Matter of MARIANI
DTA NOS. 813188, 813189 AND 813190
STATE OF NEW YORK-DIVISION OF TAX APPEALS
December 2, 1996
OPINION: PINTO - A. It has been held that "residence" means living in a particular locality but domicile means living in that locality with the intent to make it a fixed and permanent home. To acquire a new domicile there must be a union of residence and intention, animus et factus, either without the other being insufficient. (See, In re Newcomb's Estate, 192 NY 238.)
B. Tax Law @ 605(b) provides, in pertinent part, as follows: "(1) 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, 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, unless such individual is in active service in the armed forces of the United States."
C. While there is no definition of "domicile" in the Tax Law the Division's regulations (20 NYCRR former 102.2[d]) provided, in pertinent part: [*27] "(d) Domicile. (1) Domicile, in general, is the place which an individual intends to be his permanent home -- 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. "(3) Domicile is not dependent on citizenship; that is, an immigrant who has permanently established his home in New York State is domiciled here regardless [*28] of whether he has become a United States citizen or has applied for citizenship. However, a United States citizen will not ordinarily be deemed to have changed his domicile by going to a foreign country unless it is clearly shown that he intends to remain there permanently . . . . "(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 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."
D. To effect a change in domicile, there must be an actual change in residence, coupled with an intent to [*29] abandon the former domicile and to acquire another (Aetna National Bank v. Kramer, 142 App Div 444, 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). 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 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. [*30] 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 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 . . . .
Every 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 a 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 [*31] 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 attitude or to a subject governed by choice."
E. The test of intent with respect to a purported new domicile has been stated as "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, 50 AD2d 457, 378 NYS2d 138, 140). Moves to other states in which permanent residences are established do not necessarily provide clear and convincing evidence of an intent to change one's domicile (Matter of Zinn v. Tully, 54 NY2d 713, 442 NYS2d 990). The Court of Appeals articulated the importance of establishing intent, when, in Matter of Newcomb (supra at 251) it stated, "No pretense or deception can be practiced, for the intention must [*32] be honest, the action genuine and the evidence to establish both clear and convincing." Performance declarations are less persuasive than informal acts which demonstrate an individual's "general habit of life" (see, Matter of Silverman, Tax Appeals Tribunal, June 8, 1989, citing Matter of Trowbridge, 266 NY 283, 289). A taxpayer may change his or her domicile without "severing all ties with New York State" (see, e.g., Matter of Sutton, Tax Appeals Tribunal, October 11, 1990). The question is whether petitioners' overall conduct contradicted their formal declarations of a change of domicile to Bermuda.
F. As is evident from the cases cited above, in determining an individual's domicile the facts and circumstances of the case are paramount. As stated in Matter of Silverman (supra), while certain declarations may evidence a change of domicile, such declarations are less persuasive than informal acts which demonstrate an individual's "general habit of life." In the instant matter, that general habit of life supports the proposition that petitioners were domiciliaries of Bermuda for the years in issue. A physical move to another place in which a permanent [*33] residence is established does not necessarily provide the clear and convincing evidence of an intent to change one's domicile (Matter of Zinn v. Tully, supra). Only when coupled with the clear intent to change one's domicile does the fact of a changed residence become a true changed domicile.
G. The difficulty in deciding this case stems from the interpretation or, to quote the vernacular, the "spin", which is placed on the actions of petitioners during the years in issue. There is no doubt that the actions were genuine and petitioners' intent honest, the real issue is whether those factors provide clear and convincing evidence of the change. Although the Division of Taxation raised many valid points, it is determined that petitioners have established a change of domicile to Bermuda in the year 1987. Up through 1986, petitioners conceded they were domiciliaries of New York. After that time, with health concerns weighing heavily on his mind from years of suffering respiratory infections, Mr. Mariani and his wife made the decision to move their home and domicile to Bermuda, where they began spending five to six months a year. As recited in the facts, Mr. and Mrs. Mariani had [*34] dreamed of retiring to Bermuda since spending their honeymoon there in the 1960's. The confluence of Mr. Mariani's health concerns, the shift in the Banfi business operations, Mr. Mariani's self extrication from the core business of Banfi centered in New York and his new international role, dovetailed his and Mrs. Mariani's dream of "retiring" to Bermuda, albeit with 12 to 14 hour workdays.
