2014 VT 81


 
Quazzo v. Department of Taxes
(2013-205)
 
2014 VT 81
 
[Filed 01-Aug-2014]
 
NOTICE:  This opinion is subject
to motions for reargument under V.R.A.P. 40 as well as formal revision before
publication in the Vermont Reports.  Readers are requested to notify the
Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by mail at: Vermont
Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors
in order that corrections may be made before this opinion goes to press.
 
 

2014 VT 81

 

No. 2013-205

 

Ugo Quazzo


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Windsor Unit,


 


Civil Division


 


 


Department of Taxes


November Term, 2013


 


 


 


 


Harold
  E. Eaton, Jr., J.


 

Stephen S. Ankuda of Parker & Ankuda, P.C., Springfield,
for Plaintiff-Appellant.
 
William H. Sorrell, Attorney General, and Danforth Cardozo,
III, Assistant Attorney General,
  Montpelier, for Defendant-Appellee.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Robinson and
Crawford, JJ.
 
 
¶ 1.            
ROBINSON, J.   Taxpayer appeals the superior court’s decision
upholding a determination by the Commissioner of Taxes that taxpayer failed to
prove a change of domicile for purposes of obtaining an income-sensitive homestead
property tax adjustment on his Vermont residence for the years 2007 through
2009.  He argues that the Commissioner erroneously treated this case as one
involving a change of domicile, rather than maintenance of domicile, so that
taxpayer had the burden of proving by clear and convincing evidence that he had
changed domicile to Vermont, even though he had declared—and the Department of
Taxes had not challenged—his Vermont domicile years earlier.  He also argues
that the Commissioner’s findings are insufficient to support her conclusions. 
We affirm.  
¶ 2.            
The unchallenged findings, undisputed evidence, and representations of
the parties reveal the following general facts.  We will describe specific
facts in more detail in the course of discussion.  Taxpayer’s principal
residence for many years was a two-bedroom New York City apartment owned since
1973 by one of the several New York family corporations of which taxpayer was
president and Chief Executive Officer.  Taxpayer’s son now leases the
two-bedroom New York apartment from the family corporation and uses it once or
twice a month.  Taxpayer also stays in the apartment when he travels to New
York for business or other reasons.
¶ 3.            
In 1958, taxpayer purchased a house in Chester, Vermont for use as a
summer vacation home.  Between the mid-1980s and early 1990s, he “partially
retired” and began to divide his time between his New York City apartment and
Chester residence.  Over the ensuing years, taxpayer, who was ninety at the
time of the Commissioner’s decision, became less involved in running the family
businesses, although he did not retire completely.  At the August 2011
administrative hearing, taxpayer testified that he became a permanent resident
of Vermont in 1998, but he indicated in a March 2008 letter to the Commissioner
that he became a permanent Vermont resident in 2000.
¶ 4.            
For several years beginning in 2000, taxpayer filed homestead
declarations and received an income-sensitive property tax adjustment available
only to property owners domiciled in Vermont.  In 2005 and 2006, he received
the adjustment after the Department asked him to provide more information in
support of his claimed Vermont domicile.  When he filed his property tax
adjustment claim in 2007, however, Department tax examiners initiated an
inquiry after noticing his nearly exclusive use of his historical New York City
home address and telephone and fax numbers when communicating with the
Department.  Subsequently, the Department denied his application for a tax
adjustment for 2007, and later for 2008 and 2009, concluding that he had not
demonstrated that he was domiciled in Vermont.  Taxpayer appealed the denial of
his applications, and a hearing officer held an administrative hearing to
consider his administrative appeal of the Department’s denial.  Following the
hearing, the Commissioner adopted the hearing officer’s determination that
taxpayer had failed to meet his burden of showing by clear and convincing
evidence that he had changed his domicile to Vermont.
¶ 5.            
The Commissioner stated that the sole issue was whether taxpayer had
retained his New York domicile or had changed his domicile to Vermont for the
period in question.  After examining the relevant statutes and regulations, as
well as the evidence submitted by the parties, the Commissioner concluded that taxpayer
