Are New York's fact-sensitive standards for residency determination a dead letter? In the Matter of the Petition of John Gaied, DTA No. 821727 (June 16, 2011) changes the New York personal income tax residency regime, and perhaps significantly. This Recent Decision Drastically Alters New York's Statutory Residency Rules, as discussed in the Hodgson Russ, LLP State & Local Tax Practice Group's analysis of the recent Tax Appeals Tribunal decision. The Tribunal actually reversed itself in this 2-1 decision, which at least compromises the precedent established under Evans v. Tax Appeals Tribunal, 199 A.D.2d 840 (N.Y. App. Div. 3d Dep't 1993) in determining what constitutes a permanent place of abode for New York personal income tax liability purposes. At worst, fact-based analysis and other standards in Matter of Evans would seem to be all but dismissed.
On its face, Matter of Gaied seems potentially to leave many who hold interest of any kind in New York real property with an unwelcome choice between giving up their property interests or being taxed as a New York resident. Only time will tell how severely Gaied could affect the residency dynamic in New York tax policy and enforcement. But practitioners are alarmed at this point, and their clients will be when they discover the potentially sweeping nature of this decision.
RELATED LINKS: For information about established New York residency principles leading up to Gaied, LEXIS users can view:
Residency and Domicile Are Closely Intertwined in Determining New York Personal Income Tax - a New York Practice Insights Commentary (fees may apply)
Statutory Residency Tests: Significance and Measure of Days Spent in New York - a New York Practice Insights Commentary (fees may apply)
For broad multi-state explanation and analysis of personal income tax residency issues, see:
1-9 Bender's State Taxation: Principles and Practice § 9.14 - Nonresidents and Part -Year Residents
1-8 Bender's State Taxation: Principles and Practice § 8.02 - Imposition of Tax and Filing Requirements
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I believe that the hysterics generated by Gaied are overblown. Essentially most of the commentators are saying that day counts are no longer valid as long as the TP has what can be considered a "permanent place of abode..." in NYS. Since the Tribunal did not say that and has left the day count in as a standard for determining residency it still is a vital factor.
I think Jim Tully is a little past his prime ( no insult Jim) and let the language get somewhat broader than was intended. I am doing a case with exactly the same circumstances except for the fact that we are contesting the day count. I'll keep you apprised of the outcome.