There is a lot of residency guidance out there harping on the importance of taking various administrative steps to change your domicile, like changing your driver’s license, voter registration, vehicle registration, etc. And while those steps are certainly indicative of a move, they are typically less relevant to the final determination, and often can cause taxpayers to lose focus on what we think can be the most important factor in changing your domicile: where you spend your time. Indeed, a poor “time factor” can hamstring an otherwise legitimate change in domicile.
This ...
The Third Department of the New York Supreme Court, Appellate Division recently issued a somewhat surprising ruling that should expand taxpayers’ access to protest rights within the state’s Division of Tax Appeals (“DTA”).
In the case, Matter of Dumpling Cove, LLC, the Petitioner was audited and subsequently signed a Statement of Proposed Audit Change in January 2018, agreeing that it owed over $500,000 in sales tax, interest, and penalties. Shortly thereafter, the Petitioner made a partial $100,00 payment, and the Department responded with a letter confirming ...
In July, the Massachusetts Appellate Tax Board (ATB) issued a decision upholding the state’s 2020 emergency regulation that required nonresident employees who worked in Massachusetts prior to the pandemic, but worked remotely due to the pandemic, to continue to apportion their income to Massachusetts.
But just because we’re posting about it—don’t confuse the Massachusetts’ emergency regulation with New York’s convenience rule. There are several key differences.
First, unlike New York’s longstanding convenience rule, the Massachusetts regulation was ...
Earlier this year we reported on a Massachusetts case where a court, (wrongly, we think), determined that a nonresident taxpayer could be taxed on the sale of stock in a business that he founded and ran in the state. Turns out this issue might be contagious……a few months ago, Ohio successfully made a similar argument. In a Final Determination issued on March 28, 2024, the Ohio Tax Commissioner denied Claimants Dr. Garry Rayant and Dr. Kathy Fields’s $719,492 refund application filed with their amended 2018 Ohio tax return. The Claimants sold 25% of their interest in Rodan & Fields ...
Over the past few years, we’ve seen a major expansion of enforcement efforts by the New York City Department of Finance, particularly with respect to the City’s unique Unincorporated Business Tax (the “UBT”). In these audits, DOF has been taking increasingly aggressive positions around the application of various statutory provisions.
Over the past decade, New York and other states have employed some version of a “False Claims Act” (FCA) to enforce violations of the tax law, and occasionally these cases wade into residency and personal income tax waters. One of the tax jurisdictions is the District of Columbia, and recently they scored a big win in a FCA case.
Over the past few years, we’ve seen a mass exodus of taxpayers leaving New York. Why? Well, first there was the COVID-19 pandemic; that didn’t help. But in the middle of the pandemic, the State raised the personal income tax rates to some of the highest in the nation. That didn’t help either! And then we had issues around a declining standard of living in New York City, empty office buildings, remote work, and safety issues, all leading more New Yorkers to seek out more friendlier climates.
A couple weeks ago, the Third Department of the New York Supreme Court, Appellate Division issued its decision in Matter of Schreiber, reversing a prior decision of the Tax Appeals Tribunal, finding that its interpretation of Tax Law § 16(f)(2)(C) and Matter of Purcell, both related to the calculation of qualified empire zone enterprise (QEZE) tax reduction credits, was irrational. We’ve been following this issue for almost a decade, dating back to our review and analysis of the Purcell case, which you can read about here. The Schreiber case presents an interesting new twist in the story, and the Court’s analysis could impact cases beyond the realm of QEZE credits.
As states continue to seek increased revenues, especially those high-tax states dealing with a dwindling tax base, we’re starting to see some states take unusual and fairly aggressive positions in tax cases. One recent example we covered involved New York and the enforcement of its “convenience rule” in the Zelinsky case. In November 2023, the Massachusetts Appellate Tax Board issued another doozy, holding in Welch v. Commissioner of Revenue that a nonresident could be taxed on the gain from the sale of stock. (Docket No. C339531 (November 29, 2023)).
Last month, we wrote about a recent ALJ Order dealing with New York’s application of the convenience rule to a situation where a taxpayer’s New York office was closed during COVID. In that piece, we noted that we expected a decision in February 2024 in the Zelinsky case, in which the petitioner was making similar arguments about the application of the convenience rule during COVID.