove a domicile change?
A: The taxpayer's. If the information provided is inadequate, the Department must conclude the person intended to remain a Virginia domiciliary indefinitely.

Citations and references

• Va. Code § 58.1-302 (domiciliary resident and actual resident defined)
• Va. Code § 46.2-323.1 (driver's license applicants must certify Virginia residency)
• Va. Code § 46.2-307 (nonresidents may continue using a home-state license)
• Va. Code § 46.2-100 (definition of "nonresident" under Title 46.2)
• Va. Code § 58.1-332 (credit for income tax paid to another state)
• P.D. 00-151 (8/18/2000) (domicile outside Virginia can be established even while retaining a VA license)
• P.D. 02-149 (12/9/2002) (renewing a VA driver's license is a strong indicator of intent to retain VA domicile)
• P.D. 17-147 (8/23/2017) (use of public transportation in the new state mitigates a retained VA license)

Subject

Residency: Domicile - Sufficient Documentation of Intent to Change

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-155

Original ruling text

November 16, 2022

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, 2018.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2018 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if her income was taxable in Virginia. Based on the information provided, the Department determined that the Taxpayer was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was a resident of * (State A).

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia 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 Department must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer was an actual and domiciliary resident of Virginia prior to beginning employment in State A in July 2016. The Taxpayer began leasing a personal residence in State A at that time. He lived and worked in State A until he returned to Virginia in 2021. The Taxpayer’s wage statements from his employer listed his State A address, and he listed that same address on his federal income tax return for 2018 and 2019. His employment in State A appeared to have been of an indefinite duration, and it appears that he only returned to Virginia because of workplace disruptions brought about by the COVID-19 pandemic.

The Taxpayer also maintained connections with Virginia. The Taxpayer retained his Virginia driver’s license and continued to have a vehicle registered within the Commonwealth and stored at his parent’s home. Voting records indicate that the Taxpayer was registered to vote in Virginia, but he had not done so since 2008.

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 previous correspondence with the Department’s audit staff, the Taxpayer’s representative complained that the Taxpayer was being subjected to double taxation essentially because he did not appear before State A’s motor vehicle agency to obtain a State A driver’s license. In cases such as this one, when a taxpayer is an actual resident of another state and potentially still a domiciliary resident of Virginia, it is true that the taxpayer could be subject to tax in both states as a so-called “dual resident.” Virginia law, however, generally protects such taxpayers against the risk of double taxation by allowing a credit for income tax paid to the other state. See Virginia Code § 58.1-332.

The fact that an individual has a Virginia driver’s license is one factor to consider, among other possible factors, in any given domicile case. Nonresidents are not permitted to hold Virginia driver’s licenses. See Virginia Code § 46.2-323.1. They are, however, permitted to continue to use their licenses from their home states or countries. See Virginia Code § 46.2-307. For the purposes of Title 46.2 of the Code of Virginia , “nonresident” is generally defined as every person who is not domiciled in the Commonwealth. See Virginia Code § 46.2-100. Thus, in general, an individual must be a domiciliary resident of Virginia in order to hold a Virginia driver’s license.

Individuals who have resided in Virginia more than six months, however, are deemed to be residents for purposes of applying most of the provisions of Title 46.2 of the Code of Virginia , including the driver’s licensing provisions of Title 46.2, Chapter 3 ( Virginia Code § 46.2-300 et seq.). In addition, because an individual who has been physically present and residing in Virginia for more than six months may nevertheless remain a domiciliary resident of another state or country, it may be necessary in such cases to examine additional factors to determine whether a person who has obtained a driver's license based on physical presence and actual residency in Virginia also intended to become a domiciliary resident of Virginia. However, once it is clear that an individual has established domiciliary residency in Virginia, subsequent renewals of a Virginia driver’s license even while absent from the state will be considered very strong evidence of the individual’s intent to remain a domiciliary resident of Virginia. That is because the basis of the individual’s claim to be entitled to a Virginia driver’s license would no longer be based on the length of time he was physically present in Virginia as an actual resident, but rather on the implication that he remained a domiciliary resident of Virginia.

Although the Taxpayer retained his Virginia driver’s license and his vehicle was registered in Virginia, he states that he did not obtain a State A license because he used public transportation and did not use a vehicle while living in State A. The Taxpayer admits that he should have switched his license over to State A but asserts it was more easily forgotten because he was not using a car there. The fact that the Taxpayer used public transportation in State A mitigates the fact that he retained a Virginia driver’s license. See P.D. 17-147 (8/23/2017). In addition, it would have been unnecessary to register the vehicle in State A since it was not being garaged or used there.

The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the Taxpayer adequately established his intent to abandon Virginia and establish State A as his domicile. Accordingly, the assessment shall be abated.

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/4126.Y

Related Documents

00-151

02-149

17-147