Tax Appeals Tribunal

State of New York

 

IN THE MATTER OF THE PETITION OF LEON MOED

FOR REDETERMINATION OF A DEFICIENCY OR FOR REFUND OF NEW YORK STATE AND NEW

YORK CITY INCOME TAXES UNDER ARTICLE 22 OF THE TAX LAW AND THE NEW YORK CITY

ADMINISTRATIVE CODE FOR THE YEARS 1987 AND 1988.

DTA No. 810997

TSB-D-95(3)I

January 26, 1995

 

Opinion

The Administrative Law Judge determined that petitioner maintained a permanent place of abode in New York; that he was a resident of New York City for 1987 (i.e., he spent 186 days in the City) and was not a resident for 1988 (i.e., he spent 180 days in the City); that petitioner's "food shopping on Fridays and other weekend days" were not days spent in New York for State income tax purposes; and that petitioner showed the requisite reasonable cause for waiver of penalty for the year 1987.

On exception, petitioner asserts that the Administrative Law Judge erred in concluding that petitioner maintained a permanent place of abode in New York City and that the Administrative Law Judge also erred in determining which days were spent in New York City for the years at issue.

On exception, the Division asserts that the Administrative Law Judge erred in her treatment of petitioner's food shopping on Fridays and other weekend days.
In his reply brief, petitioner addresses the Division's assertions concerning the food shopping days as follows:

"[t]he Division is simply incorrect about how the ALJ should have responded to Petitioner's Friday trips to the supermarket. Initially, the Division's brief in support of their Exception argued that the ALJ went beyond her powers in concluding that Petitioner's trips to the supermarket were not considered a day spent in New York. Petitioner responded that New York's own Audit Guidelines demonstrates that common sense should dictate when a taxpayer's presence in New York is to be deemed a New York day. In reply, the Division acknowledged that '[t]he purpose of the Audit Guidelines here would seem to be to direct the auditor to employ common sense to recognize and disregard similar examples of unavoidable or unintended New York presence.'

"Accordingly, Petitioner submits that the ALJ simply used the above mentioned common sense standard in concluding that Petitioner's four minute drive to the supermarket to buy groceries for consumption in Connecticut should not be counted as a New York day. Therefore, since the ALJ's decision has both a factual and legal basis to it, the ALJ should not be reversed on this issue" (Petitioner's reply brief, pp. 6-7).

We deal first with the issue of whether petitioner maintained a permanent place of abode in New York City.

Under Tax Law § 605(b)(1)(B), a taxpayer is considered a resident for New York State income tax purposes when the individual:
"is not domiciled in the state but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the taxable year in this state . . . . “

The Administrative Law Judge identified the first "two questions arising from this statutory definition of resident [as] (1) whether petitioner 'maintains' the apartment rented by Mrs. Moed and (2) whether petitioner's overnight arrangements at the apartment were within the statute's meaning of 'permanent' (see, Matter of Evans, Tax Appeals Tribunal, June 18, 1992)" (Determination, conclusion of law "A").
Using our decision in Evans for guidance, [FN7] the Administrative Law Judge concluded that:

"[i]n this case, petitioner supplemented Mrs. Moed's separate income based on an informal and amicable agreement on a monthly basis. The amount or nature of the monthly payment was not revealed in the record but it can be inferred that such amount derived from their marital relationship which also provided the basis for his overnight stays. Petitioner and Mrs. Moed may have been separated 'in fact'; however, they nonetheless maintained a viable familial relationship.

"In Matter of Evans, the Tribunal found relevant that the taxpayer contributed in kind by furnishing the rectory. Inasmuch as the apartment served as petitioner's marital home prior to 1983, it can be presumed that he contributed to the furnishing of the apartment. Given the particular circumstances of this case, petitioner 'maintained' the rented apartment for income tax purposes notwithstanding Leon and Marilyn Moed's determination to maintain separate residences for personal reasons (including Mr. and Mrs. Moed's individual effort to separate certain funds in the payment of bills concerning their respective dwellings)" (Determination, conclusion of law "A").

As to whether the rented apartment should be considered petitioner's permanent place of abode, the Administrative Law Judge, using Evans as guidance, [FN8] concluded that there were several factors which indicated that Mrs. Moed's rented apartment constitutes petitioner's permanent place of abode, the most important of which is petitioner's ongoing, though changed, relationship with Marilyn Moed since 1983. The Administrative Law Judge determined that:

"[a]lthough Mr. and Mrs. Moed may be separated 'in fact' for the purpose of establishing separate domiciles, it cannot be discerned from the facts in this case that petitioner was specifically limited in his access to the apartment. The testimony instead indicates that petitioner's prior phone calls to his wife before an overnight stay, and his overnight stays elsewhere, may have been a matter of choice and preference, or perhaps, a question of respect for his wife's privacy which he valued so highly for himself as well" (Determination, conclusion of law "A").
The Administrative Law Judge pointed out that, in her judgment, it is not the amount of time that is determinative but the regularity and certainty of the overnight arrangement that is essential in making a determination that the apartment served as a permanent place of abode for petitioner. There is nothing in the record to indicate that this regularity or certainty in the arrangement was at risk due to the marital relationship:

"[i]n sum, the separate domiciles reflect Mr. and Mrs. Moed's respect for each other's privacy and individual needs but, given the total circumstances, did not effect the permanency of Mr. Moed's overnight arrangements at his wife's apartment, which also served as his marital home prior to his move to Connecticut. The fact that petitioner limited his access to the apartment to an average of once a week appears to have been a matter of personal choice and not one of limited access. Based on all these factors, petitioner maintains a permanent place of abode in New York City for income tax purposes" (Determination, conclusion of law "A").