had failed to present clear and convincing evidence to overcome the presumption
against a change of domicile.
¶ 6.            
In particular, the Commissioner relied on her findings that: (1)
taxpayer appeared to be absent from his Chester home a good deal of the year; (2)
he had his utility and property tax bills and other important documents mailed
to his New York address for his personal secretary to deal with so that they
would not go unattended, and he signed important documents when he was in New
York, rather than in Vermont; (3) he did not explain how his situation had
changed from the late 1980s and early 1990s to 1998 or 2000, the years he
claimed to have made a permanent move to Vermont; (4) he continued to be active
in business matters both in New York and in Vermont; (5) he had no immediate
family living in Vermont; (6) he had continuing access to the apartment in New
York leased by his son but available to him, and, in addition to his regular
travel to Chicago, London, and San Francisco, he spent an average of one to two
weeks per month in New York living in that apartment; (7) because he had
transferred all of his assets to his son and relied solely on social security benefits
and cash from his son when needed, he filed no personal state or federal or income
tax returns, so no income tax return address was available; (8) he did not
provide a passport or any other legal document showing his declaration of the
Chester home as his permanent home; (9) in 2007, the attorney for his Vermont
corporation submitted a brief in a legal proceeding stating that taxpayer was a
resident of New York; (10) despite being asked to do so by the Department, he
failed to submit bank or credit card statements, a ready source of information
that could have supported his assertion of Vermont domicile; and (11) all of
his doctors are in New York.
¶ 7.            
The Commissioner acknowledged evidence in support of taxpayer’s claim of
Vermont domicile including, among other things, that taxpayer: has a longtime
Vermont driver’s license; has his vehicles registered in Vermont; registered to
vote in Vermont beginning in 1992 and voted in Vermont at least once; testified
that his family antiques, family albums, and other “near and dear” personal
belongings are in Chester rather than New York; attends a church in Chester and
is not a member of any New York churches or clubs; and has a Vermont bank
account where he receives his social security checks.  However, the
Commissioner noted that taxpayer had obtained the Vermont drivers license and
had registered his cars in Vermont at a time when he considered his Vermont residence
to be a second home—long before he claimed Vermont as his domicile—and she was
skeptical of his claim that he did not keep any important personal possessions
in the New York City apartment given the amount of time he spent there.  Notwithstanding
these findings, the Commissioner concluded that the evidence, taken as a whole,
did not demonstrate taxpayer’s intent to change his domicile from New York to
Vermont.
¶ 8.            
Taxpayer appealed to the superior court, arguing among other things that
the Commissioner erred by requiring him to prove by clear and convincing
evidence that he had changed his domicile from New York to Vermont and by drawing
conclusions that were against the weight of the evidence.  In connection with
the first argument, the trial court posited a hypothetical taxpayer who was not
born in Vermont but moved here a number of years ago, and asked the parties,
“under what circumstances would the tax department consider the taxpayer’s
situation to be a case about the maintenance of domicile rather than about a
change of domicile?”
¶ 9.            
Taxpayer argued that “[a] case is only a ‘change in domicile’ case when
the Department of Taxes challenges the first declaration made.”  Because
the Department accepted his application for an income-sensitive property tax
adjustment in 2000 and subsequent years, taxpayer argues, the Department was
“estopped from turning back time and declaring Taxpayer a non-domiciliary for
those years.”  Thus, according to taxpayer, the Commissioner erred by treating
his situation as a change-of-domicile case rather than requiring him to show by
only a preponderance of the evidence that he had maintained his previously
established Vermont domicile for the years in question.
¶ 10.        
The State argued that the Department’s Domicile Regulation, 1 Code of
Vt. Rules 10 060 039, http://www.lexisnexis.com/hottopics/codeofvtrules
[hereinafter Reg.], requires that a taxpayer not born in Vermont, or not born
