As if federal citizenship-based taxation wasn’t bad enough, on the recently updated website of the Virginia Department of Taxation, we see a blatant attempt to scare people born in Virginia into paying taxes they don’t owe, by reiterating the falsehood that an American citizen by definition must be domiciled in one of the fifty states — since of course as we all know, no one ever checks out from the
Hotel California Greatest Country on Earth™ besides a few rich ingrates fleeing the estate tax:
Virginia residents who travel outside the country, or take up temporary or permanent residence abroad, should be aware of the filing provisions discussed below. If you are a Virginia resident who accepts employment in another country or moves outside the United States for other reasons (including military orders), the fact that you are living abroad does not mean that you are no longer considered a Virginia resident for tax purposes. Unless you have established residency in another state, you will still be considered a domiciliary resident of Virginia, and will be required to file Virginia income tax returns.
A domiciliary resident of Virginia is one whose legal domicile in the technical sense is in Virginia. Unless an individual acquires a legal domicile in another state, he or she is still a Virginia resident. This applies even if the person is residing in another jurisdiction and may have been residing there for a number of years. The fact that a person has been absent from Virginia, whether in the foreign service of the United States or in the exercise of private enterprise, does not in any way cancel out their Virginia citizenship or legal domicile.
In otherwords, if you’re not elsewhere in the United States, the Virginia Department of Taxation will try to claim you must be in Virginia — a ridiculous imitation of the federal law which claims that all U.S. Persons abroad live in neighbouring DC. But what does actual Virginia state taxation law have to say about this situation? 23 Virginia Administrative Code 10-110-30 B(3):
3. Domiciliary resident. A “domiciliary resident” is one whose legal domicile is Virginia. Most domiciliary residents actually live in Virginia; however actual presence in the state is not required. Any person who has not moved from the state with the intention of permanently residing outside of Virginia is still a domiciliary resident even though he may be actually living some place else.
A domicile once established continues until the individual moves to a new location with the bona fide intention of making his fixed and permanent home there. A person can have only one domicile. If he has two or more places of abode, his domicile is the one which he regards and uses as his permanent home.
Acquiring citizenship in a foreign country is pretty much a textbook example of intending to make your permanent home outside of Virginia, but don’t expect the Department of
Terror Tribute Taxation to want to let anyone know that. In fact, the idea that one can abandon Virginia domicile by moving abroad — not just for purposes of reality but for purposes of tax as well — is borne out by actual rulings of the Tax Commissioner. The best example I can find at short notice is this ruling from 1984, in which a taxpayer who left Virginia, had no income in Virginia, and had no ties to Virginia besides a house that he rented out was ruled to have redomiciled to the United Kingdom where, you know, he actually lived.
The determination of bona fide intention to change one’s domicile is a factual matter which must be resolved on an individual case basis. In making this determination consideration is given to a number of factors, including, but not limited to the following: sites of real and tangible property, location of savings and checking accounts, motor vehicle registration and licensing, motor vehicle operator’s license, voter registration, membership in clubs and civic groups, place of business, profession or employment, charitable contributions, location of schools attended by children, length of time of residence, place of birth and marriage, residence of family, reason for abandoning or acquiring domicile, and, in the case of a minor or married person, domicile of parents, husband, or wife and/or children. No single factor is dispositive in determining domicile; rather the factors are examined collectively to determine if the intent to acquire or abandon Virginia domicile exists. A simple declaration of intent to abandon domicile, or physical presence elsewhere is insufficient to abrogate Virginia domicile.
The idea that a government would take “place of birth” into account as an element of determining domicile shows desperation, but note even then that it’s only one of more than a dozen factors considered. Voter registration in Virginia — the only means by which a former Virginian residing overseas can exercise the pathetically limited franchise for which U.S. Persons abroad pay so dearly — is also no more than one factor.
Just keep in mind: once you’re out of Virginia, you’re much better off never going back. In one case in 1999, an Army guy who was stationed abroad for 12 years, married a German woman, had three German citizen children with her, and had no actually ties to Virginia was found to have been a “Virginia domiciliary resident” for all twelve of those years because after all he went through, he was caught up in the Army’s reduction in force layoffs, became unemployed, and chose to come to Virginia again to pursue civilian employment.
Even more bizarre is this case from 2001, in which a (possibly hypothetical?) minor who had never spent a day in Virginia and who worked overseas as a civilian employee at a U.S. Army base was determined to be a Virginia domiciliary because his parents were domiciled in Virginia when he turned 18.
My advice? Stay as far away from Virginia as possible. And I thought California was bad …