Noonan’s Notes Blog is written by a team of Hodgson Russ tax attorneys led by the blog’s namesake, Tim Noonan. Noonan’s Notes Blog regularly provides analysis of and commentary on developments in the world of New York tax law.

Fact-Free Residency Case at Tax Appeals Tribunal?

Diarmuid Glynn (“Mr. Glynn” or “Petitioner”), a CEO and researcher, lived outside the U.S but accumulated 274 days in New York City in 2017 while there on a temporary work assignment. He leased an apartment in New York City for the entirety of the year and used it while he was there and he was the sole occupant of the abode, which had all of the basics, water, heat, etc. As loyal readers to this column, you probably already know that an individual is a resident of New York State/City if that is their domicile or if they are a “statutory resident,” meaning they are in the State/City for more than 183 days of a year and maintain a permanent place of abode there for substantially all of the year. Here, Mr. Glynn appealed the ALJ’s summary determination that found him to be a statutory resident of New York in tax year 2017, arguing that “he was a nonresident for 2017 because he was in New York City solely for performance of a work assignment for a fixed and limited period of time [and] that because of his temporary work assignment, his apartment does not qualify as permanent.”

But the Tribunal sided with the Division of Taxation, affirming the ALJ’s ruling. The first part of the opinion lays out the applicable New York’s residency law, stating that for an abode to qualify as a permanent place of abode, it must be “‘a dwelling place of a permanent nature maintained by the taxpayer,’ . . . . [it] must have the physical characteristics ordinarily found in a dwelling suitable for year-round habitation [and] the taxpayer must have a ‘residential interest’ in the property.” (quoting 20 NYCRR 105.20 (e)(1); Matter of Pilaro and Gorrie, Tax Appeals Tribunal, August 18, 2022; Matter of Gaied v New York State Tax Appeals Trib., 22 NY3d 592, 598 (2014)). Then it goes on to find Petitioner’s apartment to be a permanent place of abode, reasoning that “the record shows that the . . . apartment was a dwelling suitable for use as a residence; [that] petitioner was the occupant of the apartment; and [that] the apartment was lawfully leased by petitioner, who used the apartment while he was in New York City in 2017.” Thus, as Mr. Glynn was in New York for over 183 days and maintained the abode for the entire year, the Tribunal agreed he was a statutory resident of New York in 2017.

Also cited in the opinion, however, is law specific to whether a taxpayer has a “residential interest” in their property: that “[t]he determination of a residential interest necessarily involves a subjective analysis of the taxpayer’s use of the dwelling, including the nature and duration of such use.” Our friends over at TiNY noted that the Tribunal and ALJ did not analyze Mr. Glynn’s use of the apartment, yet they concluded that the apartment qualified as a permanent place of abode and that there were no material issues of fact. TiNY argues that a subjective analysis was never conducted and that, therefore, although finding the apartment to be permanent place of abode may ultimately be correct, the analysis of such is incomplete and a finding in favor of summary judgement is unsupported.    

TiNY is probably right on this. The taxpayer probably loses this case, but it is odd to have a residency case—and one that leans heavily on subjective facts—be decided without a full hearing.  On the other hand, if the taxpayer is agreeing that the place was suitable for usage, that it was his alone, and that he was the sole occupant and used it while in New York City, perhaps that’s enough actually to conclude that there’s really no other fact-finding needed?  We’ve been successful in a lot of past-Gaied residency cases in arguing the “residential interest” issue when we’ve been able to show limited or no usage of the place in New York.  But if a taxpayer conceded “no, I used it a lot when I was here,” maybe it’s better to just close the book and end it!

One other interesting note. The taxpayer and tax department agreed that the taxpayer was not domiciled in New York in 2017.  But he filed as a part-year resident on the way into New York in 2015, which might suggest he was changing his domicile into New York at that time (since taxpayers cannot be part-year statutory residents). Of course, it’s more likely this was just a mistake. But for the sake of argument, had the taxpayer conceded he “moved in” to New York in 2015 and then left New York and changed his domicile back to his home country in 2017, then he could’ve argued, per the old Sobotka case from 2015, that he couldn’t be taxed as a statutory resident in 2017, since any days in New York before he moved wouldn’t be part of the 2017 statutory day count. This all changed in 2019, when the tax department changed the law, so now a part-year resident has to count up all their days in the year for purposes of the statutory residency test. But it wasn’t the case before 2019. By now, though, with the stature of limitations for years prior to 2019 gone in most cases, the Sobotka issue probably gets thrown to the trash bin of the New York tax world. But it was fun while it lasted!

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