File a Protective Claim for New York State MCTMT by April 30, 2013

If you are a self-employed individual, and timely filed the annual Metropolitan Commuter Transportation Mobility Tax Return, MTA-6 for tax year 2009, the deadline to file a protective claim is quickly approaching.  That date is April 30, 2013.  You only have to file a protective claim once.  It will apply to all open and all future periods. 

If you are an employer, and filed the MCTMT quarterly return MTA-305, and have not filed a protective claim for previous quarters, you also have the deadline of April 30, 2013, to file a protective claim for the quarter Jan. - March 2010.  As with self-employed annual filers, the claim will apply to all open and all future periods. 

You are advised to file a protective claim, because the constitutionality of the Metropolitan Commuter Transportation Mobility Tax has been challenged.  It is very easy to do so. 
Just click on the link Protective Claim to get started.

 

First, let me make it clear that until this issue is resolved in the courts, the MCTMT is still in effect and must continue to be filed. 

Responsibility of employers: 

The MCTMT on employers is determined on a quarterly basis. If wages subject to withholding for covered employees exceeds $312,000 for a quarter, MCTMT is due for that quarter.  Employers file form MTA-305.  If in a following quarter, covered employee wages does not exceed $312,000 MCTMT is not due for that quarter.  

Covered employees are those whose predominant responsibilities, base of operations or direction and control is in the Metropolitan Commuter Transportation District (MCTD).  If any of these are not conclusive, then the employees’ residence should be used.


 The (MCTD) includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Nassau, Suffolk, Westchester, Orange, Rockland, Putnam and Dutchess. 

Quarterly MCTMT returns must be filed and any MCTMT due must be paid for each calendar quarter by the last day of the month following the end of the quarter as follows:

Quarter                                                          Due Date

 January 1 to March 31                                    April 30

April 1 to June 30                                            July 31

July 1 to September 30                                   October 31

October 1 to December 31                             January 31 

MCTMT payments – The method and due dates for remitting MCTMT payments depend on whether or not the employer is required to or elects to participate in the PrompTax program for New York State withholding tax purposes. 

Responsibility of Self-Employed Individuals (including partners in partnerships and members of LLCs that are treated as partnerships for federal income tax purposes):

If you are a self-employed individual (as defined above) with net earnings from self-employment allocated to the MCTD in excess of $50,000 you are subject to the tax (MCTMT). 

Net earnings from self-employment is generally the amount computed on federal Form 1040, Schedule SE, Section A, line 4 or Section B, line 6 depending on which section you are required to complete. 1

 

If you have net earnings from self-employment allocated to the MCTD from more than one business or partnership, you must use the total of all your net earnings from self-employment allocated to the MCTD for purposes of the $50,000 threshold and to compute the tax.  

 

Please note that this $50,000 threshold is an allocated number.  That is total net income allocated to the MCTD by use of allocation methods according to NYS Personal Income Tax rules (Not NYS Corporation Tax rules). 

Annual MCTMT returns (MTA-6) for self-employed individuals is due on or before the 30th day of the fourth month following the close of the tax year (for calendar-year filers, this will be April 30 of the following tax year).  

Individuals who will owe any MCTMT for the tax year must make estimated MCTMT payments. The estimated tax payments are due quarterly. 

Quarter                                                          Due Date

 

January 1 to March 31                                     April 30

April 1 to June 30                                             July 31

July 1 to September 30                                   October 31


October 1 to December 31                             January 31 

All MCTMT filings and payments may be web filed through the Tax Department website or paper filed with check remitted.
 

 

According to the NYS Department of Taxation and Finance website:

 

The constitutionality of the MCTMT has been challenged in a series of lawsuits. In all but one of these lawsuits in which there has been a decision, the MCTMT has been ruled to be constitutional and the legal challenges have been dismissed. In just one of the challenges, a Nassau County Supreme Court justice recently found the MCTMT to be unconstitutionally enacted, which determination is being appealed by the State of New York and the MTA. The litigation is not concluded and the tax is still in effect. If this requirement to pay the tax and file returns were to change, the department will notify taxpayers. 

