Another N.Y. Case Confirms Burden on Taxpayer to Track Days.

In the Matter of CARL RUDERMAN, v TAX APPEALS TRIBUNAL OF THE STATE OF NEW YORK, decided on March 28, 2019, the appellate court upheld a tax assessment against a Florida domiciliary on the basis that he was a New York statutory resident.

In 2007, petitioner was a Florida domiciliary but, as an executive in the magazine publishing industry that required frequent travel between Florida and New York, he also maintained an apartment, office and significant ongoing business connections in New York. For the 2007 tax year, petitioner filed a New York nonresident and part-year resident income tax return wherein he reported a federal adjusted gross income of $2,965,928, identified his address as being in Aventura, Florida, and calculated his nonresident New York State tax liability to be $615 and reported no New York City tax liability. In 2010, the NY Department of Taxation and Finance audited petitioner’s 2007 nonresident and part-time resident income tax return ultimately determining that petitioner was a statutory resident of New York in 2007 because he maintained a permanent place of abode and spent in excess of 183 days in the state that year.

The court stated that “[a] nondomiciliary may be considered a New York resident for income tax purposes if he or she maintains a permanent place of abode in this state and spends in excess of 183 days of the year here” …  It is the taxpayer’s burden to establish that he or she was not a statutory resident of New York during the relevant tax year … It is not disputed that petitioner was a domiciliary of Florida and maintained a permanent place of abode in New York in 2007 (see Tax Law § 605 [b] [1] [B]). The issue, therefore, distills to whether petitioner spent more than 183 days in New York during the 2007 tax year. In support of his argument, petitioner did not provide a documentary source or diary sufficient to substantiate the fact that he did not spend more than 183 days in New York in 2007 (see 20 NYCRR 105.20 [c]). Instead, petitioner offered his own testimony and submitted the affidavits of eight others. Although petitioner testified that many of the days attributed to him being in New York were based on evidence of purchases that were made with credit cards that he had provided to other family members and individuals who were authorized to use them, his testimony lacked specificity as to particular dates and/or purchases that were inaccurately attributed to him. Petitioner’s testimony with regard to the frequency of his visits to see his sick mother was similarly vague and lacked the requisite specificity as to particular dates to demonstrate whether any of the days attributed to him being in New York were actually spent visiting his mother in Florida. The affidavits that petitioner submitted in support of his claim also suffered from a general lack of detail and, in some instances, contradicted petitioner’s own testimony as to when he was purportedly in Florida. Moreover, contrary to petitioner’s assertion, we cannot infer his presence outside New York on any given dates based upon a pattern of conduct, as petitioner acknowledged that his business trips between Florida and New York had no particular pattern of travel. Thus, despite the Tribunal’s finding that petitioner’s testimony was “forthright and honest[],” given the overarching generality of the offered testimony and the affidavits submitted into evidence, and the contradictions between the two, we agree with the Tribunal that petitioner failed to prove that he was not in New York for more than the requisite 183 days in 2007 … Accordingly, given that the Tribunal’s determination has a rational basis and is supported by substantial evidence, it is not within this Court’s province to substitute our judgment simply because a different conclusion could have been drawn from the evidence submitted …”

This case mirrors many others which have been decided over the years where the taxpayer lost because he or she failed to produce sufficient evidence of their day counts in the various states to carry their burden of proof.   The Domicile365 app is designed to assist with this.

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