of parents domiciled in Vermont, prove a change in historical domicile by clear
and convincing evidence, without regard to how long ago the change in domicile
took place.  The State noted, though, that as a practical matter, the longer a
taxpayer has lived in Vermont, the easier it will be to make the required
showing.
¶ 11.        
Reviewing the case on the record, the superior court found no merit to
taxpayer’s argument, relying on the well-settled principle that tax authorities
are not estopped by their prior treatment of taxpayers’ claims.  See Dixon
v. United States, 381 U.S. 68, 72-73 (1965) (stating that taxing authority may
correct mistakes in application of tax laws, even when taxpayer may have detrimentally
relied on those mistakes).  The court concluded that applying the general rule
in this case made sense because there was no showing that the Department was
aware of the facts surrounding taxpayer’s living arrangements at the time he
filed his earlier claims.  The trial court affirmed the Commissioner’s decision,
concluding that the Commissioner properly applied the change-of-domicile legal
standard on these facts, and that in light of the Commissioner’s findings, the
Commissioner could reasonably conclude that taxpayer failed to show by clear
and convincing evidence that he had changed his domicile.
¶ 12.        
On appeal to this Court, taxpayer renews his arguments that the
Commissioner: (1) erroneously imposed a presumption against Vermont
domicile and required him to prove by clear and convincing evidence that he had
changed his domicile; and (2) failed to make sufficient findings regarding the
pertinent time period and to apply the applicable statutory and regulatory
standards to the findings that she did make.  With respect to the
Commissioner’s application of the presumption, taxpayer reiterates his argument
that the “change of domicile” burden only applies the first time a taxpayer
files a homestead declaration, and suggests in the alternative that when the
Department makes an inquiry into a taxpayer’s domicile status but then allows
the adjustment, as occurred in this case in 2005 and 2006, it can no longer
treat the case as a change of domicile case.
¶ 13.        
We review the Commissioner’s decision “directly, independent of the
conclusion on the intermediate, on-the-record appeal of the superior court.”  In
re Williston Inn Grp., 2008 VT 47, ¶ 11, 183 Vt. 621, 949 A.2d 1073
(mem.).  We apply a deferential standard of review to agency interpretations of
statutes legislatively entrusted to the agency’s administration, and, “[t]hus,
absent compelling indication of error, we uphold the Commissioner’s
interpretation of tax statutes.”  Id. ¶ 12.  Further, “[w]e owe at
least as much deference when . . . we review the
Commissioner’s interpretation of Department regulations.”  Id.  Finally,
we will not set aside the agency’s conclusions of law “if they are fairly and
reasonably supported by the findings of fact.”  Piche v. Dep’t of Taxes,
152 Vt. 229, 232, 565 A.2d 1283, 1285 (1989) (quotation omitted).
¶ 14.        
To be eligible for an income-sensitive adjustment to the statewide
school property tax, a claimant must own a homestead on April 1 of the year in
which the claim is filed.  32 V.S.A. § 6066(a).  At the time of taxpayer’s
applications for tax adjustment, “Homestead” was defined in 32 V.S.A. § 5401(7)(A)
as “the principal dwelling . . . owned and occupied by a
resident individual as the individual’s domicile.”[1]
¶ 15.        
The claimant must have been domiciled in the State for the entire tax
year.  32 V.S.A. § 6066(c)(1).  “Domicile” is defined in 32 V.S.A. § 5401(14)
as:
the
principal dwelling of a person who has established permanent residence in the
State.  Intention to establish permanent residence is a factual determination
to be made in the first instance by the Commissioner.  No one factor is
conclusive of whether a dwelling is a permanent residence; the Commissioner may
consider any relevant factors, including but not limited to the following:
formal and informal statements of the declarant; the location of residences
owned or leased by the declarant; where the declarant spends time; the
declarant’s place of employment and business connections; the location of items
of significant value (either monetary or sentimental) to declarant; where the
declarant’s family lives; place of voter registration; place of issuance of
automobile registration and driver’s license; previous permanent residency of
the declarant; and address listed on federal and State income tax returns filed
by the declarant.
 