All taxpayers who have been paying this tax remain subject to the tax and are required to continue to pay the tax and file the required returns. As with other taxes, failure to make the tax payments and file required returns could subject a taxpayer to penalties. 

For more detailed information on the requirements for the MCTMT, see NYS Publication 420 – Guide to the Metropolitan Commuter Transportation Mobility Tax. 

For a free phone consultation, call Brian Gordon, CPA at 516-510-6041.

Brian Gordon, CPA, is a state and local tax consultant in private practice. Previously, he was with the NYSDTF for more than 30 years, most recently as a District Audit Manager in Manhattan and Brooklyn. He is a member of the NYSSCPA New York, Multistate & Local Taxation Committee and writes and speaks on various tax issues. He can be reached at bgord520@gmail.com or (516-510-6041).   
He also posts a monthly blog called Brian Gordon's STATEments at http://gordonstate.blogspot.com.

 

1: www.tax.ny.gov

 

 

 

YOGA IS SPIRITUAL...THEREFORE NOT SUBJECT TO NEW YORK SALES TAX

This past year, New York issued guidance on the subject of whether Yoga or Pilates classes are subject to sales tax.  They issued NYT-G-12(1)S which is an informational statement of the Department's interpretation of the law, regulations, and Department policies. 

The crux of the guidance involved whether a Pilates and/or Yoga studio constitutes a “weight control salon, health salon, or gymnasium” which would subject it to the local sales tax under Section

11-2002(a) of the Administrative Code of the City of New York (Administrative Code).   

The guidance gave the following information:

A gymnasium is commonly understood to be an indoor facility where sporting and/or exercise activities take place. According to this guidance, Pilates classes constitute exercise activities, therefore the facility would be considered a gymnasium, and the services are subject to sales tax.

However, they concluded that instruction in yoga is not an exercise activity because yoga generally includes within its teachings not simply physical exercise, but activities such as meditation, spiritual chanting, breathing techniques, and relaxation skills. 

If the facility has both Pilates and Yoga, all of the sales of services at the facility are subject to sales tax because the facility is considered a gymnasium.  If the use of the facility is exclusively to teach yoga forms and techniques, the facility will not be considered a weight control salon, health salon, or gymnasium. Therefore, the charges for yoga instruction by this facility are not taxable.

Brian Gordon's STATEment:
I find this guidance to be very generous to the yoga industry.
From my research and experience, I have found that not all yoga classes involve meditation and chanting.  Yoga primarily involves strenuous exercise. I also found that pilates, similar to yoga involves breathing and relaxation techniques, and also involves strenuous exercise.  If you check NYT-G-12(1)S you will see that this guidance came about at the request of a business that offers both pilates and yoga at most of their facilities.  This is not surprising given the similarity of the two forms of exercise. 

What makes the guidance more puzzling is that while yoga is not taxable in a facility by itself, it becomes taxable if offered in a facility that also offers pilates.  What about pilates and a dance class?  Both taxable?  Yoga and a dance class? Both not taxable? 

While New York Tax Laws and policies are sometimes perplexing, it is most important to know what these rules are, so that we are able to comply with them, or if under audit, we know how to defend our position. 

For a free phone consultation on this or any other tax issue or concern, please call
Brian Gordon, CPA at (516) 510-6041 or email at bgord520@gmail.com.

Brian Gordon, CPA, is a state and local tax consultant in private practice. Previously, he was with the NYSDTF for more than 30 years, most recently as a District Audit Manager in Manhattan and Brooklyn. He is a member of the NYSSCPA New York, Multistate & Local Taxation Committee and writes and speaks on various tax issues. He can be reached at bgord520@gmail.com or (516-510-6041).   

He also posts a monthly blog called Brian Gordon's STATEments at http://gordonstate.blogspot.com.ance or audit issue feel free to call Brian Gordon, CPA at 516-510-6041 or email at bgord520@gmail.com.

 

 

NYS Residency: New Domicile Case: Matter of Cooke

“This article originally appeared in the February 2013 TaxStringer and is reprinted with permission from the New York State Society of Certified Public Accountants.”

