Tax Appeals Tribunal
State of New York
*1 IN THE MATTER OF
THE PETITION OF JACK AND HELEN ARMEL
FOR REDETERMINATION OF A DEFICIENCY OR FOR REFUND OF NEW
YORK STATE PERSONAL
INCOME TAX UNDER ARTICLE 22 OF THE TAX LAW FOR THE YEARS
1987 AND 1988.
DTA No. 811255
TSB-D-95(28)I
August 17, 1995
Opinion
The
Administrative Law Judge determined that petitioners changed their domicile to Florida by 1987. The Administrative
Law Judge based his conclusion on the credible testimony of Mr. Armel and
documentary evidence presented by petitioners, all of which established that:
1) by 1987 petitioners' business interests were passive; 2) petitioners
undertook substantial efforts to sell their Saratoga Springs home; 3)
petitioners elected to maintain two relatively valuable automobiles in Florida
while keeping a more modest vehicle in New York; and 4) petitioners also
presented numerous objective criteria supporting a change of domicile to
Florida, e.g., receipt of a Florida driver's license by Mr. Armel, transfer of
petitioners' Merrill Lynch brokerage account to Florida and the direct deposit
of Social Security checks into a Florida bank.
The
Administrative Law Judge further concluded that petitioners failed to establish
that they spent less than 184 days in New York State in 1988. The
Administrative Law Judge noted that petitioners conceded they were in New York
from mid-May to mid-October and it was the remainder of the year which was at
issue. The Administrative Law Judge accorded little weight to the letters
submitted by friends and neighbors. The Administrative Law Judge also did not
find the airline ticket receipts to be supportive of petitioners' position
because the tickets did not show whether there were trips to New York between
the scheduled departure and arrival.
*9
With respect to petitioners' credit card statements and telephone bills,
the Administrative Law Judge further stated:
"[g]enerally,
a record of credit card purchases and telephone bills is not considered
sufficiently precise to meet the requirements of 20 NYCRR former 102.2(c) (see,
e.g., Matter of Kornblum, Tax Appeals Tribunal, January 16, 1992). This is
particularly true in this instance since petitioners have not presented any
reason for concluding the Division's analysis was erroneous" (Determination,
conclusion of law "Q").
The
Administrative Law Judge denied a motion by petitioners to reopen the record to
admit a document petitioners obtained only after the close of proceedings. The
Administrative Law Judge, relying on Matter of Jenkins Covington, N.Y. (Tax
Appeals Tribunal, November 21, 1991, affd Matter of Jenkins Covington, N.Y. v.
Tax Appeals Tribunal, 195 AD2d 625, 600 NYS2d 281, lv denied 82 NY2d 664, 610
NYS2d 151), determined that petitioners failed to show that the evidence could
not readily and with due diligence have been offered at the time the record was
open.
Petitioners,
on exception, assert that the Administrative Law Judge applied the incorrect
rule of law to conclude that petitioners were not statutory residents for 1988.
Petitioners argue that the Administrative Law Judge's statement that records
are required to substantiate presence outside of the State contradicts this
Tribunal's decision in Matter of Avildsen (Tax Appeals Tribunal, May 19, 1994).
Petitioners further contend that the Administrative Law Judge erred by not
re-opening the record. In the interests of justice and fairness, petitioners argue they should have
been allowed to introduce the new evidence.
Petitioners
contend that even if the new evidence is not considered, there is sufficient
evidence in the record to establish that they were not statutory residents for
the year 1988. Petitioners further contend that New York's definition of
"resident" violates the Due Process and Commerce Clauses of the
United States Constitution. Petitioners argue that New York's definition is
inconsistent with the principles of Due Process set forth in Texas v. Florida
(306 U.S. 398). Petitioners also argue that New York's definition does not
comport with the "internal consistency" doctrine of the Commerce
Clause.
The
Division argues that the Administrative Law Judge correctly analyzed the issue
of statutory residency and urges the affirmation of the determination with
respect to this point.
We
reverse the determination of the Administrative Law Judge.
Tax
Law § 605(b) provides, in part, that a resident is one:
"(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,
or . . .
"(B)
who is not domiciled in this 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" (Tax Law § 605[b]).
*10
We begin by noting that petitioners are correct in asserting the Administrative
Law Judge used an incorrect analysis in determining what constitutes sufficient
evidence for the issue of statutory residency. The Administrative Law Judge
recited 20 NYCRR former 102.2(c), emphasizing the final sentence of the
regulation which addresses record keeping for persons domiciled outside the
State.
20
NYCRR former 102.2(c) provided that:
"[i]n
counting the number of days spent within and without New York State, presence
within New York State for any part of a calendar day constitutes a day spent
within New York State, except that such presence within New York State may be
disregarded if it is solely for the purpose of boarding a plane, ship, train or
bus for travel to a destination outside New York State. Any person domiciled
outside New York State who maintains a permanent place of abode within New York
State during any taxable year, and claims to be a nonresident, must keep and
have available for examination by the Tax Commission adequate records to
substantiate the fact that he did not spend more than 183 days of such taxable
year within New York State" (20 NYCRR 102.2[c], emphasis added).
