Friends, family, colleagues, and readers of SALT TALK all know me as a state tax expert as well as a serious music fan. Sports—not so much. Spending my entire childhood and most of my adult life watching the New York Giants and Islanders with my Dad, I will never object to watching a game. But plan my day around it, maybe for the Giants. So please forgive me for totally stepping outside my realm by analogizing what I’m told is the long-standing Knicks – Pacers rivalry with the similar, yet dangerously different rules governing Indiana and New York individual income tax residency rules.
While I pay attention to state tax happenings in all jurisdictions, Indiana is generally not as prominent on my radar screen as New York, New Jersey, Connecticut, California and several others. However, reading the daily tax propaganda the past few weeks, I couldn’t help but notice the barrage of decisions, both for and against taxpayers, deciding whether or not a taxpayer was in fact a resident of Indiana.
New York and Indiana both have what appear to be two identical tests, domicile and statutory residence, which if either is met result in a taxpayer being a resident. Statutory residence is a very objective test and looks to whether the taxpayer has an available residence in the State combined with being present in the State for more than 183 days. It is the vagaries and the apparent differences in the application of the domicile test that frightens me. And here is why.
I spend a lot of time explaining to our clients that you can’t change domicile by simply changing your driver’s license, voter registration, car registration, magazine subscriptions, wills, bank accounts, domicile declarations, etc. True, if you don’t take these actions, I can guarantee it won’t help your domicile case. But I am constantly reminding them that New York domicile guidance runs deep. Extensive audit guidelines explain the primary factors: use and maintenance of a home, active business involvement, time spent in the state, location of near and dear items, and location of family.
Yet last week’s barrage of Indiana decisions seem to focus on what New York refers to as the secondary factors, or as I like to refer to them, the window dressing and damned if you don’t factors. Residency issues, especially planning a domicile change, can’t be done with a checklist. Each case and everyone’s lifestyle is different. So if you are looking to leave Indiana, good for you—but otherwise stay away from these decisions.
Questions about residency? Contact me at WBerkowitz@berdonllp.com or your Berdon advisor.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP -New York Accountants, advises clients on the unique requirements of governments and municipalities across the nation.
 I consulted with several of my more sports-minded colleagues, who inform me that in order for the current Knicks to be considered the rival of any team, their performance would need to move up at least 10 notches.