coa john gaied decision

8/13/2019 CoA John Gaied Decision

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=================================================================Thi s opi ni on i s uncor r ect ed and subj ect t o r evi si on bef or epubl i cat i on i n the New Yor k Repor t s.- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -No. 26I n t he Mat t er of J ohn Gai ed, Appel l ant , v.New York St at e Tax Appeal sTr i bunal , et al . , Respondent s.

Ti mot hy P. Noonan, f or appel l ant .Rober t M. Gol df ar b, f or r espondent s.

PI GOTT, J . :

On t hi s appeal , we are asked t o consi der New Yor k' s

"st at ut or y resi dent " t est ( Tax Law 605 [ b] [ 1] [ B] ) and mor e

speci f i cal l y, t he st andar d t o be appl i ed when det er mi ni ng whet her

a person "mai nt ai ns a permanent pl ace of abode" i n New Yor k.

Pet i t i oner J ohn Gai ed cont ends t hat t he quest i on shoul d t ur n on

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whet her he mai nt ai ned l i vi ng ar r angement s f or himself t o r esi de

at t he dwel l i ng. We agr ee wi t h pet i t i oner and hol d t hat i n or der

f or an i ndi vi dual t o qual i f y as a st at ut or y r esi dent , t her e must

be some basi s t o concl ude t hat t he dwel l i ng was ut i l i zed as t he

t axpayer ' s r esi dence.

Dur i ng t he r el evant t i me per i od, pet i t i oner was

domi ci l ed i n New J ersey. He owned an aut omot i ve ser vi ce and

r epai r busi ness on St aten I sl and, New Yor k and commut ed dai l y t o

wor k, a di st ance of about 28 mi l es.

I n November 1999, he pur chased a mul t i - f ami l y apar t ment

bui l di ng on St at en I sl and, l ocat ed i n t he same nei ghbor hood as

hi s busi ness. Pet i t i oner t est i f i ed t hat hi s mot i vat i on f or

acqui r i ng t he bui l di ng was t wo- f ol d: as a pl ace f or hi s el der l y

par ent s t o l i ve and as an i nvest ment pr oper t y.

St ar t i ng i n 1999, pet i t i oner ' s par ent s l i ved i n a

f i r st - f l oor apar t ment and r el i ed on pet i t i oner f or t hei r suppor t .

Pet i t i oner cl ai med t hem as dependent s on hi s f eder al , New J er sey,

and New Yor k t ax r et ur ns. He pai d t he el ect r i c and gas bi l l s f or

t he apar t ment , and mai nt ai ned a t el ephone number f or t he

apar t ment i n hi s name. However , he i nsi st s t hat he never l i ved

at t he apart ment and di d not keep any cl othi ng or other per sonal

ef f ect s t her e; nor di d he have sl eepi ng accommodat i ons at t he

apar t ment . Whi l e he had keys t o t he apar t ment , he cont ends t hat

he di d not have unf et t ered access. He st ayed at t he apar t ment

onl y on occasi on, doi ng so at hi s par ent s' r equest t o at t end t o

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t hei r medi cal needs. On t hose occasi ons, he woul d sl eep on a

couch.

Pet i t i oner l eased t he ot her t wo apar t ment s i n t he

bui l di ng t o t enant s. Dur i ng t he year s i n quest i on, 2001 t hr ough

2003, he f i l ed a f eder al Schedul e E, whi ch r eport ed i ncome and

expenses f r om r ent al r eal est at e associ at ed wi t h the pr oper t y.

He di d not , however , pr oduce recor ds t o subst ant i at e the rent al

i ncome or expenses r epor t ed. New Yor k Ci t y vot er r egi st r at i on

r ecor ds i ndi cat e t hat pet i t i oner vot ed i n gener al el ect i ons i n

New York i n 2000.

