Matter of KERNDTA No. 812127; TSB-D-95-(30)I
STATE OF NEW YORK-TAX APPEALS TRIBUNAL
November 9, 1995
OPINION: The Administrative Law Judge noted that it was undisputed that Ralph and Leona Kern maintained a permanent place of abode in New York City. Therefore, the issue was whether petitioner spent in excess of 183 days in the City. The Administrative Law Judge found the testimony of petitioner and his witnesses to be credible, but not sufficiently specific to meet petitioner's burden. The Administrative Law Judge pointed to the fact that testimony as to petitioner's "pattern of conduct" varied between the individuals testifying.
For example, the Administrative Law Judge noted that Mr. Kern testified that he went into his New York office only two to three times a week. Petitioner's [*21] witness, Mr. Farrell testified, however, that Mr. Kern "hardly ever" went to the office during the period at issue. The Administrative Law Judge did credit petitioner for days where his testimony was corroborated by documentation. Further, relying on Stranahan v. New York State Tax Commn. (68 AD2d 250, 416 NYS2d 836), the Administrative Law Judge also held that 11 days petitioner spent as an inpatient at the New York hospital cannot be counted as days spent in New York City for the purpose of determining statutory residency. The Administrative Law Judge further held that the rule in Stranahan cannot be expanded to include outpatient visits.
We affirm the determination of the Administrative Law Judge.
Section 11-1705(b)(1)(B) of the Administrative Code of the City of New York provides, in part, that a City resident individual includes an individual: "(B) who is not domiciled in this city but maintains a permanent place of abode in this city and spends in the aggregate more than one hundred eighty-three days of the taxable year in this city."
As a preliminary matter, we wish to address statements made by petitioner in footnote "8" in his brief on exception. Petitioner [*22] questions whether the burden of clear and convincing evidence imposed on taxpayers in statutory residency matters is warranted. Petitioner notes that Matter of Newcomb (192 NY 238), the authority relied on for applying the clear and convincing evidence standard to statutory residency matters, was a domicile case. Petitioner states that, "because statutory residence cases do not involve issues of intent . . . but apply an objective test of presence, the need for a heightened level of proof does not appear to exist, and the 'preponderance of the evidence' standard of proof should be applied" (Petitioner's brief on exception, p. 10).
We disagree with petitioner's conclusion. The application by the courts of the standard of clear and convincing evidence has not been limited to issues of intent. The courts have applied this standard in sales tax audit cases where the taxpayer must prove by clear and convincing evidence that either the method used to arrive at the assessment or the assessment itself are erroneous (see, Matter of Flanagan v. New York State Tax Commn., 154 AD2d 758, 546 NYS2d 205; Matter of Grecian Sq. v. New York State Tax Commn., 119 AD2d 948, 501 NYS2d 219; [*23] Matter of Micheli Contr. Corp. v. New York State Tax Commn., 109 AD2d 957, 486 NYS2d 448). This standard has also been applied in income tax audit methodology cases (see, Matter of Leogrande v. Tax Appeals Tribunal, 187 AD2d 768, 589 NYS2d 383, lv denied 81 NY2d 704, 595 NYS2d 398; Matter of Zubawicz v. State Tax Commn., 154 AD2d 735, 546 NYS2d 178; Matter of Gun Hill Plumbing Supply Co. v. Chu, 145 AD2d 769, 535 NYS2d 497; Matter of Giuliano v. Chu, 135 AD2d 893, 521 NYS2d 883; Matter of Jacobson v. State Tax Commn., 129 AD2d 880, 514 NYS2d 145 and Matter of Scarpulla v. State Tax Commn., 120 AD2d 842, 502 NYS2d 113), in a highway use tax audit methodology case (Matter of Lionel Leasing Indus. Co. v. State Tax Commn., 105 AD2d 581, 481 NYS2d 520) and in a franchise tax case where the issue was one of statutory interpretation (Matter of Landauer Assocs. v. Tax Appeals Tribunal, 183 AD2d 972, 583 NYS2d 568). As a result, we reject petitioner's claim that a different level of proof is required in this matter than what is necessary to establish a change of domicile. Petitioner next asserts that New York City Administrative Code @ 11-1705(b)(1)(B) [*24] does not require a taxpayer to specifically account for his location on every day during a subject year. Petitioner argues that only 61 days (45 days for which there was no witness recollection nor documentary evidence presented, 15 days listed on "Exhibit 'K'" as "office" days and December 23 which was not dealt with by the Administrative Law Judge n18) were left unaccounted for and that there is no specific evidence pointing one way or the other as to his whereabouts on any of these days. As a result, petitioner contends that, given his pattern of going into the office only two to three days a week, he most certainly was out of the City for at least 7 of these 61 days, the minimum number required to remove petitioner from liability in this matter.