This Court has “defined
‘domicile’ . . . to mean a place where a person lives or
has [a] home, to which, when absent, [s]he intends to return and from which [s]he
has no present purpose to depart.”  See Piche, 152 Vt. at 232, 565 A.2d at
1285 (quotation omitted).
¶ 16.        
The Legislature has directed the Commissioner to adopt rules governing
homestead eligibility requirements.  32 V.S.A. § 5410(e); see also id.
§ 3201(a)(1) (vesting Commissioner with general rulemaking authority).  The
Department’s regulation defines domicile as “the place where an individual has
a true, fixed permanent home, and to which place, whenever the person is
absent, he or she has the intention of returning.”  Reg. § 2(a).  The definition
states that “[a]n individual may have several places of abode in a year, but at
no time can he or she have more than one domicile.”  Id.  The regulation
further provides that “[o]nce established, domicile is never lost, changed, or
destroyed unless there is an actual change in the residence, together with
steps manifesting an intention to abandon the former residence and acquire a
new one.”  Id. § 2(c). 
¶ 17.        
Under the regulation, the following factors are the most relevant
because they are not readily changeable: (1) what residences are owned or
rented by the taxpayer, including their location, their relative size and
value, and how they are used; (2) where and how the taxpayer spends time during
the tax year including the amount and nature of any travel and the overall
pattern of residence of the individual; (3) the location of personal items that
are “near and dear” to the taxpayer’s heart such as family heirlooms or possessions
that enhance the quality of the taxpayer’s life; (4) the individual’s
employment, including where the individual earns a living or is actively
engaged in business; and (5) where members of the individual’s family reside.  Id.
§ 3(a)-(e).  The regulations list a host of other factors, such as place
of vehicle registration and driver’s license, that are relevant but less
weighty.  Id. § 3.
¶ 18.        
With respect to a change of domicile, the regulation states that an
established domicile continues until superseded by another, so that “a change
of residence without the intention of creating a new domicile leaves the last
established domicile unaffected.”  Id. § 4(a).  The regulation
lists several other factors relevant to determining whether there has been a
change of domicile, including the location of the domicile in prior years, the place
of voter registration, whether the voting was by absentee ballot, the place of
filing federal and state income tax returns, recitals of domicile in deeds and
other legal documents, written or oral declarations of domicile, the location
of bank accounts, membership in churches or clubs, and where any vehicles are
registered.  Id. § 4(b).  None of these factors are deemed
conclusive, but rather are weighed in light of all of the facts and
circumstances known to the Department.  Id.
¶ 19.        
Regarding burden of proof, the regulation states that the individual
“claiming domicile, or a change of domicile, shall carry the burden of proof,” id.
§ 5(a), and that “[t]he evidence required to establish both a change of
residence and the intention to effect a change of domicile must be clear and
convincing” and “manifested by unequivocal acts,” id. § 5(b).  
¶ 20.        
The critical threshold issue in this case is whether the Commissioner
properly treated this as a “change of domicile” case so that taxpayer was
required to prove by clear and convincing evidence an actual change of
residence and an intention to change his domicile to Vermont.[2] 
We find no compelling indication of error in the Commissioner’s interpretation
of the applicable regulation.  Specifically, we affirm that absent a prior
adjudication by the Commissioner or a court, a taxpayer not born in Vermont or
to parents domiciled in Vermont may be required to prove a change of domicile
for purposes of determining eligibility for the income-sensitive adjustment to
the statewide property tax.  This approach comports with the plain language of
the regulation, which recognizes a presumption that domicile is presumed to
continue unchanged once it is established.  Id. § 2(c). 
Moreover, it yields a predictable, bright-line rule that does not leave the
Department or taxpayers guessing about whether they have lived in Vermont long
enough to avoid the change-of-domicile framework.  Although the notion that
someone who has lived exclusively in Vermont for twenty years, with the intent
to make Vermont his or her domicile, could be required to prove a change of
domicile seems odd, the practical reality is that such a taxpayer will easily
meet even the higher burden of clear and convincing proof—the passage of time
and accompanying proliferation of evidence of domicile demonstrating both the
change of residence and the requisite accompanying intent.   
¶ 21.        
Taxpayer acknowledges that tax authorities “are never estopped by their
prior treatment of a taxpayer’s claim,” but nonetheless contends that it was
unreasonable for the Commissioner to impose the heavy burden of a change-of-domicile
case on a taxpayer who had filed homestead declarations for several years.  He
contends that the Commissioner should have considered his Vermont domicile to
have been previously established because he first declared his Vermont
homestead in 2000 and was allowed property tax adjustments for six of the
ensuing years, including two years when the Department initially questioned his
domicile, sought additional information, and then allowed the adjustment after
receiving the additional information.
¶ 22.        
Although taxpayer purports to eschew an estoppel argument, and does not expressly
address the elements of an estoppel claim, these contentions amount to, in
effect, an estoppel argument.  Taxpayer essentially argues that if the
Department fails to challenge a taxpayer’s first homestead declaration, it
forever loses the ability to challenge subsequent declarations.  The argument that
it is unreasonable for the Commissioner to treat this as a change-of-domicile
case because the Department did not challenge his domicile in prior years is an
equitable estoppel argument.  Such an argument is inconsistent with
well-settled law that tax authorities are not estopped by virtue of their prior
treatment of a taxpayer’s claims.  Dixon, 381 U.S. at 72-73; Auto.
Club of Mich. v. Comm’r of Internal Revenue, 353 U.S. 180, 183-84 (1957).  “The
mere acceptance or acquiescence in returns filed by a taxpayer in previous
years creates no estoppel against the Commissioner nor does the overlooking of
an error in a return upon audit create any such estoppel.”  Mora v. Comm’r
of Internal Revenue, 31 T.C.M. (CCH) 495, (T.C. 1972).  Neither the
Department’s unquestioning acceptance of taxpayer’s homestead declarations in
prior years, nor its acceptance of the declarations after asking for clarifying
information in two tax years but without any sort of adjudication, precludes
the Department from formally challenging taxpayer’s establishment of a Vermont domicile
in subsequent years.
¶ 23.        
Taxpayer suggests that application of the stricter standard of review was
particularly unfair in this case because it was not anticipated by the parties. 
Both he and the Department focused their cases on the tax years in question
rather than the years when he contends he changed domiciles.  Although the
Department argued that taxpayer bore the burden of proving his domicile, it never
suggested that this was a change-of-domicile case and that the accompanying
heightened burden applied.  Taxpayer argues that the Commissioner’s approach
was unfair since it caught him, and apparently the Department’s advocate, by
surprise, but he cites no authority for the proposition that the application of
the correct legal standard by an adjudicative body constitutes reversible error
when it was unanticipated by the litigants.
¶ 24.        
Taxpayer’s second argument is that the Commissioner failed to apply the
applicable statutory and regulatory standards with respect to her findings and
further failed to make sufficient findings to address the actual issue presented. 
His point here is that most of the Commissioner’s findings relate to the years
2007 to 2009, despite the fact that he claimed he changed domicile to Vermont
between 1998 and 2000.  In taxpayer’s view, the Commissioner should have
examined his continuing connections to New York during the period he claimed to
have changed his domicile to Vermont rather than during the period from 2007 to
2009, when his medical problems required his more frequent travel to New York. 

