State Taxation of Non-residents

State Taxation of Non-residents

By: Martin M. Shenkman, CPA, MBA, JD

So you live in State A, but have some contacts in State B. If your contacts and involvement in State B are sufficient, State B might be able to tax some of your earnings. In a recent New York case, the court found the tax authorities went a tad too far. Occasionally spending the night at your paramour’s apartment, or a business apartment, should not suffice as a tax hook. The court stated that the tax authorities have the burden of proving that the taxpayer had established a New York place of residence displacing his prior permanent home in another state. What apparently triggered the audit was the listing of a NY address on several tax forms (the little stuff always matters!). Matter of Craig F. Knight, DTA No. 819485. The court distinguished a prior case which looked at several similar facts. Aetna National Bank v. Kramer (142 App Div 444). In Aetna, the change in domicile was acknowledged to have occurred, and the only issue was when it occurred.

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