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SESSION 1
If You Continue to Live in Your New York Home During the Summer Months, Have You Effectively Changed Your Domicile?


One retiree sells his family home, moves his belongings to his new Florida condominium, severs most of his New York ties and rents an apartment where he stays when he returns North each Summer. A second retiree also buys a Florida condominium but continues to live in his family home and to maintain substantial business and personal contacts in New York. Each October he visits Florida and in May returns home. The first retiree probably has effectively changed his domicile to Florida. The second probably has not. Most snowbirds fall somewhere in the middle of this scenario. This session discusses several "domicile" cases which have actually been litigated.

Thousands of New Yorkers retire and make Florida their new home each year. This results in a substantial drain on New York State's economy. These economic losses can be mitigated, to some extent, if some of the retirees are encouraged to return to New York State for a substantial period of time each year.

Instead of encouraging the retiree to return to New York each year, New York's tax policy does the direct opposite. Even when a New Yorker has permanently changed his primary residence to Florida, if he returns to New York State for more than 183 days during the year and maintains a New York home or apartment, he must pay the same amount of New York income taxes that he would have paid if he resided in New York the entire year.

Even where the retiree is in New York for less than 183 days during the year, New York requires him to pay a full year's income tax if he is unable to convince the taxing authorities that his Florida home has become his permanent primary residence. In other words, that he has become a bona fide Florida domiciliary by changing his domicile from New York to Florida.

The New York State taxing authorities are aggressively challenging New Yorkers who claim they have changed their domicile to Florida but continue to maintain a New York home.

Many Florida-bound retirees follow a typical pattern. Prior to retirement, the New Yorker spends winter vacations in Florida. Floridians refer to such a person as a "snowflake". After retirement he stays in Florida for the winter months, often buys a condominium or villa, but still retains his New York residence. Floridians refer to such a person as a "snowbird". As time goes on, the retiree finds that many of his friends have also moved to Florida, he becomes less active in hometown matters, and lives in Florida most of the year. Often he will have sold his New York residence and will stay at a hotel or with his family when he visits New York. Floridians refer to such a person who lives in Florida most of the year-round as a "rounder".

There are, of course, many variations of the theme. At some point in the scenario the retiree is likely to consider changing his official residence or what is commonly referred to as "domicile" to Florida. This is most likely to occur when he is a "snowbird". The retiree's major concern, of course, is the elimination of New York income taxes during his lifetime and New York estate taxes on his death.

The key word throughout this Seminar is "domicile". If a retiree remains "domiciled" in New York, New York has greater control over him and his assets. On the other hand, if the retiree effectively changes his domicile to Florida, Florida takes over at least some of such control. Although the word "domicile" has been around for many years and has been the subject of legal decisions and law treatises, there is still great uncertainty in many factual situations as to whether or not a change of domicile has actually occurred. Given a particular set of facts, some courts and taxing authorities may say that a change of domicile has occurred, while others may say that it has not.

"Domicile" was defined by Roman Law to mean "in whatsoever place an individual has set up his household goods and made the chief seat of his affairs and interests, from which, without some special avocation, he has no intention of departing; from which when he has departed, he is considered to be away from home, and to which when he has returned, he is considered to have returned home."(1)

The concept of domicile has not changed much since the Roman days. Domicile is characterized in the New York Tax Regulations as the place which an individual intends to be his permanent home and the place to which he intends to return whenever he may be absent. The Regulations provide that once established, a domicile continues until the person moves to a new location with the bona fide intention of making his fixed and permanent home there. But no change of domicile results from a removal to a new location if the intention is to remain there only for a limited time even if the individual has sold or disposed of his former home. The Tax Regulations place the burden upon the person asserting a change of domicile to show that he intended to change his domicile. A person's declarations are given due weight, but they will not be conclusive if they are contradicted by his conduct. As an example, the Tax Regulations point out that the fact a person registers and votes in one place is important but not necessarily conclusive, especially if the facts indicate that he did so merely to escape taxation in New York. 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. The Tax Regulations state that in determining a person's intentions, the length of time customarily spent at each location is important but not necessarily conclusive.(2)

Although these regulatory rules are helpful in determining whether or not a retiree has changed his domicile from New York to Florida, it is often difficult to apply the domicile rules to particular facts. A retiree can best judge for himself whether or not he is in a position to change his domicile by reviewing the facts in actual cases where a change of domicile has been challenged.

The leading case in New York State was decided by the New York Court of Appeals in 1908.(3) It remains "good law".(4) It holds that a written declaration of domicile evidences an intent to change domicile if it is an expression of honest intention and not an intent to deceive. Yet, some New York State tax auditors tend to give a written declaration of Florida domicile made under oath and filed by the retiree in Florida little weight where the retiree continues to maintain a residence in New York State. They are wrong in doing so. The 1908 case involved Mrs. Newcomb. During a period of thirty years, and until she was about eighty years of age, her domicile was in New York City. She generally resided during the summer in her home in New Orleans and resided during the Winter in her residence in New York City. She wanted to make substantial bequests to Tulane University and was concerned that the Will might be contested by her relatives. She consulted with a Louisiana attorney, who advised her to change her domicile and advised her that she could do so by making an express declaration in writing to that effect. She signed a declaration stating that New Orleans was her permanent home and her place of domicile.

