United States: New York High Court Rules Use Of Actual Residence Critical To Residency Determination

In a case determining statutory residency for New York personal income tax purposes, the New York Court of Appeals held that to be classified as a resident, a person domiciled outside New York that frequently travels into New York must actually use a residence as a personal residence to be considered maintaining a permanent place of abode in the state.1


The taxpayer challenging the New York residency determination was domiciled in New Jersey from 2001 to 2003, the tax years in question. He owned an automotive service and repair business in New York and commuted daily to work from New Jersey. The taxpayer purchased a multi-family apartment building near his business in New York in late 1999 as an investment property and as a place for his elderly parents to reside. The taxpayer claimed his parents as dependents for federal and state income tax purposes and maintained the utility bills for the apartment in his name. However, the taxpayer insisted that he did not live at the apartment during this time period, but only occasionally stayed at the apartment to attend to his parents' medical needs. He did not keep personal items there, have unfettered access to the apartment, or have a bed on which to sleep. The other units in the apartment were leased to tenants.

In late 2003, the taxpayer sold his New Jersey residence, stayed with a relative in New Jersey for several months, renovated a space in the New York property, and subsequently used the renovated space as his own residence beginning in 2004.

The taxpayer filed non-resident New York personal income tax returns from 2001 to 2003. The New York State Department of Taxation and Finance issued a Notice of Deficiency as a result of an audit determining that the taxpayer was a statutory resident of New York. A New York resident is statutorily defined to include any individual who is not domiciled in New York, but who maintains a permanent place of abode in New York and spends in the aggregate more than 183 days of the taxable year in New York.2

The taxpayer, while conceding that he spent more than the required 183 days in New York, sought a redetermination of the deficiency challenging the determination that he maintained a "permanent place of abode" required to be considered a New York resident. The Administrative Law Judge sustained the determination,3 after which the taxpayer filed an exception. The Tax Appeals Tribunal initially reversed the determination of the ALJ, based on the evidence that the taxpayer did not have living quarters at his parents' apartment, and thus did not maintain a permanent place of abode.4 However, upon reargument, the Tribunal, with one member dissenting, reversed its prior decision and affirmed the ALJ's determination.5 The Tribunal concluded that its initial decision was invalid, noting there is "no requirement that the petitioner actually dwell in the abode, but simply that he maintain it." The Tribunal decision was upheld by the Supreme Court Appellate Division, Third Department and was appealed by the taxpayer.6

Court of Appeals Decision

Focusing on the statute at issue,7 the Court noted that whether the taxpayer is a statutory resident depends on whether he maintained a permanent place of abode in New York. "Permanent place of abode" is defined by regulation as a dwelling place of a permanent nature maintained by the taxpayer and does not include a mere camp or cottage, which is suitable and used only for vacations. There is no requirement that the dwelling be owned by the taxpayer. Notably, the regulations also exclude from the definition barracks or any other construction which does not contain facilities ordinarily found in a dwelling, such as facilities for cooking or bathing.8

The Court considered the legislative history of the residency statute, which was examined in a previous case9 and noted its enactment to address the perceived issue of tax avoidance by individuals who actually maintained homes in New York and spent up to ten months a year living in the state, but claimed to be nonresidents for personal income tax purposes.

The Court concluded that the Tax Tribunal erred in its interpretation of the statute when it ruled that, to be a resident, a taxpayer need only maintain a permanent place of abode, but need not live there. The Court reversed the earlier decision, stating that in order for a taxpayer to have maintained a permanent place of abode in New York, the taxpayer must, himself, actually have a residential interest in the property. Finally, the Court instructed the Appellate Division to remand the case to the Tribunal for further proceedings and awarded legal costs to the taxpayer.


The New York State courts and the Tax Appeals Tribunal have entertained a plethora of residency cases. High-income individuals that are frequently present in New York have much to gain in trying to prove that they either do not meet the 183-day test or do not reside in a permanent place of abode. A New York State residency classification results in taxation on all sources of income worldwide at a relatively high rate of state tax (which is an even higher rate if in New York City, which imposes a separate level of tax). In contrast, New York nonresidents are only subject to tax on income sourced to the state. The Department historically has been aggressive in searching out high-income nonresidents and challenging their residency status at audit.

The Court of Appeals' decision highlights the fact that certain taxpayers domiciled outside New York State who meet the 183-day test nevertheless may still be classified as nonresidents because of the lack of a permanent place of abode. The narrowing of the permanent place of abode test may be relevant for out-of-state residents that commute regularly to New York State, and own or lease property but for some reason do not actually live in the property. Similarly, foreign investors in New York City real estate, who may at times stay in the jurisdiction for work or personal reasons (but not at their investment property), can appreciate this narrowed residency test and its potentially positive impact. One can expect that the Department will continue to challenge out-of-state residents on this issue when the facts and circumstances show that a permanent place of abode may exist.

It is interesting that the Court awarded legal costs to the taxpayer, forcing New York State to bear this burden. The Court is not obligated to award costs if the Department was "substantially justified"10 in issuing its initial assessment and has not always done so. Though the New York residency requirements have been clarified, since the case will be remanded to the Tribunal for further proceedings, there may be further developments in this matter. As residency challenges become an issue11 for New York and other states with aging populations who are increasingly likely to spend time in multiple (and often tax-free) jurisdictions, taxpayers should be attentive to the courts' interpretation of who should be taxed as residents.


1 Gaied v. New York State Tax Appeals Tribunal, New York Court of Appeals, No. 26, Feb. 18, 2014.

2 N.Y. TAX LAW § 605(b)(1)(B).

3 Matter of John Gaied, Tax Appeals Tribunal, DTA No. 821727 (Aug. 6, 2009).

4 Matter of John Gaied, Tax Appeals Tribunal, DTA No. 821727 (Jul. 8, 2010).

5 Matter of John Gaied, Tax Appeals Tribunal, DTA No. 821727 (Jun. 16, 2011).

6 Gaied v. Tax Appeals Tribunal, App. Div. 3rd Dep't., 101 A.D. 3d 1492 (Dec. 27, 2012).

7 N.Y. TAX LAW § 605(b)(1)(B).

8 N.Y. COMP. CODES R. & REGS. tit. 20, § 105.20(e)(1).

9 Citing In Matter of Tamagni v. Tax Appeals Trib. of State of N.Y., 91 N.Y.2d 530 (1998).

10 N.Y. TAX LAW § 3030(C)(5)(B).

11 See GT SALT Alert: SALT Outlook, Trends and Predictions for 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions