When Does a Day Count?
Petitioner David Sobotka changed his residence and became a New York domiciliary on August 18, 2008. He filed a part year resident tax return, filing as a resident from August 18 through year end, and as a nonresident for the beginning part of the year. The Division asserted a deficiency, claiming that Sobotka was a statutory resident of New York for the period prior to him becoming a domiciliary.
A New York statutory resident is a taxpayer who:
- Maintains a permanent place of abode in New York
- Spends more than 183 days in New York
- Is not a domiciliary of New York
Here, the taxpayer maintained a permanent place of abode in New York for the full year and spent more than 183 days in New York. However, the petitioner was a domiciliary for part of the year.
The petitioner argued that under law, he could not be a statutory resident because he did not meet the third part of the test. He argued that because the law says a statutory resident is not a domiciliary, and because he was a domiciliary for part of the year, he could not be a statutory resident for any part of the year. The Court rejected this argument and noted that a part year filer can be a domiciliary for one part of the year, and a statutory resident for the other part of the year. If not, someone could become a domiciliary on the last day of the year to avoid being a statutory resident for the rest of the year.
The petitioner further argued that only days spent in New York during his nondomiciliary period should count towards the statutory resident day count test. A portion of the petitioner’s days spent in New York occurred during his time as a New York domiciliary.
The court agreed and divided the year into two periods: the domiciliary period and the nondomiciliary period. It held that a taxpayer can only be a statutory resident of New York during a nondomiciliary period if he meets both the abode and day count tests during the nondomiciliary period. As soon as a taxpayer becomes a domiciliary, the days spent in New York will not count towards the statutory resident test.
It is important to note that this decision came from an administrative law judge. It is not binding precedent, and will likely be challenged by New York State. Refunds claims should be considered for taxpayers who may have been taxed with similar fact patterns.
If you have any questions, please contact your WithumSmith+Brown professional, a member of WS+B’s National Tax Services Group or email us at [email protected].
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Barry Horowitz, CPA, MST, Partner 212-829-3211 [email protected]
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Alexander Fishbane, Esq., LLM 212-829-3211 [email protected]
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