Her Louisiana domicile was challenged. It was argued that Mrs. Newcomb resided in New York City and merely visited New Orleans and that her later visits to New Orleans differed in no material respect from those made earlier. It was also argued that she sought to become a nominal resident of Louisiana merely for the purpose of making a Louisiana Will and not for the purpose of making a permanent home.

Likewise, a New York State tax auditor challenging a change of domicile to Florida is likely to argue that the retiree continues to reside in New York and merely is visiting Florida, and that the visits after the retiree purports to change his domicile did not result in any substantial change of life-style. The auditor is also likely to argue that the change of domicile was made for the purpose of obtaining more favorable tax treatment.

The Court of Appeals in the Newcomb case rejected that approach in 1908. Where the retiree maintains two homes, the retiree should be able to pick and choose his permanent residence, and his motivation for doing so should not be relevant. The Court of Appeals in the Newcomb case laid out the following rules for determining domicile where the retiree maintains two residences:

* There must be a present, definite and honest purpose to give up the old and take up the new place as the domicile.

* Every retiree 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 whatsoever, provided there is an absolute and fixed intention to abandon one and acquire another and the acts of the persons affected confirm the intention.

* A retiree may elect between his winter and summer residence and make a domicile of either, provided he acts in good faith.

* The right to choose implies the right to declare one's choice, formally or informally as he prefers, and even for the sole purpose of making evidence to prove what his choice was.

* 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 burden of proof rests upon the party who alleges a change of domicile.

Where the retiree chooses his Florida residence as his domicile he has a method of evidencing that intention in a very clear and convincing way. He signs a written declaration of domicile, sworn to before a notary public, and files it with the Florida Circuit Court.(5) The New York tax examiner should give such election substantial weight unless there is reason to believe that the retiree has committed perjury.

Many "snowbirds" who change their domicile to Florida, yet retain their northern residence, file a written declaration of domicile and meet the criteria set forth in the Newcomb case. The retiree's desire to stay at his "old" home when he visits New York State during the summer is not inconsistent with a bona fide intention to change domicile to Florida, and the New York taxing authorities should not penalize the affluent retiree who has the financial ability to indulge in this convenience.

Moreover, there is no statutory basis to impose such a tax on the retiree where the sole basis for the imposition of the tax is the retention of a residence in New York. The income tax provisions refer both to an individual who retains his New York domicile and to an individual who maintains a permanent place of abode in New York state. In the latter instance, no income tax is paid if the individual is not present in New York for more than 183 days. If it was the intention of the Legislature to recognize a change of domicile only where the individual did not retain his place of abode in New York it would have said so. Furthermore, there would have been no reason to include the 183 day provision in the tax law. The tax law would merely have subjected all persons who maintain a permanent place of abode in New York State to taxation to the same extent as a New York resident. The fact that a retiree retains his New York "permanent place of abode" should not be controlling but rather only one factor, among many, in weighing whether a change of domicile has occurred.

In 1977, the New York Court of Appeals held that Sam Brunner had effectively changed his domicile from New York to France even though he retained a life estate in his New York residence. This case is significant because the courts require greater evidence of a change of domicile when there is an alleged change of domicile from New York to a foreign country. Citing its 1908 Newcomb decision, the court restated its position that the domicile issue "frequently depends upon a variety of circumstances, which differ as widely as the peculiarities of individuals".(7) Thus, the fact that Mr. Brunner retained a residence in New York was viewed as only one factor to consider, among many.

But in those instances where a dual residency is maintained and the taxing authority determined no change of domicile has occurred, it may be difficult to convince the New York court to reverse that determination, even where there are several other factors indicating that a change of domicile has occurred. This was illustrated in both the Zinn case and the Clute case.

The New York Tax Commission ruled that Solomon Zinn, who lived in both New York and Florida, had not changed his domicile from New York to Florida. The lower appellate court overruled the Commission and upheld Mr. Zinn's contention that he was not domiciled in New York State and, therefore, not subject to New York income taxes as a resident. The court relied on the fact that Mr. Zinn had moved to Florida, maintained bank accounts and registered automobiles in Florida, educated a school-age child there, and operated a business in Florida. The court also noted that Mr. Zinn had executed a new Will indicating his Florida residence and "most significantly" filed under oath a declaration of domicile, and that a perjurious statement in such a statement could subject him to a state prison term of up to 20 years. The court also noted that the record documented Mr. Zinn's desire to sell his New York house and the difficulties which preceded the sale. The Court of Appeals was not convinced and reversed the lower appellate court, finding that there was substantial evidence in the record to support the New York State Tax Commission's determination.(8) The court pointed out that Mr. Zinn had filed a resident tax return (apparently by mistake) and he remained active in the day-to-day management of a New York business. It didn't make any difference that there was also substantial evidence to support Mr. Zinn's position that he had changed his domicile. Where there is substantial evidence both ways, the reviewing court generally sustains the findings of the taxing authorities.

