Can I still prove I abandoned my Virginia domicile years ago even if I renewed my Virginia driver's license and kept vehicles registered there in the meantime?

Plain-English summary

The IRS flagged that a taxpayer might owe a 2018 Virginia income tax return. The Department's records showed no return filed, so it asked her for information and, based on her response, assessed her as a Virginia domiciliary resident (later crediting tax she'd paid to her new home state). She appealed, saying she'd actually left Virginia for good years before 2018.

This time, unlike similar cases the Department has rejected, the taxpayer won. She'd last lived in Virginia in 2011, then moved through two other states before settling in her current state in August 2017 -- leasing, then in 2021 buying, a home there, and consistently filing that state's resident returns, including for 2018. Yes, she'd kept a Virginia driver's license (renewed in December 2016) and three Virginia-registered vehicles, which is normally treated as strong evidence of staying a Virginia domiciliary. But she explained this was convenience during frequent moves, not a decision to keep Virginia as home -- and by the time of this ruling she'd transferred her license and registrations to her new state. The Department weighed everything together: nearly 12 years away from Virginia (the longer the absence, the more likely an intent to abandon), a purchased home, and years of consistent resident filings elsewhere, against a Virginia driver's license she said she didn't realize could raise residency questions. On balance, it found she did intend to make her new state her domicile, and abated the assessment -- while noting explicitly that cutting her Virginia ties sooner would have made her case stronger.

What this means for you

People who've relocated but haven't fully closed out old-state paperwork

Keeping an old state's driver's license or vehicle registration out of convenience, without realizing the residency implications, isn't automatically fatal to proving you've moved your domicile -- but it's a real risk factor you should clean up as soon as practical. Here, a nearly 12-year absence and a purchased home in the new state were strong enough to overcome that lingering paperwork; a shorter absence or less consistent filing history might not have been.

Multistate movers appealing a domicile assessment

The Department's own reasoning here highlights that domicile changes as part of a process, and when the timing of true intent is unclear, the Department will generally treat the change as having occurred toward the beginning of that process rather than the end -- which is a favorable read for taxpayers who can show consistent conduct (filings, home purchase) pointing the same direction over a long span.

Accountants and tax professionals

Compare this ruling against the Department's more common "failure to abandon" rulings (like P.D. 23-84 and P.D. 23-86 from the same batch): what distinguished this taxpayer was the sheer length of absence (~12 years, versus much shorter gaps in the losing cases) plus an actual home purchase and a clean, consistent out-of-state filing pattern -- not just spending 183+ days elsewhere.

Common questions

Q: If I renewed my old state's driver's license after moving, have I lost my domicile-change argument?
A: Not necessarily. It's still treated as a strong indicator of intent to retain domicile, but the Department will weigh it against everything else -- especially a long, unbroken absence and consistent filings in your new home state.

Q: How long an absence is "enough" to show abandonment?
A: There's no fixed number, but the Department has said longer absences make abandonment more likely; here, nearly 12 years combined with a home purchase and consistent filings tipped the balance in the taxpayer's favor.

Q: What should I do if I'm still holding onto my old state's license or registrations?
A: Transfer them to your new state as soon as practical -- doing so (as this taxpayer eventually did) removes an ongoing risk factor, even though it doesn't retroactively erase the fact that you once held them.

Q: Does this ruling apply to my situation?
A: Not automatically -- domicile is decided on "all the facts and circumstances" of each case, and the Department was explicit that no single factor controls.

Citations and references

• Va. Code § 58.1-302 (domiciliary resident and actual resident definitions)
• Va. Code § 46.2-323.1 (Virginia driver's license requires residency)
• Va. Code § 58.1-205 (assessments deemed prima facie correct)
• P.D. 00-151 (8/18/2000); P.D. 02-149 (12/9/2002) (driver's license as domicile evidence)
• P.D. 16-189 (9/19/2016) (length of absence and intent to abandon domicile)

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-85-0

Original ruling text

July 13, 2023

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond 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 Taxpayer’s response, the Department determined that she was taxable as a domiciliary resident of Virginia and issued an assessment accordingly. The Department subsequently adjusted the assessment by allowing a credit for income tax paid to * (State A). The Taxpayer appeals, contending she owes no income tax to Virginia because she 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 that person and the place to which that person intends to return even though they may be residing elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.

The Taxpayer explains that she last lived in Virginia in 2011. She lived and worked in * (State B) from April 2011 to November 2011, in *** (State C) from November 2011 to July 2017 and in State A since August 2017. She leased a personal residence in State A from August 2017 to September 2021 and then purchased a residence there, where she continues to reside. The Taxpayer filed a 2018 State A resident income tax return and her federal income tax return using her State A address. She also obtained a State A driver’s license and registered her vehicles in State A in 2022.

The Taxpayer also retained connections to Virginia. She retained a Virginia driver’s license, which was renewed in December 2016. She also owned three vehicles that were registered in Virginia. The Taxpayer explains that she retained and renewed her Virginia driver’s license and registered her vehicles at her parent’s Virginia address due to her frequent moves.

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).

Virginia Code § 58.1-205 provides that, in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show she was not subject to income tax in Virginia.

The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. Where a change of domicile occurs as part of a process, the exact timing of when the true intent of an individual forms to change domiciliary residence can be difficult to discern. Unless a change in domicile has clearly been established through the preponderance of evidence, the Department will generally consider a change to have occurred toward the beginning of the process.

The Taxpayer has not resided in Virginia since 2011, a period of approximately 12 years. The Department has reasoned that the longer a person is absent from a prior state or country of domicile, the more likely they intend to abandon such domicile. See P.D. 16-189 (9/19/2016).

The Taxpayer states that she renewed her Virginia driver’s license and vehicle registrations as a convenience because of her relocations. She also states that she was not aware that keeping her Virginia driver’s license and vehicle registrations could cause questions to be raised concerning the status of her domicile. The Taxpayer states that had she known, she would have not have renewed these connections. The Taxpayer has now transferred these official documents to State A. In addition, the fact that she has purchased a home in State A and continuously filed State A resident income tax returns evidences a strong intent to establish a State A domicile. Although she retained some connections with Virginia during her period of State A residence, it does not appear that the connections strongly evidenced an intent to retain a Virginia domicile under the unique facts of this case.

As stated above, a change in domicile occurs as part of a process in which no single factor is dispositive. Although it would have helped the Taxpayer’s case to have terminated her Virginia connections prior to moving to State A, it appears that the Taxpayer intended to make State A her domicile. Accordingly, the assessment for the 2018 taxable year will 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 website. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at (804) ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4388.B

Related Documents

00-151

02-149

16-189