Further, petitioner argues that, in order to be considered a statutory resident, he would have had to average 4.2 days a work week for those weeks he was not hospitalized or on vacation. Petitioner claims that, given evidence of his poor health, this result is implausible. n18 December 23 was not addressed by the Administrative Law Judge in his modified determination despite the Division's request in its motion to reargue. This date was also identified in the Division's exception as one of the dates for which no evidence was presented by petitioner. December 23 was the only date listed in the Division's exception and motion to reargue that the Administrative Law Judge did not address in the modified determination. Petitioner, in his brief, agrees that no evidence on this date was presented, but petitioner does not concede December 23 as a day spent in New York City for income tax purposes. [*25] We first note that this Tribunal has stated in the past that the degree of specificity of a taxpayer's testimony regarding days in and out of New York City or New York State will be evaluated based on the nature of the factual issues raised (Matter of Armel, Tax Appeals Tribunal, August 17, 1995). Where a taxpayer can establish a "pattern of conduct" from which his location may be determined for any particular day, the taxpayer need not specifically account for his whereabouts on every day of the subject period. However, where a taxpayer cannot establish a pattern of conduct that covers a large period of time, then more specific evidence relating to daily activity is required. We find that a brief review of the decisional law on statutory residency is warranted. In Matter of Armel (supra), the issue on exception was the petitioners' location from December 7, 1988 through December 31, 1988.
The petitioners testified that every year since 1984, they would leave New York in October and spend their winter months in Florida. We held that the petitioners had established through credible testimony and corroborating affidavits a pattern of travel which established that they [*26] were not in New York during the period at issue and, therefore, did not spend in excess of 183 days in New York State. Therefore, it was unnecessary for petitioner Jack Armel to specifically recall where he was during the December days in issue because his pattern of conduct established that he was out of the State during the entire month.
In Matter of Moss (Tax Appeals Tribunal, November 25, 1992), as correctly pointed out by the Division in their reply brief: "the petitioner testified credibly that he completed his diary at the end of each year by reconstructing events based on, inter alia, his general routine of taking long weekends at Quogue pursuant to an agreement with his employer that he would not work in the New York City office on Fridays and would frequently work in Quogue on Mondays. It was from his stated pattern of conduct and other sources that Mr. Moss was able to recount the specific days he spent in and out of New York City" (Division's brief on exception, p. 3).
In Matter of Reid (Tax Appeals Tribunal, October 5, 1995), the petitioner was able to prove through testimony and his business logs where he was on every weekday. On weekends, he established [*27] through his credible testimony and that of his witness, a "general habit of life" that revolved around his home in Connecticut and did not include travel into New York. The taxpayer was not required to give a specific accounting for every weekend day because of his credible testimony. Nevertheless, every day was accounted for through a combination of business logs and credible testimony.
In Matter of Avildsen (Tax Appeals Tribunal, May 19, 1994) where New York City income tax was at issue, the petitioner traveled frequently, including regular commutes to his office in New York City. Because of the taxpayer's frequent travel, a specific day-by-day accounting was necessary in order to establish he was not in New York City for more than 183 days. Turning to the facts, petitioner has failed to produce evidence sufficient to prove a cogent pattern of travel accounting for his location during the 61 days at issue. What distinguishes this matter from the foregoing decisions where the taxpayer did prove a pattern of travel is that petitioner has not established any general pattern from which we may accurately determine his location on a particular day. For example, petitioner's argument [*28] includes the assertion that he has established a "pattern" of never working on Mondays unless there was a meeting scheduled, while he claims he usually worked on Fridays. However, the record reflects that petitioner spent nearly as many Mondays as Fridays in New York City. The Division in its brief on exception points out that the record shows that petitioner was in New York 23 Mondays and 28 Fridays. While the dates the Division cites for Mondays in New York are not entirely accurate, i.e., May 25 was not a New York City day as the Division contends, while September 28 was stipulated to be, which the Division omitted, our review of the record does confirm the Division's claim that petitioner's asserted pattern is not borne out by the evidence.