The Zinn case demonstrates the importance of winning the case at what is now the New York Tax Tribunal level.(9) Where the Tax Tribunal finds that there has been no change of domicile, it may be very difficult to reverse that determination where the retiree retains a New York residency and continues to conduct some business in New York. The "clear and convincing test" in determining a change of domicile, coupled with the rule that an appellate court sustain the Tax Tribunal when there is substantial evidence to support it in the record, presents two formidable obstacles. In order to increase his chances of being successful at an early stage, it is critical that a retiree seek professional guidance as soon as he suspects any challenge to his domicile status.

Another interesting case involved Mr. Clute.(10) Mr. Clute was 64 years old and a life-long resident of New York. He lived in a home which he owned and also owned two pieces of property nearby --- one having a day cottage on it and the other a boat house. He also owned a residence as trustee of his father's estate which he had been trying to sell since 1973. Because his children had no interest in managing the family business, he decided that he would sell it and moved into a condominium in Florida. The condominium was furnished partly with personal property which Mr. Clute brought from his New York residence and partly with property belonging to his wife, whom he recently married and who previously resided in Florida. In 1977, Mr. Clute and his wife sold their Florida condominium and bought a new one. Mr. Clute resigned from various New York business clubs and joined various social clubs in Florida. However, he continued to own the farm which he inherited from his father. His son's family resided on the farm and he occupied it whenever business activities required him to be in New York. Mr. Clute filed a declaration of domicile in Florida stating that he had changed his domicile in 1976, registered to vote in Florida, and filled out a juror questionnaire. He executed a codicil to his Will reciting that he had changed his residence to Florida. He and his wife registered their cars in Florida. He discontinued a safe deposit box in New York and opened one in Florida. He opened checking and savings accounts in Florida, paid a Florida intangible tax, and affiliated with a church in Florida.

The New York court noted that the Tax Commission relied primarily on two factors in determining that Mr. Clute continued to be a New York domiciliary. He did not abandon his New York home which he used more frequently during the two taxable years in question than he did his Florida residence. Also, he spent a considerable amount of time fulfilling his responsibility as a director at two New York banks. The court noted that determining an individual's domicile is ordinarily based on conduct manifesting an intent to establish a permanent home with a permanent association in a given location, and that an individual's original domicile continues until there is a clear manifestation of an intent to acquire a new one. The court further noted that there was substantial evidence to support both the position of Mr. Clute and that of the Tax Commission but, in the limited scope of an appellate review, the court could not substitute its judgment for that of the Commission, and there was substantial proof in the record to sustain the Commission.

It may be very difficult for the retiree to establish a change of domicile if he continues to carry on his profession during the summer months when he is in New York State and has no intention to sell his New York home or discontinue his practice. Dr. Feldman purchased a condominium in Boca Raton, Florida. He filed a Florida Declaration of Domicile, registered to vote in Palm Beach County, obtained a Florida driver's license, registered his car in Florida, joined a Florida men's club, and moved most of his bank accounts to Florida. When he moved to Florida he gave the apartment on the second floor in a two-family house he owned in Brooklyn to his daughter and reconditioned a bedroom in the downstairs office for his use whenever he returned to New York. The first floor also contained a bathroom and small kitchen. He lived during the summer months in a summer home on a lake near Monticello which was closed up the rest of the year.

When Dr. Feldman was in New York State he opened his office for a couple of days a week and treated patients. The New York Tax Appeals Tribunal held that Dr. Feldman continued to be domiciled in New York. The Tribunal focused on Dr. Feldman's continued practice of medicine, and noted that "the practice continues to exist and, in fact, serves as a continual tie to the local community" and that Dr. Feldman falls "short of establishing by clear and convincing evidence an intent to change domicile".(11)

The test of intent with respect to a purported new domicile has been stated in some cases to be "whether the place of habitation is the permanent home of a person, with the range of sentiment, feeling and permanent association with it."(12) How is this test to be applied to the New Yorker who has a home both in New York and Florida? Must he divorce himself from the emotional attachment to New York City, Buffalo, Syracuse, or wherever else in the state he lived most of his life? Must he remain passive when he hears the band play "New York, New York" for fear he will be reported to the New York taxing authorities? Should he hesitate when invited to the annual "Buffalo Night" in Boca Raton every winter where the famous Buffalo chicken wings and beef on kimmelweck are served? Such a subjective test is misplaced. It should be sufficient if the retiree really feels comfortable and "at home" when in Florida and has elected to make Florida his domicile. This right to elect a domicile should not be denied simply because the retiree also feels comfortable and "at home" when he is living in New York State during the summer.