I n December 2003, pet i t i oner sol d hi s New J er sey

r esi dence i n or der t o sat i sf y a l ar ge 2002 f eder al t ax

obl i gat i on. He pl aced hi s bel ongi ngs i n st or age and st ayed wi t h

an uncl e i n New J er sey whi l e renovat i ng t he boi l er r oom at t he

St aten I sl and pr oper t y t o make an addi t i onal apar t ment , wher e he

began r esi di ng i n 2004, af t er t he t ax year s at i ssue.

For each of t he t ax year s i n quest i on, pet i t i oner f i l ed

nonr esi dent i ncome t ax r et ur ns i n New Yor k. Af t er an audi t , t he

Depart ment of Taxat i on and Fi nance i ssued a Not i ce of Def i ci ency

i ndi cat i ng t hat he owed an addi t i onal $253, 062 i n New Yor k St ate

and Ci t y i ncome t axes, pl us i nt er est . The Depart ment det er mi ned

t hat he was a "st atut ory resi dent " of New Yor k wi t hi n t he meani ng

of Tax Law 605 ( b) ( 1) ( B) because he spent over 183 days i n

New Yor k Ci t y and mai ntai ned a "per manent pl ace of abode" at t he

St at en I sl and pr oper t y dur i ng t hose year s.

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Pet i t i oner sought a r edet er mi nat i on of t he def i ci ency,

concedi ng t hat he was i n New Yor k Ci t y more t han 183 days dur i ng

each year at i ssue but chal l engi ng t he det er mi nat i on t hat he

mai nt ai ned a "per manent pl ace of abode" at t he St aten I sl and

pr oper t y. Af t er a hear i ng, an Admi ni st r at i ve Law J udge ( ALJ )

i ssued a det er mi nat i on sust ai ni ng the Not i ce and t her eaf t er ,

pet i t i oner f i l ed an except i on.

The Tax Appeal s Tr i bunal i ni t i al l y r eversed t he ALJ ' s

det er mi nat i on on t he gr ound t hat pet i t i oner di d "not have l i vi ng

quar t er s at hi s par ent s' apar t ment " and t her ef or e, he di d not

mai ntai n a permanent pl ace of abode.

The Depar t ment moved f or r eargument , cont endi ng t hat

t he Tr i bunal ' s deci si on f ai l ed t o take i nt o account pr ecedent

t hat , i n or der t o qual i f y as a stat ut or y r esi dent under t he Tax

Law, a t axpayer need not actual l y dwel l i n the permanent pl ace of

abode, but need onl y mai nt ai n i t . Pet i t i oner opposed t he mot i on.

On r eargument , t he Tr i bunal , wi t h one member

di ssent i ng, gr ant ed t he Depar t ment ' s mot i on, af f i r med t he ALJ ' s

deci si on and sust ai ned t he def i ci ency. The Tr i bunal st at ed t hat

i t s i ni t i al deci si on was " an i mpr oper depar t ur e f r om t he l anguage

of t he st at ut e, r egul at i ons, and cont r ol l i ng pr ecedent " and

concl uded t hat "wher e a t axpayer has a pr oper t y r i ght t o t he

subj ect pr emi ses, i t i s nei t her necessar y nor appr opr i at e t o l ook

beyond t he physi cal aspect s of t he dwel l i ng t o i nqui r e i nt o t he

t axpayer s' subj ect i ve use of t he pr emi ses. " The Tr i bunal

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r ej ect ed pet i t i oner ' s ar gument t hat t he pr emi ses must be

mai nt ai ned f or hi s per sonal use, f i ndi ng t hat t her e i s "no

r equi r ement t hat t he pet i t i oner act ual l y dwel l i n t he abode, but

si mpl y t hat he mai nt ai n i t . " The Tr i bunal f ur t her f ound t hat

pet i t i oner had not est abl i shed t hat t he pr oper t y was mai nt ai ned

excl usi vel y f or hi s par ent s use. I t f ound t hat pet i t i oner st ayed

over ni ght on occasi on t o car e f or hi s f at her , l i st ed t he addr ess

under hi s name f or t he ut i l i t y and t el ephone bi l l s, l i st ed t he

addr ess as hi s on t he other apart ment l eases, and had unf et t er ed

access t o t he apar t ment ( r ej ect i ng, as di d t he ALJ , pet i t i oner ' s

t est i mony that he di d not have unf et t er ed access) .

