Use your browser's "back" button to return to the text.In the Matter of BURKE DTA No. 810631; TSB-D-94-(18)I; STATE OF NEW YORK-TAX APPEALS TRIBUNAL June 2, 1994
On exception, the Division asserts that petitioners have not demonstrated a change in domicile. The Division states that the Administrative Law Judge's conclusion to the contrary is incorrect for the following reasons: (1) the implication that Florida family ties are stronger than New York family ties is not supported by the record; (2) the finding that Paul A. Burke was not actively [*28] involved in the affairs of his New York business interests is not a rational interpretation of the evidence; (3) the record does not support the premise that petitioners moved their focus of home from New York to Florida prior to the years in question; and (4) the testimony of Paul Burke as to the purpose of the telephone calls to his office is incredible.
In response, petitioners present arguments to support the determination of the Administrative Law Judge.
We affirm the determination of the Administrative Law Judge for the reasons set forth below.
Tax Law @ 605(b)(1)(A) provides, in pertinent part, as follows:
"Resident individual. A resident individual means an individual:
"(A) who is domiciled in this state, unless (i) he maintains no permanent place of abode in this state, maintains a permanent place of abode elsewhere, and spends in the aggregate not more than thirty days of the taxable year in this state. . . ."
While there is no definition of "domicile" in the Tax Law (cf., SCPA 1103[15]), the Division's regulations (20 NYCRR former 102.2[d]) provide, in pertinent part:
"(1) Domicile, in general, is the place which an individual intends to be his permanent home [*29] -- the place to which he intends to return whenever he may be absent. (2) A domicile once established continues until the person in question moves to a new location with the bona fide intention of making his fixed and permanent home there. No change of domicile results from a removal to a new location if the intention is to remain there only for a limited time; this rule applies even though the individual may have sold or disposed of his former home. The burden is upon any person asserting a change of domicile to show that the necessary intention existed. In determining an individual's intention in this regard, his declarations will be given due weight, but they will not be conclusive if they are contradicted by his conduct. The fact that a person registers and votes in one place is important but not necessarily conclusive, especially if the facts indicate that he did this merely to escape taxation in some other place.
* * *
"(4) A person can have only one domicile. If he has two or more homes, his domicile is the one which he regards and uses as his permanent home. In determining his intentions in this matter, the length of time customarily spent at each location is important [*30] but not necessarily conclusive. As pointed out in subdivision (a) of this section, a person who maintains a permanent place of abode in New York State and spends more than 183 days of the taxable year in New York State is taxable as a resident even though he may be domiciled elsewhere."
Permanent place of abode is defined in the regulations at 20 NYCRR former 102.2(e)(1) as:
"a dwelling place permanently maintained by the taxpayer, whether or not owned by him, and will generally include a dwelling place owned or leased by his or her spouse."
As the Administrative Law Judge stated:
"[t]o effect a change in domicile, there must be an actual change in residence, coupled with an intent to abandon the former domicile and to acquire another (Aetna National Bank v. Kramer, 142 App Div 444, 445, 126 NYS 970). Both the requisite intent as well as the actual residence at the new location must be present (Matter of Minsky v. Tully, 78 AD2d 955, 433 NYS2d 276)" (Determination, conclusion of law "C").
The concept of intent was addressed by the Court of Appeals in Matter of Newcomb (192 NY 238, 250-251):
"Residence means living in a particular locality, but domicile means [*31] living in that locality with intent to make it a fixed and permanent home. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile.
"The existing domicile, whether of origin or selection, continues until a new one is acquired, and the burden of proof rests upon the party who alleges a change. The question is one of fact rather than law, and it frequently depends upon a variety of circumstances, which differ as widely as the peculiarities of individuals. . . . In order to acquire a new domicile there must be a union of residence and intention. Residence without intention, or intention without residence, is of no avail. Mere change of residence although continued for a long time, does not effect a change of domicile, while a change of residence even for a short time, with the intention in good faith to change the domicile, has that effect. . . . Residence is necessary, for there can be no domicile without it, and important as evidence, for it bears strongly upon intention, but not controlling, for unless combined with intention, it cannot effect a change of [*32] domicile. . . . There must be a present, definite, and honest purpose to give up the old and take up the new place as the domicile of the person whose status is under consideration. . . . [E]very human being may select and make his own domicile, but the selection must be followed by proper action. Motives are immaterial, except as they indicate intention. A change of domicile may be made through caprice, whim, or fancy, for business, health, or pleasure, to secure a change of climate, or change of laws, or for any reason whatever, provided there is an absolute and fixed intention to abandon one and acquire another, and the acts of the person affected confirm the intention. . . . No pretense or deception can be practiced, for the intention must be honest, the action genuine, and the evidence to establish both clear and convincing. The animus manendi must be actual with no animo revertendi. . . .
"This discussion shows what an important and essential bearing intention has upon domicile. It is always a distinct and material fact to be established.
Intention may be proved by acts and by declarations connected with acts, but it is not thus limited when it relates to mental [*33] attitude or to a subject governed by choice."
The Administrative Law Judge, after considering all of the evidence and testimony presented, concluded that petitioners had demonstrated a change in domicile. Applying the above principles to the facts of this case, we agree that petitioners have proven, by clear and convincing evidence (Matter of Bodfish v. Gallman, 50 AD2d 457, 378 NYS2d 138), their intention to change their domicile from New York State to Florida.