One tax examiner mentioned that the true test is where the retiree keeps his teddy bear. It would be great if it was that simple. Every retiree could buy a teddy bear and keep it in Florida all year. But the tax examiner was obviously speaking figuratively and was trying to describe the attachment one has to his true home.

There are some instances where a change of domicile would rarely be challenged. For example: the retiree sells his "family home" and moves all of his furniture and personal belongings to a new home in Florida; he severs all his New York ties; when he "visits" New York State each summer he stays in an apartment. This scenario sometimes will occur, but is the exception.

The other extreme is where the retiree continues to live in his old New York family home and retains all his belongings there. He rents or buys a Florida condominium in a retirement community where he has no close acquaintances and has no active involvement. Each October he visits Florida. Each May he returns home.

Most retirees find themselves somewhere in the middle. At first, they feel a bit strange in the new environment. As time goes on they develop close friendships with many people who live near the Florida home, many of whom may be former New Yorkers. It doesn't take long to become fond of a Florida golf course that is in your back yard. They soon find themselves thinking of both Florida and New York as their home. At some point, they may even consider selling their New York family home and staying in Florida all year round.

Two cases decided by the New York Tax Appeals Tribunal in 1990 and 1991 gave conflicting signals to the retiree. The Sutton case(13) decided in October 1990 appeared to indicate that retaining the New York home would not create an insurmountable obstacle to the retiree who desires to change his domicile to Florida. The Weschler case decided by the Tribunal in May, 1991 appeared to indicate that it might, especially where the retiree spends almost half the year in New York State. Although the same three Commissioners decided both cases, they are difficult to reconcile with each other.

Elliott Sutton presented the following points in support of his change of domicile:

* He moved into a larger condominium in Florida and later listed it for sale to buy a larger town house but because of a downturn in the economy deferred the sale.

* He filed a Florida Declaration of Domicile.

* He registered to vote and actually voted although at times by absentee ballot.

* He belonged to a number of social clubs in Florida and no clubs in New York.

* He was very active in racing power boats in Florida.

* He stated in his Will that Florida was his domicile.

* Although he owned several retail stores in New York, he was not actively involved in their ongoing operations and each was operated by an independent manager.

* He decided to change his domicile because of the break-up of a long-term relationship and the death of his mother and sister.

* He had negotiated to purchase a Florida restaurant chain but the sale was never consummated.

* His son visited Florida on nearly every holiday.

* He maintained bank accounts in both states but the New York accounts were primarily long-term trust accounts for his son.

* He initially continued to maintain a New York apartment because it provided a relatively inexpensive alternative to obtaining hotel accommodations when he came to New York. He later purchased a Manhattan condominium which he expected to appreciate in value and which he was holding partly as an investment.

* Although some of his personal bills were paid at one of his New York businesses, this was to assure prompt payment because he traveled frequently.

* He spent about 70% of his time in Florida and he traveled extensively.

The Division of Taxation argued that Sutton's general habit of life, especially his failure to terminate certain business interests in New York and his failure to give up his apartment in New York City, was so contrary to his declaration of intent as to preclude the finding by the administrative law judge that Sutton, by clear and convincing evidence, proved that he changed his domicile. The three commissioners rejected these arguments and affirmed the administrative law judge's determination in favor of Sutton.

Less than a year later, the same three commissioners affirmed the determination of an administrative law judge against Dr. Herman Weschler(14). The audit year was 1985. In June 1984, Dr. Weschler retired as a surgeon but continued to perform some consulting services, earning $7,326 in 1985. Dr. Weschler argued:

* He executed a Declaration of Domicile.

* He registered to vote in Florida and actually voted there.

* All his bank accounts and a safe deposit box were in Florida.

* He had a Florida driver's license and Florida car registration.

* He executed a Florida Will.

* He was a member of various Florida clubs.

* He was affiliated with physicians in Palm Beach county.

* He gave up his New York cemetery plot.

Dr. Weschler admitted that he maintained his New York home until October 1985, but stressed that his married son occupied the home as his primary residence as a result of domestic problems and the need to provide living quarters for himself and his four children. The Division of Taxation did not take issue with the finding that Dr. Weschler had only spent 174 days in New York in 1985.

In holding against Dr. Weschler, the Tax Tribunal stated:

"The factors which weigh most heavily against petitioners are the retention of their home in Eastchester, New York and their return thereto for approximately six months in 1985. Petitioners' unexplained retention and use of their New York home for most of 1985, combined with Dr. Weschler's limited medical consulting and service oriented work to the VA Hospital and the nursing home, militate against the conclusion that the petitioners intended to give up their New York domicile and establish a new domicile in Florida in 1984."

The Tax Tribunal attempted to distinguish its own decision in Sutton by pointing out that in that case Sutton had an explanation for retaining his domicile (i.e., he was holding it as an investment). The Commission concluded that although Weschler may have retained his home in late 1985 to accommodate his son's marital problems, it did not serve as a reason for not selling the house during the first ten months of 1985 since the marital problems did not arise until the last two months of the year.

