“Tax Residency Can be Elusive”

By: Diane Roskies

I. Overview

The high-tax states in the U.S. are aggressive in trying to retain and increase revenue collections. The primary basis for state income taxation is “residency” or “domicile.” A resident of a state generally is subject to the income tax on worldwide income.  A hot topic is the proposed “one-time” 5% California wealth tax on the assets of billionaires who are or were full-time or part-year residents of California on January 1, 2026.[1]  Much has been written about the “tax the rich” movement.[2]

While New York State has not (yet?) proposed a wealth tax, New York has broad income tax residency rules which focus on “residency” or “domicile.” New York City “piggybacks” the New York State rules. This blog will briefly summarize the New York rules and a recent New York case that addressed those rules.

II. New York “Residency” Rules

The pivotal issue to determine New York taxation is whether a person is a New York “resident” or “domiciliary.”  If so, the person’s income is subject to New York income tax.

A person is a New York income tax “resident” for a year if he or she is domiciled in New York (as discussed below), unless he or she has (i) no New York permanent place of abode, (ii) a permanent place of abode outside of New York, and (iii) has spent 30 days or less in New York during the tax year.[3] If a person is not domiciled in New York but maintains a New York permanent place of abode for substantially all the tax year, and spends 184 days or more in New York during the tax year, he or she is a New York income tax “resident.”

A person is not a New York income tax “resident” if he or she did not maintain a permanent place of abode in New York during the tax year, (ii) maintained a permanent place of abode outside New York during the entire tax year; and (iii) spent 30 days or less (part of a day counts as a day for this purpose) in New York during the tax year.

A “permanent place of abode” generally is a residence that a person permanently maintains, whether owned or not, and is suitable for year-round use. “Domicile” essentially is a person’s permanent home to which he/she intends to return.  New York law provides that a person claiming to have abandoned his/her New York domicile has the burden to prove the abandonment and established a new domicile outside New York by clear and convincing evidence.

III. New York Domicile Audit Guidelines (the “Guidelines”)

The Guidelines provide that the Primary Factors in determining domicile are (i) location of the person’s home, (ii) location of the person’s active business involvement, (iii) time spent in New York, (iv) location of tangible property that is near and dear, and (v) location of family connections. Other Factors in determining domicile are (i) Primary mailing address, (ii) location of voter registration, and (iii) execution of an Affidavit or Declaration of Domicile. (Florida has such a document and filing procedure.)

New York City adopts the Guidelines for New York City income tax audits if (and when) it suits them.

IV. Hoff v. Division of Taxation; New York Tax Appeals Tribunal, DTA 850209 (Oct. 9, 2025)

A recent New York tax case illustrates the practical issues involved in avoiding New York resident or domicile status.

The Hoff case involved a husband and wife who were long-term New York domiciliaries. They asserted that they had become domiciled in Florida for New York income tax purposes. In Florida, they purchased a home, registered to vote, registered their cars, obtained Florida driver’s licenses, and opened bank accounts. However, they retained their New York home and other New York real estate, continued to receive substantial income from the husband’s New York company, and remained members of New York country clubs. 

The Hoffs did not maintain a log of their days spent in and outside New York. New York auditors examined their telephone records[4]  to estimate the days they spent outside New York. For the two years at issue they spent more days in New York than Florida. The number of days per year spent outside New York varied from year to year. Therefore, the court concluded that the Hoffs did not completely sever their residency and domicile in New York.

V. Take Away from Hoff

If a person wishes to terminate New York tax “residency,” formal steps alone, like changing driver’s licenses and voter registration are insufficient. Life patterns must also change. Where a person derives income, keeps valuable tangible property, and spends holidays are very relevant. A taxpayer must prove a negative, that their center of life is no longer New York.

The New York State Tax Department[5] thoroughly audits claims of domicile change, especially if moving from New York to Florida. New York is very reluctant to conclude that someone has terminated their New York domicile. The Hoff decision illustrates how difficult this can be.

___________________

[1] There are meaningful questions whether the proposed wealth tax is constitutional, particularly its retroactive effective date to January 1^st, 2026. https://www.ntu.org/foundation/detail/is-a-wealth-tax-constitutional, January 14^th, 2026, the Tax Foundation published an overview of the proposed wealth tax.

https://taxfoundation.org/research/all/state/california-wealth-tax-billionaires-proposal/

[2] https://www.bloomberg@bna.com, Charlie Wells, “Soak the Rich Battle Cry Is Rising From London to California,” Bloomberg Tax, Daily Tax Report, January 19-20, 2026.

[3] There is also an exemption if the person is in a foreign country for 450 or more days during 548 consecutive days.

[4] New York State auditors frequently subpoena telephone carriers to obtain telephone records.

[5] The New York State Tax Department also conducts New York City residency income tax audits.