TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, February 22, 2014

Court Rejects New York's Use of 183-Day Rule to Automatically Tax Non-Resident Property Owners

NYWall Street Journal, Lower Taxes Seen for Nonresidents Who Own Property in New York:

A new decision from New York's highest court [Gaied v. New York State Tax Appeals Tribunal, No. 26 (NY Feb. 18, 2014)] makes it less likely that out-of-state residents who own houses or apartments in New York will be forced to pay city and state income taxes.

The New York state Department of Taxation and Finance has long held that any nonresident who spends more than 183 days in New York would be deemed a New York taxpayer if shown to own or rent any residence within the state.

But the state Court of Appeals ruled Tuesday that auditors would now have to show that out-of-state residents actually used their New York properties as their own houses in the course of the year.

Tax lawyers said the decision was a setback for New York state and New York City, which deploy auditors to check whether out-of-state residents owe state and city income taxes, among other issues. The decision could jeopardize much of the $300 million in annual revenue assessed through residency audits, the lawyers said. ...

Robert Willens, an accountant who closely follow state tax policy, said that "under the ruling just owning a home in no longer enough." Now he said the state would have to have some evidence "that is being used as a residence" by the taxpayer.

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