Rather than focusing on the retention of the New York home, the Tax Tribunal might simply have based its holding on the fact that Dr. Weschler continued medical consulting in New York. By stressing the fact of Dr. Weschler's home prior to October 1985, the Tribunal implies that a retiree must have an explanation or an excuse for retaining a New York home. But does this not contradict the rules laid out in the Newcomb case by the New York Court of Appeals in 1908? That decision should be binding on the Tax Tribunal even today. Mrs. Newcomb needed no excuse for retaining her New York home. She could retain both homes and make a good faith election as to her domicile at either location.

Conflicting decisions were also issued by the Tribunal more recently. They involved two families in Western New York --- the Buzzards(15) and the Burkes(16).

In 1963, the Buzzards and their six children moved from their hometown of Pittsburgh to Buffalo where Mr. Buzzard became president of a company that distributes automotive parts and supplies. By 1983, the Buzzard family owned 100% of the outstanding shares of the business, several of their children were active in the business and one son was named president. Mr. Buzzard became chairman of the board. At that point, Mr. Buzzard became a consultant to the company and his involvement in the day to day management of the company ended and he ceased maintaining an office in Buffalo.

In 1978, the Buzzards' youngest child left home for college and they purchased a three bedroom home in Boynton Beach, Florida and three years later in 1981, the Buzzards sold their Buffalo home. The move to Florida was precipitated in part by an injury to Mr. Buzzard's leg which reacted unfavorably to cold weather. At first they rented a furnished home in Buffalo where they stayed during the summer, but then decided to build a new home in Buffalo at which they stayed when they were in the Buffalo area.

In 1982-83, the Buzzards executed a "Florida" Will, obtained a Florida driver's license, registered to vote in Florida, were granted a Florida homestead exemption and began filing Florida intangible tax returns and New York non-resident income tax returns.

New York audited the Buzzards for the years 1985 through 1988. During the year at issue, Mr. Buzzard served the company, for the most part, in an informal manner. He drew upon his reputation in the industry and made contact with and entertained parts dealers and customers and was active in industry trade associations. Mr. Buzzard, an avid golfer, maintained a membership in two Buffalo area country clubs where he entertained customers.

During the summer when he was in Buffalo, he generally went to the office three or four days a week where he spent a few hours reviewing his mail and conversing with employees.

The Buzzards' general pattern since 1982 was to spend the colder months in Florida and then spend from about May through September in Buffalo. They also had short stays in Buffalo at other times of the year, including two to three weeks during December. The days in New York were 116 (1985), 131 (1986), 156 (1987) and 140 (1988).

The Buzzards had weak ties to their neighbors in New York and had developed substantial social ties to their neighbors in Florida.

Applying the test in the Newcomb case, one would have thought this was an "open and shut" case. The Buzzards had two homes and had elected Florida as their domicile. Not so, held the Administrative Law Judge in a 1992 opinion. The Judge stressed that the Buzzards retained deep and substantial ties to the Buffalo area, notwithstanding the sale of their residence in 1981. The strongest of these ties was their close relationship with their children and grandchildren who were a central part of their lives. The Judge also stressed that the home that the Buzzards built after they claimed to have changed their domicile was "more than simply a summer home" so that they could return to the Buffalo area at any time of the year.

Finally, the Judge stressed the involvement in the family business in 1981 when the Buffalo home was sold and downplayed the inactive role of Mr. Buzzard that commenced in 1983.

As might be expected, the Buzzards appealed to the New York Tax Tribunal. The Tribunal affirmed. The Buzzards then appealed to the Appellate Division of the New York Supreme Court. The Court also affirmed and sustained the assessment of the additional taxes(17). Among other things it noted: "Most significantly, during the years in question petitioners spent more time in New York than in Florida." You will recall that the Buzzards did not even come close to the "183 days test". But they also spent a lot of time elsewhere. During the audit period they only proved they had spent 94 days in (1985), 98 days in (1986), 115 days in (1987) and 140 days in (1988) in Florida. The Supreme Court also noted that Mr. Buzzard continued as a paid consultant of his company, frequently visiting the company's office when in Buffalo, continuing to maintain membership in two Buffalo country clubs, continuing to maintain master charge accounts in Buffalo stores and had his primary bank accounts in Buffalo banks. The Court also noted that the Buzzards engaged Buffalo attorneys and accountants and that their primary physician was located in Buffalo.

The Court completely ignored the close family ties to children and grandchildren that was stressed by the Administrative Law Judge.

The Supreme Court did recognize that the Buzzards had established strong contacts with Florida, but held that the Court was not at liberty to substitute its judgment for a reasonable determination by the Tribunal which was supported by substantial evidence merely because it is possible to reasonably reach a different conclusion.

Now let us look at the Burke case. The same Tax Appeals Tribunal that required the Buzzards to pay New York Taxes, recognized the change of domicile by the Burkes to Florida.