The Division makes several arguments on exception. However, these arguments fail to warrant resolution of this matter in favor of the Division. The underlying tone of all the arguments the Division sets forth is that, during the years in dispute, petitioners maintained ties to New York which evince a clear lack of intent to change domicile. However, we agree with the Administrative Law Judge that, notwithstanding that petitioners maintained some ties to New York, a taxpayer may change his or her domicile without severing all ties to New York State (see, e.g., Matter of Sutton, Tax Appeals Tribunal, October 11, 1990) and petitioners did so by moving their focus of home from New York to Florida prior to the years [*34] in question. Our affirmance of the Administrative Law Judge is based upon several aspects of his determination.
First, we disagree with the Division that the finding that Paul A. Burke was not actively involved in the affairs of his New York business interests is not a rational interpretation of the evidence. The Division argues that given the magnitude of the rental operation managed by Burke Rental Corporation that it was unreasonable for the Administrative Law Judge to believe Mr. Burke's testimony that his telephone calls to New York were mostly about personal financial affairs. The Division contends that these telephone calls were about the business and that these telephone calls indicate Mr. Burke's role in the business was not passive, and that Mr. Burke took a more active role when he is in New York.
Several factors support the Administrative Law Judge's conclusion. The most important factor is that the Administrative Law Judge determined that Mr. Burke's explanations as to the content of the telephone calls and the nature of his involvement in the business were credible after hearing the testimony and evaluating its reasonableness. We defer to this evaluation of credibility [*35] (Matter of Spallina, Tax Appeals Tribunal, February 27, 1992) and the Division has not pointed to any facts sufficient to override our deference. n8 Also, as the Administrative Law Judge found:
"the overall amount of telephone contact (some 24 hours over three years) and the limited number of office visits do not seem sufficient to constitute active involvement, or to foster efficiency, in managing the business. Furthermore, Ms. Bugenhagen handled personal business (e.g., central bill paying) for the Burkes. While she would know which business operational expenses needed paying, she would not know which personal bills were valid and should be paid (not having been with the Burkes)" (Determination, conclusion of law "E").
n8 We do not find it significant that petitioners indicated that they were actively involved in the high rise housing partnerships on their tax returns for the years in question. As stated in the facts, petitioners claim that this was a clerical error from which they received no tax benefit. The Division has not disputed the latter claim.
Thus, we agree with the Administrative Law Judge that it is not unreasonable to accept petitioners' explanation [*36] that the telephone calls/office visits related primarily to such personal matters. In addition, there is no sense from the description of the business, as finally established, that active involvement by Mr. Burke was required, either on an overall basis or during the part of the year when the Burkes were physically present in New York. As the Administrative Law Judge noted:
"Such a conclusion [that Mr. Burke was actively involved in his business interests] would run counter to the credible testimony by Mr. Burke that he neither needed nor wanted to be active in the business and that such involvement would undermine the authority and autonomy of Ms. Bugenhagen and her staff -- a result directly contrary to the system petitioners had worked to establish" (Determination, conclusion of law "E").
Next, the Division contends that if petitioners had any family ties they existed in New York. However, as manifested in the findings of fact, petitioners' family and social lives, while not exclusive to, both became centered in Florida prior to the years in question.
The fact that the Burkes continue to maintain a large New York, residence, and did not sell their original New York home until [*37] 1987, does not indicate that they could not have intended to effectuate a change in domicile. n9 A taxpayer may change his or her domicile without severing all ties to New York State (see, e.g., Matter of Sutton, supra). The test of intent with respect to changing one's domicile is "whether the place of habitation is the permanent home of a person, with the range of sentiment, feeling and permanent association with it" (Matter of Bodfish v. Gallman, supra, 378 NYS2d 138, 140). In this regard, we agree with the Administrative Law Judge that it is very significant that the Burkes moved their most personal belongings and memorabilia to Florida, including photographs, china and the like. n9
n9 In conclusion of law "E," the Administrative Law Judge's determination stated, in relevant part:
"[p]etitioners sold their long-term home in New York (Errick Road) and purchased a condominium in Florida. At the same time, petitioners sold a condominium in the Bahamas, acquired in the mid-1970's and used extensively over the years by petitioners. . . . Petitioners did acquire a new house in New York after selling their long-term home" (Determination, conclusion of law "E").
Here, the Administrative Law Judge misstakes the sequence of petitioners' real estate transactions involving their Bahamas, Florida and two New York properties. Petitioners purchased the Florida condominium prior to the sale of their long-term New York home and acquired a new New York house before this sale. However, this sequence is correctly reflected by the Administrative Law Judge and this Tribunal in the findings of fact. [*38]
Finally, the Administrative Law Judge found that the Burkes clearly changed their lifestyle when they changed their domicile from New York to Florida in 1985. The Burkes retired in 1985, became passive in their business interests and retired to a stable Florida retirement community. The Administrative Law Judge found that petitioners were ready to change "to a hands-off, relaxed and recreation/social-oriented lifestyle" in contrast to the long work days and lifestyle the Burkes maintained while they lived in New York prior to 1985.
Based on the foregoing, we agree with the Administrative Law Judge that petitioners have shown, in a clear and convincing manner, that they perfected a change in domicile to Florida prior to the years in dispute.
Accordingly, it is ORDERED, ADJUDGED and DECREED that;
1. The exception of the Division of Taxation is denied;
2. The determination of the Administrative Law Judge is affirmed;
3. The petition of Paul A. and Ellen E. Burke is granted; and
4. The Notice of Deficiency dated March 11, 1991 is cancelled.
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