In
Matter of Avildsen (supra), we held a virtually identical regulation addressing
New York City residency did not govern the production of evidence at a Division of Tax Appeals hearing. We stated in
Avildsen that section 11- 1705(b)(1)(B) of the Administrative Code of the City
of New York [FN3] does not define the type of proof required by a taxpayer to
establish that he was not in New York City for more than 183 days. We further
concluded that the regulation [FN4] at issue in Avildsen did not require, as a
matter of law, the production of records at a Division of Tax Appeals hearing.
We noted that had the Division promulgated such a regulation, absent
legislative direction, it would have exceeded the Division's authority.
Consequently, we determined in Avildsen that credible testimony was sufficient
to meet the taxpayer's burden. As a result, we conclude the Administrative Law
Judge erred in focusing exclusively on 20 NYCRR former 102.2(c) in determining
what was necessary to meet a taxpayer's burden at a Division of Tax Appeals
hearing [FN5] and in not considering the credible testimony of Mr. Armel.
Turning
to the facts, petitioners, through their testimonial and documentary evidence,
have clearly and convincingly proven that they were in New York for less than
184 days in 1988. The Administrative Law Judge relied in part on Mr. Armel's
credible testimony in concluding that petitioners changed their domicile before
1987. We can see no basis to find Mr. Armel's testimony credible on the issue
of domicile but to find it incredible on the intertwined issue of statutory
residency (see, Matter of Mobley v. Tax Appeals Tribunal, 177 AD2d 797, 576
NYS2d 412, appeal dismissed 79 NY2d 978, 583 NYS2d 195). Mr. Armel testified that during the period at issue
he was mindful of the 183-day rule for statutory residency and that the only
time he and his wife spent in New York in 1988 was between May 15th and October
15th. Mr. Armel further testified that their move to Florida began with the
purchase of a condominium in late 1984 and since then they have traveled to New
York only for the summer months.
*11
The Division asserts that petitioners' testimony is not credible because
Mr. Armel did not account for he and his wife's whereabouts on any specific
day. We find it was unnecessary for petitioners to do so. The degree of
specificity required of their testimony regarding days in and out of the State
must be evaluated based on the factual issues raised (see, e.g., Matter of
Avildsen, supra [frequent travel to and from New York and absence of supporting
documentation required testimony providing a day-by-day accounting for the
period at issue]; cf. Matter of Sutton, Tax Appeals Tribunal, October 11, 1990
[general testimony to the effect that the petitioner was in New York
"certainly less than 100 days a year" corroborated by specific documentary
evidence sufficient to meet the petitioner's burden]). In this case, it is
important to stress that, according to the findings of fact, the only days in
issue are the 26 days from December 7 through December 31, 1988. Second, the
issue of petitioners' location on these days arises in the context of their
claim that they spent the entire winter in Florida in 1988, as was their custom
since 1984. Under these circumstances,
petitioners can prevail by proving that they stayed in Florida for the entire
winter of 1988. They need not establish their whereabouts each specific day.
Mr.
Armel's credible testimony is corroborated by other evidence in the record.
Affidavits and letters submitted by petitioners' friends and neighbors support
a finding that petitioners were in Florida for the month of December.
Petitioners
introduced into evidence a letter from Ms. Pat Griffen, a neighbor who watches
petitioners' house in Saratoga Springs when petitioners are not in New York.
Also in evidence is an affidavit from two friends who reside across the street
from petitioners' house in Saratoga Springs. Petitioners further submitted a
letter from friends in Saratoga Springs who visit petitioners in Florida.
Finally, a fourth signed statement was submitted by six members of a poker club
Mr. Armel participates in every Tuesday while in Sarasota. The documents
corroborate petitioners' position that they travel back to Florida every year
from New York in mid-October and do not return to New York until the following
May.
The
Administrative Law Judge accorded the four documents little weight on the basis
that it was unlikely that friends and neighbors would recall precisely the
arrival and departure dates for the years at issue. While we agree with the
Administrative Law Judge that such recollection is unlikely, we also find
petitioners are correct to point out that "the precise recollection of the
dates of arrival and departure should not
have been the focus of his inquiry" (Petitioners' brief on exception, p.
20). Petitioners further note that, "[i]t is entirely credible for these
witnesses to know and remember whether petitioners were present in New York
during December, 1988, even assuming, arguendo, that they may not remember
petitioners' precise departure date in October . . . . The question here is not
whether petitioners left New York on some particular date in October 1988,
rather the question is whether they were absent in December, 1988, more than a
month later" (Petitioners' brief on exception, p. 21). We find the letters
and affidavits to be probative for the limited purpose of supporting
petitioners' position that they were not in New York during the month of December,
1988.
*12
As a result of our conclusions above, the remaining issues are rendered
moot.
Accordingly
it is ORDERED, ADJUDGED and DECREED that:
1.
The exception of Jack and Helen Armel to the determination of the
Administrative Law Judge is granted;
2.
The exception of Jack and Helen Armel to the order of the Administrative Law
Judge is denied;
3.
The determination of the Administrative Law Judge is modified to the extent
that petitioners were not statutory residents for the year 1988;
4. The order of the Administrative Law Judge is sustained;
5. The petition of Jack and Helen Armel is
granted;
6.
The motion of Jack and Helen Armel to reopen the record is denied; and
7.
The Notice of Deficiency dated July 19, 1991 is cancelled.
DATED:
Troy, New York