In his exception, petitioner argues that:

"[t]he evidence clearly and convincingly indicates an irregular and sporadic use of Mrs. Moed's New York apartment and, therefore, based on the totality of the circumstances, Petitioner does not maintain a permanent place of abode under Tax Law Section 605(b)(1)(B)" (Petitioner's exception, p. 2).

The core of petitioner's assertion concerning the maintenance of a permanent place of abode is that the Administrative Law Judge improperly relied upon the marital status of petitioner in weighting the evidence relevant to this issue. [FN9] Petitioner states that the Appellate Division, in affirming Evans, "emphasized the need for a connection between the petitioner's use of the New York residence and his furnishing of consideration" (Petitioner's brief, p. 10). Petitioner argues that, in this case:

"there is no evidence indicating any connection between [Mr. Moed's] informal payment of money to Mrs. Moed during their separation, the purchase of furniture for the New York apartment during the years Petitioner and Mrs. Moed lived together, [FN10] and the Petitioner's utilization of Mrs. Moed's apartment as a late night substitute hotel during the tax years at issue. Both the payment of a monthly amount of money to supplement Mrs. Moed's income and the transferring of the furniture to Mrs. Moed were simply part of the terms of the informal marital 'separation' settlement.

* * *

"There was no evidence that the Petitioner or Mrs. Moed viewed Petitioner's payment of money and transferring of the furniture as a quid pro quo for the utilization of the apartment. In addition, contrary to the situation in Evans, there is no evidence of a 'shared rental' arrangement between the Petitioner and Mrs. Moed. Accordingly, the only possible rationale for the ALJ's decision is the continued existence of the marital or familial status of the Petitioner and Mrs. Moed. This conclusion is contrary to New York State law where, as in this case, the spouses are separated in fact" (Petitioner's brief, pp. 11-12).

We reverse the determination of the Administrative Law Judge on this issue and agree with petitioner that he did not maintain a permanent place of abode in New York City for the years at issue. We rely for guidance on Matter of Evans v. Tax Appeals Tribunal (199 AD2d 840, 606 NYS2d 404), decided after the determination of the Administrative Law Judge was issued, in which the Appellate Division affirmed our decision and:

"reject[ed] petitioner's claim that his use of the rectory was not 'permanent' because he did not own, lease or rent the premises. We agree with the Tribunal that 'the permanence of a dwelling place * * * can depend on a variety of factors and cannot be limited to circumstances which establish a property right in the dwelling place"' (Matter of Evans v. Tax Appeals Tribunal, supra).

Comparing the facts in Evans to the facts here, we conclude that the apartment was not maintained by petitioner as a permanent place of abode.

Here, as in Evans, petitioner had no property right in the apartment, i.e., he did not own, lease or rent the apartment, rather, his wife rented the apartment.
Unlike the situation in Evans, here there is no evidence of a shared rental. There is no evidence indicating any connection between petitioner's informal marital separation agreement to pay money to Mrs. Moed and petitioner's utilization of the apartment. In fact, as the Administrative Law Judge pointed out in her determination, the "amount or nature of the monthly payment was not revealed in the record" (Determination, conclusion of law "A"). There is no evidence linking the furniture purchased by the Moeds when married with petitioner's utilization of the apartment.

Next, contrary to Evans, petitioner did not have free and continuous access to the apartment. Implicit in the Administrative Law Judge's determination is that there is some supervening legal definition of access which negates the Moeds' self-imposed restrictions in this case. We cannot agree. The fact that restrictions on petitioner's access to the apartment were imposed by mutual agreement between him and his wife does not alter the fact that his access was limited.

Finally, the fact that petitioner and Mrs. Moed sought to maintain a "viable familial relationship" does not make any less serious their marital separation "in fact." [FN12] Stated simply, marital status is clearly a pertinent factor to be considered among the totality of factors in determining domicile and residency. However, once the marital status has been established, here the Moeds' separation "in fact," the nature of the continuing inter- personal relationship between the Moeds does not provide sufficient basis for us to infer that petitioner's monthly payments were for shared rent or to presume that the furniture in the apartment was a contribution in kind as described in Evans or to doubt the self-imposed restrictions by the Moeds on petitioner's access to Mrs. Moed's apartment.

Since it is conceded that petitioner was domiciled in Connecticut for the years at issue, and since we have determined that petitioner did not maintain a permanent place of abode in New York State for the years at issue, we need not address either party's exception concerning the Administrative Law Judge's calculation of days in New York City or New York State.

Accordingly, it is ORDERED, ADJUDGED and DECREED that:
1. The exception of Leon Moed is granted;
2. The exception of the Division of Taxation is denied;
3. The determination of the Administrative Law Judge is reversed;
4. The petition of Leon Moed is granted; and
5. The Notice of Deficiency, dated February 8, 1991, is cancelled.

DATED: Troy, New York