|February 1, 2013|
Previously published on January 2013
New York State and New York City impose a personal income tax on a “resident individual” -generally someone who is domiciled in New York or who is not domiciled in New York but maintains a permanent place of abode in New York and spends more than 183 days of the taxable year in New York.
In Gaied v. New York State, the taxpayer, a New Jersey domiciliary, purchased a building in Staten Island, New York, for use by his parents as a residence and an investment. The issue in the case is whether the taxpayer maintained a permanent place of abode in New York. Gaied has a long history. In 2009, New York’s Division of Tax Appeals determined that the taxpayer was a New York resident because of his access to the apartment. On appeal, the New York Tax Appeals Tribunal reversed the decision, finding the taxpayer not to be a New York resident because of his limited access to the apartment, lack of personal items there, and failure to use the place as a residence. The New York Division of Taxation requested re-argument, controversially arguing that no requirement exists that the taxpayer actually dwell in the abode for it to be permanent, and that the taxpayer’s subjective use of the premises is not determinative for purposes of establishing a permanent place of abode where a taxpayer has a legal relationship to the property, continually maintains the premises, and the property meets the physical attributes of an abode. The Tribunal agreed, again finding that the taxpayer was a New York resident.
The taxpayer appealed, and the Tribunal, in December 2012, confirmed that the taxpayer was a resident for New York personal income tax purposes, even though a contrary conclusion would have been reasonable based on the evidence presented. The Tribunal based its decision on the fact that the taxpayer was registered to vote in New York, maintained a telephone and utilities in his own name for the property, paid all expenses for the apartment, retained unfettered access to the apartment, occasionally slept at the apartment, did not establish that he kept the apartment exclusively for his parents, and did not prove that he held the property solely for investment purposes. While this decision does not initially appear to be a good result for the taxpayer, the taxpayer can again appeal this case to the New York Court of Appeals “as of right” because of the two dissenting judges in the case.