 

The Cooke Case
by Brian Gordon

In June 2012, the New York State Department of Taxation and Finance issued new Nonresident Audit Guidelines, which it posted on its site. As noted in earlier articles, these guidelines seemed to indicate a new perspective on how the department would be approaching the complex and controversial issue of state residency for income tax purposes. A new case, decided late in 2012, gives some additional insight into the department's current approach toward residency.

In the Matter of the Petition of Gordon R. and Jennifer L. Cooke, issued November 15, 2012, an administrative law judge (ALJ) found that the petitioner (Gordon Cooke) changed his domicile from New York City to the Hamptons on the east end of Long Island, N.Y. This is a very interesting case because a residence used primarily on weekends and holidays was found to be the domicile. Of special interest to CPAs and the clients they serve are the factors outlined in the Audit Guidelines and the facts in this case which led to findings in favor of the taxpayer.
Background: Residency and Domicile Definitions
To understand Cooke, there's a need to know the basic New York residency rules: People are residents of New York if they are domiciled there. "Domicile" in simple terms is a person’s primary residence. Someone would also be a resident, commonly referred to as a Statutory Resident, if he or she maintains a permanent place of abode (residence) in New York state or New York City and they are present in the jurisdiction for more than 183 days. The focus of Cooke is on domicile.
It's not a cut-and-dried decision: Domicile is an issue of intent. That is, people can choose where they want to live, but they must choose, and actually make a change. They must have the feeling that the new place is their “home”—a place that they will return to when they are absent. The burden is upon any person asserting a change of domicile to show that the necessary intention existed.
According to the 2012 NYS Nonresident Audit Guidelines, there are five primary factors the state will consider in analyzing whether a house is a "domicile." None of them stand alone. They all must be analyzed to reach a proper conclusion.
The five primary factors are:
Home: This is a comparison of the residences. The state compares the (1) size, (2) value and (3) nature of use (lifestyle). The most important of these three is "nature of use." In a case such as Cooke, where the issue was between one residence in the city and one in the suburbs, the state looks at what type of life the resident was leading. Is the focus of the resident's life family, friends, holidays, social engagements, sports? Where do those activities take place?
Business Connection: Where you work is important in determining domicile. However, those with resources may decide to keep an apartment near their job and use it like a hotel, while being domiciled in the suburbs where the focus of their life is.
Near and Dear Items: This refers to important tangible items that most people would want to keep with them in their home. They include family photos, collectible items, family keepsakes, documents, trophies and awards, valuable artwork and other valuable items. It is not necessarily the monetary value of these items that will be considered as there are many people that can afford to decorate their homes with very expensive items, but it is the sentiment attached to these items that make them part of one’s primary home. (This has particular meaning in Cooke, noted below, as children's artwork was limited to one of the family's homes, as discussed below.)
Time: This is a calculation of the time spent at each location. This could be a major factor if it is heavily skewed in one location; however, if there is only a small difference, then the other primary factors will be more heavily evaluated.
Family: The state elevated this in the 2012 guidelines to be a primary factor analysis. Family has played such an important role in domicile cases that it could not be overlooked. See Matter of Buzzard (Tax Appeals Tribunal, February 18, 1993, confirmed 205 AD2d 852, 613 NYS2d 294 [3d Dept 1994]). The family factor also played an important role in Cooke.
Finally, "Lifestyle," or “habit of life,” while not specifically enumerated as a primary factor, is interwoven throughout the factors.
The Cooke Case: How the Factors Were Applied
Gordon Cooke conceded that he was domiciled in New York City from 1975 through 1984. In late 1984, the family completed construction of a home at Merchants Path, Bridgehampton , New York—the Hamptons region (the "Merchants Path House"). The Cookes completely furnished the entire home with new items, spending more money than they had ever spent furnishing their New York City apartment. This is part of the home factor analysis, including nature of use.
