11.04.19 | SALT Chat
Way back in 1966, singer John Denver wasn’t thinking about state tax residency when he wrote “Babe I Hate to Go.” Yes, readers, not only do you learn when reading my blog, but I also learned that the number 1 hit song for Peter, Paul and Mary, “Leaving on a Jet Plane,” was written by John Denver three years earlier and did not hit the charts with its original title.
So now that the world’s most high-profile taxpayer is leaving New York for Florida, albeit on Air Force One, I thought this would be a great time to remind my readers of a few simple but important facts about changing your residence for state income tax purposes.
Readers can joke back and forth about the political implications of President Trump’s “move” to Florida, but I write this to remind my readers to pay careful attention to this next sentence; filing a Declaration of Domicile with the County Clerk, Court, or wherever the appropriate office might be, does not magically jettison tax residency in your former tax home, although it might very well establish residency in your newly declared one.
Remember readers, to change domicile for state income tax purposes, you must abandon your old domicile and establish a new domicile. Either of these, on its own, is not enough. So, while filing a self-serving declaration with another State certainly might establish residency in the newly declared locale, it in no way substitutes for the substantial acts required to abandon your old domicile and escape its tax consequences.
New York has a well-developed set of guidelines in this area which recognizes there is no all-or-nothing test and that five primary factors, use and maintenance of a home, active business involvement, time spent (not simply a 183 day count), location of near and dear items as well as location of family, are analyzed and weighted in an attempt to determine where the taxpayer’s true tax home is. The so-called secondary factors (the ones that everyone talks about on the golf course, such as changing your driver’s license and voting registration) should in theory only be examined if the five primary factors are inconclusive.
Also remember, you as the taxpayer attempting to establish the change have the burden of proof. There are many subtleties and variations of facts that exist and there is certainly no one-size fits all approach to making the change. But please, if you only remember one thing, filing a declaration of domicile in and of itself is not going to be enough. If you have residency questions contact me at email@example.com or your Berdon Advisor.
Wayne Berkowitz, a tax partner and co-leader of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.
 While I’m not a big John Denver fan, I do have to give him full credit for helping create my love of music. When I was 10 years old, the first arena-sized concert I ever attended was John Denver at Nassau Coliseum. My Mom, Dad and Sister were all present as well. We have a cousin, who was a music promoter at the time and was able to score my parents some 10th row floor seats. Apparently, it made a significant impression on me and coincidentally, I believe at least 2 of the members of Peter, Paul and Mary were sitting nearby.