10.14.19 | SALT Chat
The year was 2014 and the New York State Court of Appeals breathed life and a lot of common sense into the New York residency wars. Matter of Gaied v New York State Tax Appeals Tribunal was decided by New York State’s highest court, and it seemed like a new competitor named common sense has finally entered into the residency battles.
As my readers know, there are two ways to be taxed as a resident in New York; either by being domiciled in the State or by being a statutory resident. The statutory residency test involves a mechanical day-count test (more than 183) and requires the maintenance of a permanent place of abode (“PPA”). Unfortunately, until the Gaied decision, determining whether one had a PPA was also viewed somewhat mechanically. To sum up a long line of litigation in one sentence, if you maintained living quarters that were suitable for year-round use, regardless of the use to you as a taxpayer or whether you used the living quarters, you had a PPA.
Gaied was groundbreaking in holding “that the taxpayer must, himself, have a residential interest in the property.” The facts in the case indicated that the three-unit residential property owned by the taxpayer was not his PPA since two units were rented to third parties and one unit was used by his elderly parents. The taxpayer was in New York City virtually every day for business and often stayed at the Staten Island apartment of his parents. But it simply was not his home. The facts indicated that he would stay on the couch to check up on his parents.
Compare this to a recent Administrative Law Judge (“ALJ”) opinion In the Matter of Obus where the taxpayer worked in New York and does not dispute his presence in the State for more than 183 days. It is also undisputed that the taxpayer owns a home in upstate New York (over 200 miles from his workplace) and spent no more than two to three weeks a year at this home. The ALJ held that the taxpayer did in fact maintain a PPA in New York and upheld the determination of statutory residency.
Why the difference between Gaied and Obus? Some notable points stand out to me. It seems that the taxpayer in Obus was arguing for a vacation home exception to having a PPA. In Gaied the facts pointed to the apartment as the home of the taxpayer’s parents. While Obus did rent a separate unit to a year-round tenant, they still had control over the rest of the property.
While Gaied clearly knocked out the old Tax Department mantra of what you use the residence for doesn’t matter at all, I am a firm believer that it still matters. Concerning the taxpayer in Gaied, while he owned the residence in question, it was still his parents’ home-sweet-home. He was a guest, albeit a frequent one. In Obus, while the taxpayer was not a frequent visitor to the upstate home, he certainly was not a guest.
The outcome; we will have to wait and see. If you have questions contact me at email@example.com or your Berdon Advisor.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.
 22 NY3d 592 
 Matter of Nelson Obus and Eve Coulson (DTA NO. 827736 August 22, 2019.) Note that ALJ decisions are not binding authority and an exception has already been filed.