The Cookes also moved an abundance of their valuable and cherished possessions out of the New York City apartment and into the Bridgehampton house. These included their deceased parents’ papers, a family bible and extensive stamp collection, valuable Curtis Indian prints, Greg Perillo pen and ink drawings, and their children’s artwork, photographs, awards, trophies, and yearbooks. This is included in the analysis of near and dear items and shows a shift to the Hamptons.
In 1983, the family joined St. Ann’s Episcopal Church in Bridgehampton and both of the children were baptized there two years later. Since then, the family has been very involved in activities at the church and regularly attends Sunday services. Both daughters served as acolytes at St. Ann’s when they were younger. The Cookes did not belong to any church in New York City. This evidences the family's lifestyle.
Between late 1984 through 1995, the family's weekly routine typically commenced with a drive to New York City from Sagaponack with his family on Sunday evenings. The family spent Monday through Friday residing in the New York City apartment. During the workweek, Gordon Cooke spent the great majority of his daytime hours working in New York City. Meanwhile, Jennifer Cooke (wife and mother) took care of the children and began taking classes in the city. Once they attained the proper age, the children attended private schools in New York City during this period. The children were very active in scholastic athletics, but did not entertain many friends or socialize while in New York City. On Fridays, the Cookes would drive back out to their Merchants Path House, where they would spend the weekend.
During this nine-year period, the Cookes spent the majority of their free time at their Merchants Path House. Besides spending weekends, they celebrated most holidays there. Additionally, the family hosted many parties for family and friends at the Merchants Path House. They also enjoyed many birthdays and other major family occasions there, such as a tenth wedding anniversary and Jennifer Cooke’s 40th birthday. During this period, such occasions were seldom, if ever held in the New York City apartment. The children participated in extracurricular activities in the Bridgehampton area and later obtained summer jobs there. These are primarily home and lifestyle issues, and show a strong attachment to the Hamptons home and area.
The Cookes filed New York City resident personal income tax returns through 1995. Although Gordon Cooke claims to have been domiciled outside of New York City since 1985, he was required to file as a “Statutory Resident” because he maintained a residence in the city and was present there for more than 183 days. (The facts state that he spent Sunday night through Friday in New York City. Six days per week totals 312 days for a year. Even considering holidays, vacations and business trips, he obviously conceded that it was more than 183 days.)
Business Factor Changes—and an Audit
There was a change in the “Business Factor” near the end of 1995. At that time Gordon Cooke became president and CEO of J.Jill Group/D.M. Management (J.Jill), which is headquartered in Quincy, Massachusetts. Upon joining J.Jill, his primary business activity was no longer in New York City. He remained as president and CEO of J.Jill through May 2006.
In order to accommodate his new work venue, Gordon Cooke rented an apartment in Boston, and stayed there during the workweek. After discussion with his wife, Gordon Cooke chose not to relocate his family to Boston with him because the children were already established in their schools in New York City.
In 2002 (the beginning of the audit period), the Cookes decided to sell the Merchants Path House and buy a new house on Parsonage Pond Road, Sagaponack, New York (Parsonage Pond House)—also in the Hamptons. The Parsonage Pond House was much larger than the Merchants Path House, being approximately 5,500 square feet in size, and cost $3.6 million. Although their children were grown by that time (aged 24 and 19), the Cookes wanted to purchase a larger Hamptons house because, as they testified, they envisioned growing old there together and hosting their children’s families. Lauren Cooke, one of the daughters, described the Parsonage Pond House as her parents’ “dream home.” This is an obvious boost to the home factor in the Hamptons.
During the audit period, daughter Lauren was also working at J.Jill and living in Boston, and daughter Erica was at Brown University in Rhode Island. Jennifer continued her weekday classes in the city, but their daughters’ bedrooms in the city were converted for other functions after their departures. Lauren and Erica Cooke each have a bedroom at the Parsonage Pond House, containing all of their treasured personal memorabilia from their childhood. Lauren explained that she still stays in that room when she visits her parents.
