In Virginia P.D. 13-115 (June 26, 2013), the Department of Taxation (“Department”) determined whether a taxpayer reestablished residency in Virginia in 2009. The Taxpayer was a Virginia resident and after college moved to State A, where he established residency and filed state tax returns. In 2007 he moved to State B to attend law school, but he did not establish residency in State B. While in law school, he maintained some connection to Virginia. He renewed his Virginia driver’s license, completed an internship in Virginia, and had mail directed to his parents’ house in Virginia. The question becomes whether the Taxpayer abandoned his State A domiciliary and established residency in Virginia when he renewed his connection with the state.
The Department notes two types of residents: domiciliary and actual. A domiciliary residence means “the permanent place of residence of a taxpayer and the place which he intends to return even though he may reside elsewhere.” An actual resident means “a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia.”
The Taxpayer had abandoned his domiciliary residence when he moved to State A after college. When he reestablished his connection with Virginia, he did not establish actual residency with the state, because he did not live in Virginia for 183 days. While he took steps to reestablish his domicile with Virginia, the Department noted that there was not sufficient evidence that he did in fact reestablish his domiciliary residence with Virginia. He demonstrated a greater intent to retain his State A domiciliary residency because “he took a position with a law firm in State A” after law school, married a resident of State A, and “sat for and passed the State A bar exam.” Consequently, the Department determined that the Taxpayer was not subject to Virginia resident income tax in 2009 because he was a domiciliary resident of State A in 2009.
This ruling demonstrates how fact- and circumstance-driven state residency cases are for taxpayers. Taxpayers who seek to change their state of residency should take sufficient steps to abandon the domiciliary and actual residency with their old state and effectively establish residency in their new state.
The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.
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