Florida or New York: which one is home? For snowbirds Donald and Rose Lieberman, who spent winters in Florida and summers in New York, their home was New York, according to a recent Administrative Law Judge decision. Therefore, as New York residents, the Liebermans were subject to New York State income tax on their worldwide income. Part of the reason for the ALJ’s determination was that Donald regularly came to New York to look after his investment properties personally, and stay in touch with his tenants. He referred to these business trips to New York as “kissing the bricks.” Perhaps if he had more of a long-distance romance, he might have saved over $100,000 of New York tax, interest and penalties.
The Liebermans had lived for many years in Queens, New York. For health reasons, they wanted to avoid the cold New York winters, and bought a place in Florida in 1990. In 2004, they filed a New York State part-year resident income tax return, claiming that they changed their domicile from New York to Florida and ceased to be New York residents. Ownership of their home in Queens was transferred to their three children, although the Liebermans continued to stay there during their extended trips to New York during the spring and summer.
Changing domicile, however, requires a lot more than obtaining a Florida driver’s license, registering to vote in Florida, and registering cars in Florida, all of which the Liebermans did. Domicile is defined as the place that a person considers home, and intends to return to whenever absent. A person claiming a change of domicile has the burden to prove, by clear and convincing evidence, that he or she has abandoned the old domicile and established a new one. There are numerous objective factors to consider, including the amount of time spent in each location and the taxpayer’s involvement in business activities. For more discussion of the domicile test for residency and the factors involved, see articles here and here.
The ALJ determined that the Liebermans produced “little convincing evidence” that they intended their domicile to be in Florida. They spent about the same amount of time in New York as in Florida. Donald Lieberman remained actively involved in his New York real estate business. There was no evidence of a daily routine in Florida or a social life. Their snowbird pattern of life stayed the same before and after their claimed change of domicile.
While an ALJ opinion is not a controlling precedent, the Liebermans’ case shows that New Yorkers planning to move to other states – whether to warm climates like Florida, North Carolina, Nevada or Arizona, or to snow country such as Vermont – need to know the law and keep good records to prove a change of domicile.