New York Residency Rules

William Killory, CPA (Oct, 2009)

As the leaves turn color and the cold weather beckons the snow birds back to Florida, many New Yorkers begin to wonder what life would be like outside of New York, at least as a taxpayer. Paychex founder Tom Golisano famously stated that he was leaving New York State, frustrated with the state of politics and a 30% increase in the top personal income tax rate. We wish Mr. Golisano good luck with his efforts, but leaving New York, at least as a taxpayer, may be harder than one thinks.

The New York State Department of Taxation and Finance is very aggressive in its efforts to keep New Yorkers paying tax to the Empire State long after they think they are ex-New Yorkers. Merely spending 183 days a year in Florida may not be enough to be a non-resident of New York. New York's auditors will be looking for proof that you have changed domicile, which they consider the place where you have your permanent home.

Snow birds that maintain a residence in New York will have to prove with "clear and convincing evidence" that they have changed domicile. Auditors will be looking for residences, active business involvement, where your time is spent, where items "near and dear" to you are located, family connections and other secondary factors.

If you maintain a residence in New York and Florida, auditors will look at relative size and value of the homes. Owning a home in New York and renting a condo in Florida will argue in favor of maintaining a New York domicile. New York auditors will look for items that are "near and dear" to you including items as seemingly innocuous as family picture albums to valued heirlooms and collectibles. When moving these items from New York it would be helpful to have them shipped by a recognized moving company, have these items inventoried and insured.

Operating the family business from the intra-coastal waterway will at a minimum create New York sourced income. If you are actively involved in operating the business or, as often happens, intimately involved in negotiating the sale of your closely held company, New York will likely rule that you have not sufficiently broken your New York connections.

New York will look at your family connections and if you are making frequent trips back to New York to visit family. Not only do you risk spending too much time in New York but an auditor may assume that you are still a New Yorker for tax purposes. If your children are attending college in New York and spending their time at the old homestead New York will take that into consideration when weighing the several factors that go into determining residency.

Secondary factors that New York will look for are voting registration, driver licenses and car registrations. Hunting and fishing licenses in New York should reflect non-resident status. Banking and brokerage statements should reflect a Florida address. Filing for a Florida homestead exemptions and making a declaration of domicile in the local clerk's office in Florida will help make your case for non-resident status. With the advent of the internet, advances in technology and telecommunications we leave electronic footprints wherever we are. You can be sure that New York will be more than happy to use these footprints to your detriment.

There are several factors that auditors will look at when weighing residency status. It is a facts and circumstances test and New York is very aggressive in this area. If you truly want to leave New York; sell your house, pack up your stuff and leave. Don't forget to file a final part-year resident return on your way out. Anything less can open an unwelcome inquiry from New York.

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