Gordon Cooke testified that since his retirement from J.Jill in May 2006, he has spent more time than ever at the Parsonage Pond House. In addition, he and his wife continue to host parties and holidays there. They stated that they plan to remain in the Hamptons for the remainder of their lives. This is proof that they had the required intent to make this their home.
As a result, the Cookes were able to make the following case for the residency audit years of 2002 to 2004:
Home: Large “dream home” in Hamptons compared with “utilitarian” apartment in the city. Hamptons home used for family gatherings, social events, lifestyle hobbies. The city apartment was used for occasional business trips—no social events.
Business: Primarily Massachusetts. Occasional business trip to the city.
Near and Dear: All precious items and important documents were kept in the Hamptons.
Time: Time in Hamptons and city were about equal. However, Gordon Cooke went to the Hamptons to relax and live his lifestyle, while the city time was primarily work.
Family: While he saw his wife in the Hamptons and the city, Gordon Cooke saw his daughters only in the Hamptons.
Despite this summary, the New York City Audit Division argued that the Cookes' claimed Hampton's home was nothing more than a “weekend/vacations Hamptons lifestyle.”
The government's position may have had more strength prior to the audit period—that is, when Gordon Cooke was still working in New York City, rather than Massachusetts. However, the ALJ didn’t differentiate, citing the Tribunal case Matter of Craig F. Knight (Tax Appeals Tribunal, November 9, 2006), indicating that someone can maintain a residence and work in the city while being domiciled in the suburbs. As noted in Knight:
The presence of a suburban commuter at work or play in New York on most days, without more, does not create a New York domicile and the frequency of theater attendance or restaurant meals seems to have little probative value on the issue of whether his or her home continues to be in the suburbs. If other factors indicate that an individual is a mere sojourner whose home is elsewhere, that status will not be elevated to domicile by the frequency of visits.
The Cooke ALJ further stated that the audit position had ignored the evidence in this case of the "overwhelming amount of family activities and general habit of life that took place in the Hamptons throughout the calendar year." Regardless of whether he was working in New York City or Boston, the Hamptons was the place to which Gordon Cooke intended to return whenever he was absent.
During years in question, 2002 to 2004, while it was true that Gordon Cooke's time in the Hamptons was primarily on weekends, he was spending most of his weekdays in Massachusetts because his job was there. Since he had severed his main business tie with New York, and his daughters had moved out of the city apartment, home base for the family was the Hamptons.
Also according to the ALJ: Both Gordon and Jennifer Cooke and their daughter, Lauren, "testified credibly at the hearing. Each declared their unbridled affection for the Hamptons and stated that it was their home prior to, during, and after the years at issue."
The Cookes did not consider the New York City apartment their home. When asked to compare his feelings for New York City with those for the Hamptons, Gordon described the city apartment as “utilitarian,” whereas “the Hamptons was for life and remembrance.” Lauren [daughter] candidly testified that she did not think of the city apartment as her home, but stated that she “had a specific purpose for being in New York City” and likened her time there to being at a job.
While the standard is subjective, the courts and the Tax Appeals Tribunal have consistently looked to certain objective criteria to determine whether a taxpayer’s general habits of living demonstrate a change of domicile.
In this case, the ALJ stated: Examination of Gordon Cooke's “general habit of life” during the years prior to and including 2002 through 2004 further substantiated the claimed domicile change. In essence, Gordon was an "extremely busy executive who traveled extensively and returned to the Hamptons whenever he did not have somewhere he had to be."
Based on the ALJ’s analysis of the case, it is clear that the family factor, which the state Nonresident Audit Guidelines elevated in importance in 2012, played a significant part in this decision. This decision also showed the importance of not only school-aged children, but of the role of the children as adults, and how that is part of one’s lifestyle.
It may be difficult to make a clear and convincing case for a change of domicile to a home used primarily on weekends, holidays and vacations. Nevertheless, Cooke shows it can be done when residents can prove that the new claimed domicile is the focus of life with regard to family friends, leisure activities—lifestyle—and that the residents intend that home to be a permanent home, with the range of sentiment, feeling and permanent association with it.

