Three times during this spring busy season I researched extensively the facts and the law surrounding the states of residence of taxpayers in order to determine where state taxes should or should not be paid. Maybe I should have just posed a simple question: “Where’s your dog?”
In February 2017, the State of New York Division of Tax Appeals (the “Court”) decided the case of Gregory Blatt. Mr. Blatt was an attorney who in 2009 had worked for several years for InterActive Corporation (“IAC”) as general counsel. He lived in New York City. After a corporate reorganization, Mr. Blatt decided to move on. He spoke to IAC Chairman and CEO Barry Diller about his plans.
Mr. Diller wanted to keep Mr. Blatt as part of IAC. He asked him if he wanted to run IAC company Match.com., based in Dallas. Shortly after breaking up with his long-time live-in girlfriend, single Mr. Blatt is given the chance to run dating sites that include Match.com and Tinder. Hmm. . .
Mr. Blatt was tempted to swipe right on the deal. But there was one drawback – Dallas. Mr. Blatt was a sophisticate from the East Coast. What possibly would there be to do in the heart of the hinterlands? So, Mr. Blatt negotiated to work at least half the time in New York. He kept his apartment and his boat in New York. He took the Dallas job in early 2009. Match would pay his Dallas living expenses.
He rented a very nice apartment in the Ashton, in the heart of Dallas’ Uptown. He fell in love with Dallas, the thriving social scene in Uptown, the great restaurants within walking distance, the sports and entertainment venues easily accessible. (Full disclosure – I live about three blocks from the Ashton – Mr. Blatt is right!)
While not discussed directly in the case, I am sure of another factor. He had to have fallen for Texas women. And, he’s the guy that runs Tinder!
He embraced Texas. He made the final commitment in late 2009 – he moved his dog to Big D.
Towards the end of 2010, Mr. Blatt got the opportunity be the CEO of IAC. He tried to run IAC from Dallas, because he now fully appreciated the charms of Texas. But he ultimately decided to move back to New York in 2011. He claimed to be a Texas resident for most of 2009 and for 2010. He avoided over $400,000 in New York state income taxes by so claiming. New York’s Department of Revenue took issue with his self-classification as a Texan.
The Court conceded that Mr. Blatt did not live more than 183 days in New York in 2009 or 2010. So, he was not a statutory resident of New York. His residency hinged on his domicile – the place in which an individual taxpayer intends to be his permanent home. When this saga began, he was domiciled in New York. To change domicile (from New York to anyplace else), “a taxpayer must prove his subjective intent based upon the objective manifestation of that intent displayed through his conduct.”
The Court pointed out that Mr. Blatt submitted over 100 statements of fact regarding his intentions. Only one seemed to really matter:
“In reviewing the factors of a change in domicile, historically, the move of items near and dear tend to demonstrate a person’s intention. As borne out by the evidence in this case, petitioner’s dog was his near and dear item which reflected his ultimate change in domicile to Dallas.“