The documentary evidence and testimony established that during the audit period, most of petitioners' time was spent out of New York, and Mr. Mariani was operating out of an office in his house in Bermuda, Atlanta-by-the-Sea, up to 14 hours a day. He was linked to the Long Island office by a dedicated telephone line, facsimile machine and computer. His business trips and vacations to places like his residence in Colorado began and ended in Bermuda. In referring to Bermuda, Mr. Mariani credibly testified it was the place he always went home to.
Additionally, Mr. Mariani developed the idea for Jumby Bay, the Antiguan resort visited by Mr. Mariani in 1984 and then purchased by a Banfi subsidiary in 1985. It was his experience and knowledge in the area, gleaned in part from his participation on the [*35] Dean's Board of Cornell University's Business School and Hotel School, that qualified him to take charge of the operations and development of Jumby Bay and convert it into one of the top ten resorts in the world.
Also in 1985, Banfi suffered substantial financial losses due to a U.S. government recall of Banfi's best selling wine, Riunite. This was followed in 1986 by a U.S. moratorium on Italian wines due to a "methanol scare". These dramatic adverse occurrences became the catalysts for the restructuring of the Banfi wine company and led to John Mariani's assignment to the non-U.S. operations of Banfi and his commitment to Jumby Bay. This shift in his job focus made his decision to move to Bermuda consistent with the rest of his life and most beneficial for his health. Further, as stated above, it was also consistent with his obvious desire to begin allowing the next generation its chance to run the business without his dominating presence. He was very capable of handling his job responsibilities from his home office in Bermuda and travelling to Europe or Antigua from there. His business trips almost always went through New York, and on occasion he would stop over for business meetings [*36] at the corporate headquarters, sometimes staying at the residence he owned in Lattingtown. However, as stated above, he always returned to Bermuda, the place he thought of as home. During the audit period, petitioners had a residence in Colorado which was used by the family for vacations and celebrations of holidays. During some of the audit period, Diana Mariani was in college in Colorado, making such reunions convenient as well. Petitioners also had access to, and utilized, several other residences owned by their companies in Rome, Tuscany and in Antigua. Residences, in and of themselves, were not determinative of domicile for this family of means, nor did the law (20 NYCRR former 102.2[d] [4]) provide as such.
Although Mr. Mariani did considerable travelling around the world, the evidence indicates that his domicile was Bermuda. His habits of everyday life were centered around Bermuda. He was a part owner of a company there which owned a restaurant which featured Banfi wines. He ate most of his meals at his home, sometimes entertaining guests and then having meals at their homes in reciprocation. The Marianis usually ate out once a week. A staff of three was employed to care for [*37] the Bermuda home. As borne out in the record, the only expense which was greater for the audit years at the Lattingtown residence was the property tax bill.
In addition, petitioners were members of the Mid Ocean Club in Bermuda where Mr. Mariani played golf and on which their house was situated. It was convenient to their home and also served as a social club as well. Mr. Mariani could easily take time out of his busy schedule at his home office and hit balls at the club's practice tee, which was only a short walk away. Although Mr. Mariani retained memberships in various clubs in New York, in both resident and nonresident status, his use of those facilities could not have approached the use he made of the Mid Island Club, given the amount of time he spent in Bermuda and the few days he was in New York on business.
The Marianis were members of St. John's Parish in Bermuda since 1986 and attended Sunday mass regularly at Castle Harbor. The Marianis relinquished their membership in their parish in Oyster Bay, NY. Mrs. Mariani was active in the Bermuda community through her membership in a number of women's, flower and church clubs during the audit period. She was also a member of the [*38] American friends of Bermuda, a Bermudan historical society that works on the restoration of historic monuments on the island. Although much was made of the address to which petitioners' bills were sent during the audit period, in this matter it was not an important factor in determining petitioners' intent with respect to their domicile. In fact, the explanation given by Mr. Mariani was very credible, i.e., that his extensive travel made it more convenient to have some of his mail, especially bills, mailed to the corporate headquarters in New York to ensure that they were not overlooked and interest charges incurred. Given the extensive explanation of his travel regimen dictated by his job responsibilities, Mr. Mariani's explanation is that much more credible.
In addition, Mr. Mariani utilized several doctors in Bermuda during the years in issue, both general practitioners and a sports medicine specialist. While he also maintained his respiratory specialists in New York which he used prior to the audit period, he did so because of their unmatched expertise, which could not be duplicated on Bermuda. Finally, petitioners demonstrated their change in domicile with other evidence like [*39] applying for and receiving a residential certificate; training for and being granted licenses to drive; not registering or voting in New York elections; and registering no motor vehicles in New York. In addition, during the years 1987, 1988 and 1989, Mr. Mariani was present in New York State for only 108, 121 and 132 days, respectively, which although not a deciding factor, certainly lends even more credibility to the circumstantial evidence in his favor. The year following, 1990, the day count fell to only 40, indicating even further that New York was not the place to which he intended to return. In viewing the totality of the circumstances, petitioners have demonstrated a strong intent to remain in Bermuda permanently, not New York. H. The Division's argument that the burden on individuals changing their domicile to a foreign country is greater than that for individuals intending to change their domicile to another state, citing Matter of Bodfish v. Gallman (supra), has been rejected by the Appellate Division. In Matter of Bernbach v. State Tax Commission (98 AD2d 559, 471 NYS2d 903), the Appellate Division said, in no uncertain terms: "We find it irrational, however, [*40] to require a taxpayer to give up his United States citizenship in order to prove to the Tax Commission that he has abandoned his New York domicile."
In Bernbach, petitioner moved to New York City to be closer to his spouse's psychiatrist and then, nine months later moved to France, married a French woman, and never returned. The Division held that he never gave up his New York domicile, noting family and social ties to New York and the purchase of a cooperative apartment in New York, after only renting in New Jersey prior to that time. The Court disagreed, saying the Commission relied on factors, which considered separately and cumulatively, did not provide a rational basis for the conclusion that Bernbach was a New York domiciliary. Further, the court noted that the Commission did not rely upon any finding as to the credibility of petitioner's proof, which was undisputed. The testimony in the Bernbach matter demonstrated that he left New York to begin a new and permanent life in France with the woman that he had previously met. He took the proper steps for living and working in France and signed a nine-year lease on an apartment in France. He opened a French bank account [*41] and obtained a French driver's license.
Likewise, the Marianis have more than amply demonstrated their intent to move their domicile to Bermuda, having taken up residence and assumed the daily routine of life there since 1987. Buttressed by Mr. Mariani's health concerns, his change in job duties, his wishes to extricate himself from the core business in favor of the next generation, and their desire to retire to Bermuda, the conclusion that they changed their domicile is inescapable.
The Division's arguments do not change this outcome. Those factors it relied on to find a New York domicile, while factually accurate, do not diminish those facts and interpretations of new facts by Mr. Mariani's credible testimony of petitioners' intent to make Bermuda their one home or domicile. Having a substantial house in New York, receiving mail there, banking in New York and receiving substantial income from a New York corporation, belonging to New York clubs and having passports with stamps from Bermuda Immigration indicating only temporary visitation do not demonstrate a New York domicile under the circumstances set forth above. Petitioners' extraordinary means, numerous residences, constant [*42] and extensive in international travel, health concerns, business duties and love affair with and demonstrated lifestyle in Bermuda bear witness to Mr. Mariani's credible explanation of his change of domicile to Bermuda.
I. The petitions of John Mariani, Pamela T. Mariani, Diana F. Mariani and Christina N. Mariani are granted and the three notices of deficiency, dated January 9, 1992, are cancelled.
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