For a free phone consultation on this or any other tax issue or concern please call
Brian Gordon, CPA at (516) 510-6041 or email at bgord520@gmail.com.

Brian Gordon, CPA, is a state and local tax consultant in private practice. Previously, he was with the NYSDTF for more than 30 years, most recently as a District Audit Manager in Manhattan and Brooklyn. He is a member of the NYSSCPA New York, Multistate & Local Taxation Committee and writes and speaks on various tax issues. He can be reached at bgord520@gmail.com or (516-510-6041).   

 

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NYS Residency – The Contoversial Gaied case: What is a Permanent Place of Abode?

You are a resident of New York if you are domiciled there – meaning it is your primary residence.  You are also a resident of NY - generally referred to as a Statutory Resident - if you maintain a permanent place of abode (a residence) and you are present in New York for more than 183 days (a part day equals one day – overnight is not required).

This article will focus on Statutory Residency, and the continuing saga of the controversial  case, Matter of Gaied.  Mr. Gaied recently lost again, this time at the Appelate Division, with three deciding in the majority and two dissenters.

A brief history of events:

On audit, Mr. Gaied was found to be a Statutory Resident of New York State and City for years 2001, 2002 and 2003.                

Taxpayer had a hearing before an Administrative Law Judge (ALJ) who found against the taxpayer, agreeing with NYS that petitioner was a resident.

Petitioner took the case before the Tax Appeals Tribunal who found in favor of the petitioner, determining that he was NOT a resident of NY.

The Division of Taxation filed a motion for reargument which was granted.  After reviewing the entire record, the Tax Appeals Tribunal withdrew its prior decision, and found against the petitioner, with a majority of two, and one dissent.

The petitioner then took the case to the Appellate Division, Article 78 proceeding.  A decision was entered on Dec. 27, 2012 again finding against the petitioner three to two.

This is a summary of these hearings:
In the years in question, 2001 – 2003, petitioner Mr. Gaied was domiciled in New Jersey.  He also owned a three family house in Staten Island, NY.  His parents lived in one of the apartments with the full financial support of Mr. Gaied.   Mr. Gaied acknowledges being in New York more than 183 days as he has a business in Staten Island.  Therefore, the only question in this case is:  Does his parent’s apartment constitute a permanent place of abode for Mr. Gaied?

To qualify as a permanent place of abode, the residence can be owned, rented, or there can also be other informal agreements which allow someone to live in a residence.  The case that has often been cited for this issue is Matter of Evans [Tax Appeals Tribunal, June 18, 1992, confirmed 199 AD2d 840 (1993)].  In that case, Evans was a guest at a rectory in NYC.  He usually spent Monday through Friday there.  He shared in the living expenses and kept personal belongings there. He had a key, and came and went at his own discretion (had unfettered access).  This was determined to be a permanent place of abode for Mr. Evans.

Let’s look at the factors in the case of Mr. Gaied.

Did Mr. Gaied maintain the property?  He financially maintained it for the use of his parents.              

Did Mr. Gaied keep personal belongings here? No.        
Did Mr. Gaied have a key and unfettered access?  This was a primary point of contention. 

Unfettered access is a primary consideration in the determination of permanent place of abode.  In other words, if there is a residence that you can use any time you want (whether you use it or not), you have a key and don’t have to ask anyone’s permission to use that residence, it will probably be considered a permanent place of abode. 

Mr. Gaied testified that he stayed at the apartment only occasionally and only at the request of his parents when his father needed help due to illness.  On these occasions he slept on the couch.  He testified that he did not have unfettered access.  This is a key to the case (no pun intended).  Mr. Gaied was the landlord.  He had keys to the other two tenants’ apartments.  He kept these keys in his parent’s apartment. 

Oral testimony is often a petitioner’s best defense, because if credible, the testimony becomes part of the facts of the case.  In this case however, at the first hearing before an Administrative Law Judge (ALJ), the ALJ determined that petitioner's claim that he did not have unfettered access to any of the individual apartments, including that of his parents, was incredible.  As a result, the ALJ found that Mr. Gaied maintained a permanent place of abode in New York and was therefore a Statutory Resident of New York.
The case went before the Tax Appeals Tribunal.  According to the Tribunal, Mr. Gaied’s parent’s apartment was not a permanent place of abode for him; therefore he was not a Statutory Resident of NY.

The Tribunal stated:    
Even if petitioner held the keys, this would not compel the conclusion that the taxpayer maintained a permanent place of abode at the MacFarland Avenue [Staten Island] property during the years in issue. Unlike the facts in the Evans case, petitioner did not have living quarters at his parents' apartment, nor a bedroom or a bed.