Mr. Burke formed Burke Construction in the early 1950's and by the 1970's was building upwards of 100 or more homes a year in Western New York. In 1977, Mr. Burke began the transition from building houses to developing low income housing for the elderly and formed Burke Rental. By the 1980's he had acquired ownership of approximately 30 rental properties.

Mr. Burke purchased a home in Jonathan's Landing in Florida. Their goal was to retire in a stable retirement community in Florida. The Burke's had many friends in Florida with similar lifestyles and social activities. They had few friends remaining in New York. They enjoyed fishing and playing golf year-round, were actively involved in various community and charitable activities in Florida and were involved in only limited charitable activities in New York.

The Burkes were audited for the years 1987 through 1989. The Administrative Law Judge held that, notwithstanding that the Burkes maintained some ties to New York, a taxpayer may change his domicile without severing all ties to New York State and the Burkes did so by moving their "focus of home" from New York to Florida. He noted that they had moved their most important personal possessions and memorabilia to Florida and that they actively sought to distance themselves from the operation of their New York business interests and configured their business to be managed by others. The Judge also noted that the Burkes did not retain significant family ties to New York and maintained their New York residence as a secondary summer home.

The Division appealed to the Tax Appeals Tribunal, but lost. The Tribunal agreed with the Administrative Law Judge and held in favor of the Burkes quoting at some length the 1908 Newcomb case we discussed at the onset of this session. The Tribunal also cited the Sutton case we also discussed and held that a "taxpayer may change his or her domicile without severing all ties to New York State" and did so by "moving their focus of home from New York to Florida."

In their briefs, both parties presented an analysis of Florida telephone bills that showed that on average one or two telephone calls per week were made from the Burke's Florida telephone to the New York office of Burke Rental and varied in length from one minute to 45 minutes. The Division claimed that the telephone calls undermined the testimony that Mr. Burke's business was run autonomously by the office staff without Mr. Burkes' active decision making intervention. The Burkes maintained that the calls related to personal matters and that the total phone time amounted to approximately eight hours per year, an amount insufficient to constitute active involvement in running a several million dollar business operation. The Tribunal deferred to the Administrative Judge's determination that the Burke's explanation of the telephone calls was credible and that the facts did not indicate that Mr. Burke's active involvement in the business was required. The Tribunal noted testimony showing that Mr. Burke's active involvement would have undermined the staff.

Most significantly the Tribunal found that the "fact the Burkes continue to maintain a large New York residence, and did not sell their original New York home until 1987, does not indicate that they could not have intended to effectuate a change in domicile." The Tribunal at the end of its 25 page opinion stated:

"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." The Tribunal held that the Burkes had proved their case in a "clear and convincing manner."

It is difficult to reconcile the Buzzard and Burke cases and establish guidelines upon which to rely. With all these cases as a background, let us again address the question which is the title of this session: "If you continue to live in your northern home during the summer months, have you effectively changed your domicile to Florida?"

The answer requires an evaluation of all the other ties that the retiree continues to have with New York. It may be difficult to win the case if the domicile change is contested where the retiree continues to have substantial ties to New York. The retiree's chances of success will improve if other domicile factors support his position.

The approach an auditor will likely take in evaluating these domicile factors is discussed in some detail in session 7 of the Seminar. As discussed in that session, the auditors are now instructed that the sole fact a retiree retains a home in New York is not inconsistent with a change of domicile to Florida. A check list approach for preparing for such an audit is set forth in session 2.

If you wish to be further confused, you will also want to review the following cases:

Matter of Colin W. & Delma K. Getz (18)

The Tax Appeals Tribunal determined that "while the petitioners may have very well intended Florida to be their permanent domicile, their general habit of life indicated, at best, an equal commitment to both locations." Thus, it held they did not establish by clear and convincing evidence that there was a change in domicile to Florida. Further, the Tribunal noted that the taxpayers failed to submit adequate documentation, such as credit card slips to support the claim that they did not spend more than 183 days in New York and that upon retirement they continued to maintain their house and country club membership in New York after they purchased a Florida condominium and made numerous trips to New York in order for the petitioner to serve as a bank director and to spend time with their son. * * *

Kartiganer v. Koenig(19)

The Court determined that the petitioners had not proven a change of domicile from New York to Florida. Although the Court gave consideration to the petitioners' "formal" Florida residence declarations such as voter registration, address on will, licenses, etc., it noted that the petitioners' informal acts, namely, petitioner husband's active involvement in his New York engineering business and the maintenance of their New York home, contradicted their declarations. It also noted that many factors indicated that they failed to abandon their New York domicile and sever their ties to New York and the most significant factor was the petitioner's constant supervision and review of his business interest in New York. The record below had established that the petitioner reviewed contracts and gave advice on personal liability and past and future projects and that internal controls required his approval of all projects, his supervision of progress, check points of on-going projects and his final review before submission to clients. Thus, the evidence in the record clearly showed the petitioner retained overall control of his New York business interest. * * *

