This article originally appeared in the September 2018 TaxStringer and is reprinted with permission from the New York State Society of Certified Public Accountants.

In a recent case involving residency before the New York State Tax Tribunal, In the Matter of the Petition of Leslie Mays, the issue of the taxpayer’s permanent place of abode was at the center. You may be surprised that the tribunal determined that an apartment that was maintained for less than five months was a permanent place of abode.

Under New York law, a person can be a resident in one of two ways.

One way is to be domiciled in New York. In simple terms, your domicile is your primary residence. If you have multiple residences, it would be the residence that you consider to be your true “home.”

The other way is if you are determined to be a statutory resident. You fall into this category if you are not domiciled in New York, but

• you have a permanent place of abode in New York and

• you are present in New York for more than 183 days (any part of a day counts).

Ms. Mays was found not to be domiciled in New York, so the tribunal turned to the issue of statutory residency and the definition of a permanent place of abode. There was no dispute that Ms. Mays spent more than 183 days in New York City because she was working there.

What is a permanent place of abode?

Again, to keep it simple, it is a residence. The word permanent is often misunderstood. It does not mean that one has to own it or use it permanently. Permanent refers to the structure, or the residence itself.

The New York State Nonresident Audit Guidelines indicates that for a dwelling to be permanent, it must be suitable for year-round use: “A structure that is not suitable for year-round use and that you use only for vacations is not a permanent place of abode. Also, a barracks or any structure that does not contain facilities ordinarily found in a dwelling, such as facilities for cooking, bathing, etc., is not generally considered to be a permanent place of abode.”

A permanent place of abode can be owned, rented, or borrowed—the key is that it has to be available for a person to live there for substantially an entire calendar year with no restrictions. “Substantially an entire year” is generally accepted to mean more than 11 months. It can be owned by a friend or a corporation, but it has to be yours to use.

In Mays’s case, it was determined that the use of a permanent place of abode doesn’t have to be permanent at all. What is unusual about Mays is that the taxpayer had two different places of abode during different parts of the same year. The first apartment was provided on a temporary basis as a benefit from the petitioner’s new employer, Avon Products Inc., until she procured a “permanent residence.” She did not have a lease for the first apartment and moved from one to the other during the year, living in the temporary apartment for about 4.5 months and the other for 7 months. Added together, Mays lived in two different places of abode for more than 11 months. This was good enough for the New York State Tax Department to hold that Ms. Mays was a New York State and New York City resident. The administrative law judge (ALJ) and the tribunal agreed.

The petitioner, however, testified that her stay at this apartment was temporary in nature until such time as she could find suitable permanent housing either within or outside New York, and she seems to have a point. The meaning of the term “permanent” was addressed by the Tax Appeals Tribunal in In the Matter of John M. Evans, Petitioner, v. Tax Appeals Tribunal of the State of New York. This case involved a taxpayer, Mr. Evans, who lived at a church rectory during the workweek. His primary home (domicile) was in Westchester. The Tribunal compared Mays to Evans as Ms. Mays also did not have a legal right to the abode because she did not have a lease.

The tribunal in Evans stated, “Permanence, in this context, must encompass the physical aspects of the dwelling place as well as the individual’s relationship to the place.” The rectory satisfied both conditions of permanence: His living quarters were suitable for year-round use, and the “long-standing (12 years) and regular nature of petitioner's arrangements are certainly evidence of what can reasonably be described as ‘permanence.’”

Notice the long-standing 12-year arrangement—however, the tribunal ruled against Ms. Mays. It did not consider whether the relationship to the abode was longstanding, only that she had a “residential interest” in the apartment, meaning she used it as a residence.

The tribunal explained that prior to 2009, there was a regulation that provided an exception to permanence if the abode was maintained by a taxpayer during a temporary stay for the accomplishment of a particular purpose. The temporary stay exception was no longer available to the petitioner in the 2011, the relevant tax year.

Because Ms. Mays lived in the first apartment for most of January through the end of May and the second apartment from June through the end of the year, she was found to have maintained a permanent place of abode for substantially the entirety of 2011. Because there was no dispute that Ms. Mays was present in New York City for more than 183 days, she was a statutory resident.

If you have any questions on the issues raised in this article, please contact the author.