The Division also accurately points out that petitioner's asserted pattern of working in his New York City office two to three days a week does not account for the number of days petitioner spent in the City. Petitioner testified that he went into New York for doctor appointments and that on these days he generally did not go into the office (Tr., p. 257). Petitioner testified that he did not go into the office on these days at least in part [*29] because of the difficulty in traveling through Manhattan (Tr., p. 294). Including days visiting a physician with those days petitioner spent in the office adds uncertainty to petitioner's assertion that he could not have averaged more than 4 days per work week in the City. We further note that the record reflects a number of weeks petitioner has, in fact, stipulated to being in New York City at least 4 days in a given work week. n19 As a result, while petitioner's heart condition is well documented, we cannot find for him based on the assertion that it was unlikely that petitioner averaged 4.2 days a work week in New York City. n19 These weeks are those beginning on 2/8, 4/5, 4/19, 4/26, 5/3, 6/14, 6/28, 7/5, 7/19, 10/4, 10/18, 11/15, 12/14. We next address petitioner's assertion that this matter should be resolved in his favor based on the Administrative Law Judge's finding of credibility.
Petitioner asserts that the witnesses:
"all were in a position to observe at the time how often Mr. Kern went to his office, and Mr. and Mrs. Kern were in a position to observe how often he went into the City or remained at home. While time has reduced competency to testify, solely from [*30] memory, where Mr. Kern spent a specific day, these witnesses were certainly competent to recollect, in general terms, the frequency with which he would go to the office during a normal week" (Petitioner's brief on exception, pp. 14-15).
We do not agree that the witnesses' recollections can carry this matter. In past decisions where we have allowed credible testimony to meet a taxpayer's burden, the testimony could account for the petitioner's location by stating with certainty that, for example, the taxpayer was in Florida every December (Matter of Armel, supra) or the taxpayer was home on weekends and not in New York City (Matter of Reid, supra). The difference in the credible testimony in this matter as opposed to the decisions cited above is that the testimony of witnesses in Armel and Reid was unequivocal with respect to the specific days in issue, while in this matter the testimony only raises a probability that petitioner was not in New York for any one of the 61 days in issue. In other words, the testimony does not specifically relate to any particular day.
Further, the witnesses' testimony referenced above only considered petitioner's office visits. [*31] Other reasons petitioner would be prompted to enter the City were not included. As noted above, petitioner testified that office days did not necessarily coincide with trips to a doctor's office (Tr., p. 257) a point echoed by petitioner's bookkeeper, Ms. Leitch (Tr., p. 109). As a result, while the witnesses' testimony may have been truthful and competent, in our view it is insufficient to meet petitioner's burden.
We next address petitioner's argument that days where there are no credit card charges should not be counted as New York City days. Petitioner argues that if he had spent the day in New York City he would have had to eat a meal, payment for which would have been made on his credit card. We, however, are unwilling to infer the positive from a negative. The absence of a credit card charge on a given day does not lead to the conclusion that said day was not a New York City day. What petitioner seeks is to essentially extend the presumption granted by the auditor, that, unless there was evidence to the contrary, Saturdays and Sundays were considered spent by petitioner in Scarsdale. We cannot see how such a presumption may be made with respect to the weekdays, however, given [*32] the frequency of trips petitioner made into the City during the week. Therefore, we reject petitioner's claim that the absence of a credit card charge on a given day results in excluding said day.
Accordingly, it is ORDERED, ADJUDGED and DECREED that:
1. The exception of Ralph and Leona Kern is denied;
2. The exception of the Division of Taxation is granted to the extent that December 23, the only day not addressed by the Administrative Law Judge in his modified determination, is treated as a New York City day;
3. The determination of the Administrative Law Judge is affirmed;
4. The petition of Ralph and Leona Kern is granted to the extent indicated in conclusions of law "I," "J" and "K" of the Administrative Law Judge's determination, but is otherwise denied; and
5. The Division of Taxation is directed to modify the notice of deficiency dated March 16, 1992 in accordance with paragraph "4" above, but such notice is otherwise sustained.
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