Matter of Silverman(20)

The Tax Appeals Tribunal decided that the taxpayers were still domiciliaries of New York for 1978 through 1982 noting that the taxpayers maintained their historical New York home as well as extensive business and social ties to New York throughout this period and that although efforts were made to sell the New York home, it was not clear how serious these efforts were, calling into question the taxpayers' intention to abandon their New York domicile. * * *

Matter of Kornblum(21)

The New York Tax Appeals Tribunal held that the Kornblums did not effectively change their domicile to Florida. They had purchased a Florida condominium shortly after Mr. Kornblum retired. Mr. Kornblum obtained a Florida driver's license, voted in Florida, obtained a local library card and became active in the condominium association. The Tribunal did not consider this enough and pointed out:

* they moved no household furnishings from the New York home to Florida

* they continued electric, telephone and other services in the New York home while in Florida and traveled between the two locations throughout the year

* they continued to maintain their safe deposit box in a New York bank, held two New York bank accounts and left their investments for management by the New York office of a national investment service

* Mrs. Kornblum continued to treat with a New York physician The Kornblums appealed to the New York Supreme Court (Appellate Division) but lost. The Court recognized that the evidence could be viewed as supporting a change of domicile, but refused to substitute the Court's judgment for the Tribunal. * * *

Matter of Getz(22)

Mr. Getz owned a five-bedroom home in a suburb of Albany. In 1983, when he was age 61, he decided for health and other reasons to retire from the New York Telephone Company, purchase a two-bedroom Florida condo and change his domicile to Florida. He continued to own his New York home. He signed a Florida declaration of domicile and changed his voter's registration, driver's license and car registration. Mr. Getz was active in numerous community organizations and resigned from most of them except that he continued to maintain a resident membership at the Albany Country Club so he could use the golf course and continued as a director of the bank. Mr. Getz resided in Florida from late October to early May. He was a director of a New York bank and testified he traveled to New York at various time during the winter months to attend board meetings.

Mr. Getz testified that he did not sell his New York home because he would have incurred a substantial capital gains tax, and that since it was not his principal residence he would not be entitled to the $125,000 capital gains tax exclusion but on his death his estate would receive a stepped-up basis. He also testified that the New York home not only provided a place for he and his wife to stay when they visited New York, but also a residence for their unmarried son. He also testified that he furnished the Florida condo with new furniture because it required an entirely different style of furnishings. Proof was also submitted that he was active in his Florida condominium association and served as its president and was also active in some other Florida organizations. The Administrative Law Judge held against Mr. Getz, stating that the conduct most problematic but not conclusive was his maintenance of the New York home, regular returns to New York and his ongoing relationship with the bank and country club. On appeal, the Tax Appeals Tribunal affirmed and noted, among other things, the contention that the record makes clear that many strong emotional ties to New York conflicted with Mr. Getz's efforts to demonstrate his intention to change his domicile to Florida. * * *

Matter of Rauscher(23)

The Tribunal affirmed the Administrative Law Judge, holding that the change of domicile was not effective based on the fact that:

* the taxpayer maintained an investment in a New York real estate business and retained a New York attorney as "trustee" for the properties

* received mail in New York

* employed a secretary in New York

* maintained a New York phone number (apparently for business purposes)

* kept cars registered in New York

* retained New York bank accounts The Tribunal noted that the taxpayers failed to introduce any evidence as to their general habits of life, e.g., social ties, and that the declaration of domicile, Florida registration and homestead exemption were not sufficiently persuasive. * * *

In July 1997 the Tax Appeals Tribunal decided the Aldo Gucci case.(24) The issue was whether Mr. Gucci had effectively changed his domicile from New York. The Tribunal quoted at some length from a New York Supreme Court case.(25) It may be helpful to cite this language whenever the domicile auditor argues that a change of domicile was not effective because the retiree always intended to return to New York at some future indefinite date. The court noted:

"`The intention necessary for acquisition of a domicile may not be an intention of living in the locality as a matter of temporary expediency. It must be an intention to live permanently or indefinitely in that place. But it need not be an intention to remain for all time; it is sufficient if the intention is to remain for an indefinite period.' (25 Am. Jur. 2d Domicile @ 25, at 19[1966.)

"When a person has actually removed to another place, which is his fixed present residence, with an intention of remaining there for an indefinite time, it becomes his place of domicile, notwithstanding he may have a floating intention to return to his former domicile at some future and indefinite time. (28 C J S Domicile @ 11, at 19[1941 1911941].)

"Though the idea of permanency is sometimes involved in the domicile concept, the term "domicile" is more safely defined in the negative rather than affirmative. A person's domicile is the place he is making his home not with a present intention to remain there forever, but 'without' a present intention of leaving at some particular future time. (Siegel, Practice Commentary, McKinney's Cons. Laws of N.Y., Book 58A, SCPA 103, p. 21.)" (Matter of McKone v. State Tax Comm., supra, 490 NYS2d at 630.)

