NYS Residency – Gaied wins at Court of Appeals (Why this time?)

After losing at other levels with dissenting opinions, Gaied finally wins at the New York Court of Appeals. This is a very important case involving statutory residency that many professionals have been following through the various levels of the New York State court system. What was different this time? The key issue came down to the meaning of "maintaining" a permanent place of abode.

Quick background of the case: (See prior article for full review http://www.Gordonstate.blogspot.com)

For the years under audit, Mr. Gaied was domiciled in New Jersey. He operated a business in Staten Island, NY, so for statutory residence purposes he exceeded the threshold of 183 days in New York. He also owned a three unit residential property in Staten Island. Of these three apartments, two were rented to tenants. Mr. Gaied's parents lived in the other. Mr. Gaied paid all expenses for his parents. Mr. Gaied was also an occasional overnight guest at his parents' apartment. In those instances, he slept on their couch. New York State's position was that Mr. Gaied was a statutory resident because he maintained a permanent place of abode - his parents' apartment - and was present in New York for more than 183 days.

In one of the prior decisions on this case The Tax Tribunal found that use of the abode isn't necessary – ownership is sufficient. ("Where a taxpayer has a property right to the subject premises, it is neither necessary nor appropriate to look beyond the physical aspects of the dwelling to inquire into the taxpayers' subjective use of the premises.") While that statement is technically true, where they erred and were overruled by the court of appeals is that the abode must be maintained to "continue one's living arrangements". In other words, ownership is not enough if you are maintaining the abode for someone else's living arrangements. This was not Mr. Gaied's residence. He was an occasional guest in his parent's home. The fact that he paid the bills doesn't change that.

If you are a guest in another's home, you do have to be cautious however. If you are a frequent guest to the extent that the abode can be viewed as your residence (e.g., you have a key, have your own space, keep personal items there, and contribute to the maintenance of the residence), you could be found to be maintaining a permanent place of abode. The NYS Tax Tribunal case "Matter of Evans" has long been the standard in this area.