The di ssent woul d have af f i r med t he Tr i bunal ' s or i gi nal

deci si on i n pet i t i oner ' s f avor . He not ed t hat t he Tr i bunal

const r ued t he st at ut e i n i t s or i gi nal deci si on "i n a pr act i cal

manner , gener al l y ref er r i ng t o an i ndi vi dual doi ng what ever i s

necessary t o cont i nue one' s l i vi ng ar r angement s i n a par t i cul ar

dwel l i ng pl ace. "

Pet i t i oner br ought t hi s CPLR ar t i cl e 78 pr oceedi ng

chal l engi ng t he Tr i bunal ' s second det er mi nat i on. The Appel l at e

Di vi si on, wi t h t wo J ust i ces di ssent i ng, conf i r med t he

det er mi nat i on, r ecogni zi ng t hat al t hough a "cont r ar y concl usi on

woul d have been reasonabl e based upon t he evi dence pr esent ed, " i t

was never t hel ess "const r ai ned t o conf i r m, si nce [ t he cour t ' s]

r evi ew i s l i mi t ed and t he Tr i bunal ' s det er mi nat i on [ was] ampl y

suppor t ed by t he r ecord" ( 101 AD3d 1492 [ 3d Dept 2012] ) .

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The di ssent f ocused on t he l egi sl at i ve i nt ent of t he

st at ut or y resi dence r ul es and not ed t hat t he par amount i nqui r y i n

determi ni ng whether a taxpayer i s mai nt ai ni ng a permanent pl ace

of abode i n New Yor k shoul d be whet her a t axpayer mai ntai ns

"l i vi ng ar r angement s" i n a par t i cul ar dwel l i ng pl ace ( i d. at

1495) . Appl yi ng t hi s anal ysi s, t he di ssent woul d have f ound t hat

pet i t i oner di d not l i ve i n t he dwel l i ng or have any per sonal

r esi dent i al i nt er est t her e, and t he Tr i bunal ' s deci si on t o hol d

hi m as a r esi dent was " i r r at i onal and unr easonabl e. "

Pet i t i oner appeal ed f r om t he Appel l at e Di vi si on' s

or der , pur suant t o CPLR 5601 (a) .

Tax Law 601 and New Yor k Ci t y Admi ni st r at i ve Code

11- 1701 i mpose, r espect i vel y, New Yor k St at e and New Yor k Ci t y

per sonal i ncome t ax on St at e and Ci t y " r esi dent i ndi vi dual s. " An

i ndi vi dual may be t axed as a " r esi dent " i n one of t wo ways, t he

f i r st one bei ng t he obvi ous; t hat he or she i s domi ci l ed i n New

Yor k, i . e. t he t axpayer ' s permanent and pr i mar y home i s l ocat ed

i n New Yor k ( see Tax Law 605 [ b] [ 1] [ A] ) .

The al t er nat i ve t est i s f ound i n Tax Law 605 ( b) ( 1)

( B) , whi ch t axes a "st at ut or y r esi dent " or someone "who i s not

domi ci l ed i n t hi s st ate but mai nt ai ns a per manent pl ace of abode

i n thi s s t ate and spends i n t he aggr egate more t han [ 183] days of

t he t axabl e year i n t he st at e. "

I t i s t he second t est t hat i s at i ssue her e.

Pet i t i oner concedes t hat he was i n New Yor k Ci t y more t han 183

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days dur i ng each of t he year s at i ssue. Thus, whet her pet i t i oner

i s a st at ut ory r esi dent depends on whet her he mai nt ai ned a

per manent pl ace of abode i n New Yor k.

I n Mat t er of Tamagni v Tax Appeal s Tr i b. of St at e of

N. Y. ( 91 NY2d 530 [ 1998] ) , t hi s Cour t exami ned t he l egi sl at i ve

hi st or y of t he t ax st at ut e, and not ed t hat t her e had been

"sever al cases of mul t i mi l l i onai r es who act ual l y mai nt ai n homes

i n New York and spend t en mont hs of every year i n t hose homes . .