On reargument, The Tribunal reversed their findings.  They found that a bedroom or bed is not required for a finding of permanent place of abode:

A review of our decisions… indicates that where a taxpayer has property rights to the subject premises, it is neither necessary nor appropriate to look beyond the physical aspects of the dwelling place to inquire into the taxpayer’s subjective use of the premises (see People ex rel. Mackall v. Bates et al, 278 AD 724 [1951]; Matter of Boyd, Tax Appeals Tribunal, July 7, 1994; Matter of Roth, Tax Appeals Tribunal, March 2, 1989; Matter of Barker, Tax Appeals Tribunal, January 13, 2011).  For the reasons stated herein, we conclude that our decision of July 8, 2010 was in error and is hereby reversed and withdrawn.

The plain language of the statute and regulations contains no requirement that to be deemed a permanent place of abode, a dwelling place must have a separate bedroom and bed.  One can easily envision a situation where a person maintains a studio apartment, with no separate sleeping area, but with cooking and bathing facilities.  The lack of a bedroom or bed would not preclude such premises from being deemed a permanent place of abode.
Also:                                                                                                                                                                  

It seems incredible that petitioner would not have unfettered access to the first floor apartment [his parents], where he stored the keys for the other apartments, which he might have to enter in case of emergencies.  As such, we find no reason to disturb the ALJ’s assessment of credibility.

The case was then raised to the Appellate Division.  Mr. Gaied was found to be a resident again with three judges in the majority and two dissenting.

The majority found the following:

Significantly, the Tribunal determined that petitioner, in addition to owning the building, maintained a telephone and the utilities in his own name at the apartment, paid those bills as well as all other expenses for the apartment, retained unfettered access to the apartment, occasionally slept at the apartment, failed to establish that he kept the apartment exclusively for his parents, and did not prove that he held the property solely for investment purposes. These factual findings by the Tribunal, some of which were strongly disputed by petitioner, are nonetheless supported by substantial evidence in the record, and such facts are sufficient to support the Tribunal's determination that petitioner maintained a permanent place of abode in New York.
Also:                                                                                                                                                           
Even though a contrary conclusion would have been reasonable based upon the evidence presented, we are constrained to confirm, since our review is limited and the Tribunal's determination is amply supported by the record (see e.g. Matter of Kornblum v Tax Appeals Trib. of State of N.Y., 194 AD2d at 883).

The dissenters agreed with the original Tribunal decision, completely contradicting the second Tribunal decision after reargument, saying that without a bed or place for personal items, it was not Mr. Gaied’s permanent place of abode.  They added: The mere fact that petitioner kept the keys to the other apartment units in the dwelling and listed that address as the address where tenant notices should be sent does not require a different result.

The only two important questions are: 

1. Did Mr. Gaied have unfettered access?

2. Is a bed required?

Many people are concerned with the result in this case.  If a parent pays for an apartment for their child in college in NY, will that be considered a permanent place of abode for the parent? 

That is a real concern based on some of the conclusions reached in this decision, however there were other factors here.  Mr. Gaied actually did stay at his parent’s apartment on occasion.  He did work nearby giving him reason to go there.  He did have utilities in his own name, and received mail there.  Is this enough, considering that it was clearly his parent’s home and he was maintaining it not for his own use, but for theirs?  Maybe this isn’t the last we’ll hear of the Gaied Case?

For a free phone consultation on this or any other tax issue or concern please call
Brian Gordon, CPA at (516) 510-6041 or email at bgord520@gmail.com.

Brian Gordon, CPA, is a state and local tax consultant in private practice. Previously, he was with the NYSDTF for more than 30 years, most recently as a District Audit Manager in Manhattan and Brooklyn. He is a member of the NYSSCPA New York, Multistate & Local Taxation Committee and writes and speaks on various tax issues. He can be reached at bgord520@gmail.com or (516-510-6041).   

He also posts a monthly blog called Brian Gordon's STATEments at http://gordonstate.blogspot.com.