"The importance of establishing intent was articulated by the Court of Appeals when, in Matter of Newcomb (192 NY 238), it stated: "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."

A retiree who contemplates a change of domicile should meet with his professional advisor and discuss in detail the retiree's background and the facts that prompt a change of domicile. It is necessary that a convincing scenario be presented. The results in the cases reviewed in this session often turned on the "spin" given to the facts. In a recent tax case, the Administrative Law Judge in holding in favor of the retiree recognized that the same set of facts can often be interpreted differently:

"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..."(26)

Before any contact is made with a domicile auditor --- be truthful --- but make sure the facts have the most favorable "spin" from the outset.

TWO EXPENSIVE HOMES OUTSIDE NEW YORK

ARE NOT ENOUGH TO CHANGE NEW YORK DOMICILE

The Tax Appeals Tribunal in 1998 once again has relied on the venerable Newcomb case in applying the domicile test (27). The taxpayers claimed that their social and family life was centered in New Jersey and St. Croix, that they owned expensive homes in both places, and that they had many private business projects outside of their primary New York employment. Not enough. The Tribunal noted their children went to New York schools and that New York City was a constant in their lives "around which all else orbited". Relying on the Newcomb case, the Tribunal ruled that there must be a union of intention and residence and that here the intention was missing. There was no "absolute and fixed intention to abandon one [domicile] and acquire another".









CAUTION: Many of the decisions reviewed in this session discuss in detail the surrounding facts. Only the highlights have been cited. Before relying on any decision it should be reviewed in its entirety since facts not recited may either be helpful or harmful. Several domicile cases are decided by the Tax Appeals Tribunal and the New York Supreme Court (Appellate Division) each year. The latest decisions should be reviewed.


1. Wade v. Wade, 93 Fla. 1004, 113 So. 274(1927).

2. 20 NYCRR 105.20(d). The New York Surrogate's Court Procedure Act defines domicile as a fixed, permanent and principal home to which a person wherever temporarily located always intends to return. SCPA 103(15). The Florida Probate Code defines domicile as a person's usual place of dwelling ( 731.201(11).

3. Matter of Newcomb, 192 N.Y. 238, 43 N.E. 950 (1908).

4. For example, see Matter of the Estate of Brunner, 41 N.Y.2d 917, 363 N.E.2d 346 (1977).

5. Fla. Stat. 222.17. The Florida Probate Code defines domicile as a person's usual place of dwelling ( 731.201(11)).

6. Deliberately Omitted.

7. Matter of Estate of Brunner, 41 N.Y.2d 917, 394 N.Y.S.2d 621, 363 N.E.2d 346 (1977).

8. Zinn v. Tully, 54 N.Y.2d 713, 442 N.Y.S.2d 990, 426 N.E.2d 484 (1981).

9. The New York Tax Commission was replaced by the Tribunal in 1987.

10. Clute v. Chu, 106 A.D.2d 841,. 484 N.Y.S.2d 239 (3rd Dept. 1984)

11. Matter of Sol and Lillian Feldman, Tax Appeals Tribunal dec. (Dec. 15, 1988).

12. Matter of Bodfish v. Gallman, 50 A.D.2d 457, 378 N.Y.S.2d 138 (1976).

13. Matter of Elliott and Ghislaine Sutton, 1989 Tax Case J-1261.

14. See Wechsler, N.Y. Tax Appeals Tribunal (5/16/91).

15. See Buzzard, DTA 808865 (2/18/93).

16. See Burke, DTA 810631 (6/2/94).

17. Buzzard v. Tax Appeals Tribunal, 205 A.D.2d 852, 613 N.Y.S.2d 294 (3rd Dept. 1994).

18. Matter of Getz, TSB-D-93(11)-I.

19. Matter of Kartiganer, 194 A.D.2d 879, 599 N.Y.S.2d 312 (Third Dept. 1993)

20. Matter of SilvermanTSB-D-89-(14)-I.

21. Matter of Kornblum, 500 N.Y.S.2d 158 (A.D.3rd 1993).

22. Matter of Getz, New York Tax Appeals Tribunal, DTA 809134 (July 10, 1993).

23. Matter of Rauscher, New York Tax Appeals Tribunal, DTA 810567 (May 12, 1994).

24. Matter of Gucci, DTA 812160; 1997 N.Y. Tax Lexis 303 (July 10, 1997).

25. Matter of McKone v. State Tax Commission, 111 A.D.2d 1051, 490 N.Y.S.2d 628, aff'd 68 N.Y.2d 638, 505 N.Y.S.2d 71.

26. Matter of Mariani, 1996 N.Y. Tax Lexis 567 (December 2, 1996).

27. Matter of Smith and Groh, 1998 WL 433458 (N.Y. Tax App. Trib.) DTA No. 810532 and 813342.

Allan R. Lipman and Kelly V. Zarcone, members of the FL and NY bar.

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