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Key NY tax ruling provides guidance on vacation homes as permanent place of abode

On Behalf of | Dec 14, 2022 | Tax Audits

New York taxing authorities have a reputation for coming down hard on those who try to get out of state income tax obligations. The taxing authorities will investigate anyone they believe falsely claims not to live in the state and if they find the taxpayer does meet their residency requirements will hit them hard with a large tax bill and added interest — plus the potential for additional penalties.

Does the state always win these cases?

In a recent example a taxpayer was able build a successful case against the taxing authorities.

It helps to review what residency means in the state for taxing purposes before diving into this case. In New York, taxing authorities generally consider a taxpayer a resident when they either have a domicile, or true home, in the state or meet the statutory residency test if their home is in another state. Taxing authorities will often win these cases if they can establish the taxpayer spent at least 183 days in New York.

In this case, a New Jersey resident who worked in New York City and spent more than 183 days in the state at his job also happened to own a vacation property in the Adirondacks. The state used this to argue that the taxpayer owed state income taxes. The taxpayer countered that the vacation home was truly that, a home used on occasion for vacations. Even though he was in the state most days to work, he did not stay at his vacation home. This was supported by the fact that the vacation property was more than a 4-hour commute from his office in New York City. The courts ultimately agreed with the taxpayer, and he won his case.

What if I face similar allegations?

This case highlights the fact that each income tax evasion claim is a case specific analysis. Other vacation home cases have lost, but the facts of this specific situation led the courts to rule in the taxpayer’s favor. As such, those who face similar allegations from New York taxing authorities are wise to seek legal counsel. The attorneys at Goldburd McCone LLP are familiar with these issues. They can review the allegations and help tailor a defense to your case, better ensuring a more favorable outcome.