. but . . . cl ai m t o be nonr esi dent s" ( 91 NY2d at 535 quot i ng

I ncome Tax Bur eau Mem, Bi l l J acket , L 1922, ch 425) . We

expl ai ned t hat t he st at ut or y r esi dence pr ovi si on f ul f i l s t he

si gni f i cant f unct i on of t axi ng i ndi vi dual s who ar e "r eal l y and

[ f or ] al l i nt ent s and pur poses. . . r esi dent s of t he st at e" but

"have mai nt ai ned a vot i ng r esi dence el sewher e and i nsi st on

payi ng t axes to us as nonr esi dent s" ( i d. ) . "I n shor t , t he

st atut e i s i nt ended t o di scour age t ax evasi on by New Yor k

r esi dent s" ( 91 NY2d at 535) .

The Tax Law does not def i ne "permanent pl ace of abode",

but t he r egul at i ons def i ne i t as "a dwel l i ng pl ace of a per manent

nat ure mai ntai ned by t he t axpayer , whet her or not owned by such

t axpayer , [ whi ch] wi l l gener al l y i ncl ude a dwel l i ng pl ace owned

or l eased by such t axpayer ' s spouse" ( 20 NYCRR 105. 20 [ e] [ 1] ) .

The r egul at i ons f ur t her provi de t hat , by way of exampl e, "a mer e

camp or cot t age, whi ch i s sui t abl e and used onl y f or vacat i ons,

i s not a per manent pl ace of abode" ( i d. ) .

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The Tax Tr i bunal has i nt er pret ed "mai nt ai ns a permanent

pl ace of abode" t o mean t hat a t axpayer need not " r esi de" i n t he

dwel l i ng, but onl y mai nt ai n i t , t o qual i f y as "st at ut or y

r esi dent " under Tax Law 605 [ b] [ 1] [ B] . Our r evi ew i s l i mi t ed

t o whet her t hat i nt er pr et at i on comport s wi t h t he meani ng and

i nt ent of t he st at ut es i nvol ved ( Mat t er of Si emens Cor p. v Tax

Appeal s Tr i b. , 89 NY2d 1020, 1022 [ 1997] ) . We concl ude t here i s

no r at i onal basi s f or t hat i nt er pr et at i on. Not abl y, nowher e i n

t he st atut e does i t pr ovi de anyt hi ng other t han t he "per manent

pl ace of abode" must r el at e t o t he t axpayer . The l egi sl at i ve

hi st or y of t he st at ut e, t o pr event t ax evasi on by New Yor k

residents, as wel l as t he r egul at i ons, suppor t t he vi ew t hat i n

order f or a t axpayer t o have mai nt ai ned a permanent pl ace of

abode i n New Yor k, t he t axpayer must , hi msel f , have a r esi dent i al

i nt er est i n t he pr oper t y.

Accor di ngl y, t he j udgment of t he Appel l at e Di vi si on

shoul d be rever sed, wi t h cost s, and t he mat t er r emi t t ed t o that

cour t wi t h di r ect i ons t o remand to respondent New Yor k St ate Tax

Appeal s Tr i bunal f or f ur t her pr oceedi ngs i n accor dance wi t h t hi s

opi ni on.

* * * * * * * * * * * * * * * * *

J udgment r eversed, wi t h cost s, and mat t er r emi t t ed t o t he

Appel l at e Di vi si on, Thi r d Depar t ment , wi t h di r ect i ons t o remandt o r espondent New Yor k St ate Tax Appeal s Tr i bunal f or f ur t herpr oceedi ngs i n accor dance wi t h t he opi ni on her ei n. Opi ni on byJ udge Pi got t . Chi ef J udge Li ppman and J udges Gr af f eo, Read,Smi t h, Ri ver a and Abdus- Sal aam concur .

Deci ded Februar y 18, 2014

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coa john gaied decision

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