¶ 25.        
We conclude that the Commissioner’s findings were sufficient to support
her conclusions.  Taxpayer bore the burden of establishing his domicile in
Vermont by proving by clear and convincing evidence that he had changed his
domicile to Vermont.  That includes proof that he switched domicile from New
York to Vermont between 1998 and 2000.  Taxpayer testified that his partial
retirement began in the mid-1980s and continued into the 1990s, and that he became
permanently situated in Vermont beginning in 1998, at which time he purchased a
burial plot in a Chester cemetery.  He also testified, however, that he never
completely retired because of his role in the family businesses, and that he continued
to maintain his New York contacts, particularly with respect to his businesses
and his health issues.
¶ 26.        
In her decision, the Commissioner acknowledged taxpayer’s testimony regarding
his claimed change of domicile to Vermont between 1998 and 2000, but concluded that
he “did not demonstrate what had changed between 1985 or 1992, when he was
still a New York domiciliary, and 1998 or 2000, when he was still splitting his
time between the apartment in New York and the Chester house.”  The
Commissioner noted that taxpayer had not filed tax returns and had not produced
a passport or bank and credit card statements—or other readily available
evidence, including testimony from neighbors or town officials—to support his
claim of a change of domicile to Vermont during that period or later.  The
Commissioner pointed out, “the one official record in evidence” concerning
taxpayer’s declaration of domicile was in a 2007 legal brief submitted by the
attorney for his Vermont family business stating that taxpayer was a resident
of New York.
¶ 27.        
The Commissioner concluded that taxpayer had failed to show by clear and
convincing evidence that he had changed his domicile to Vermont.  In so
concluding, the Commissioner did not rely heavily upon taxpayer’s relatively recent
need to travel to New York more often for medical reasons.  Rather, the
Commissioner noted taxpayer’s continued use of his historical New York
apartment, his continued business contacts in New York, his continued use of
the New York address for dealing with most of his correspondence and bills, and
the absence of any family in Vermont.  On the other side of the ledger, the
Commissioner acknowledged taxpayer’s ties to Vermont—his Vermont bank account
where he received social security checks, his longtime Vermont driver’s
license, the registration of his vehicles in Vermont, and his Vermont voter
registration, among others—but concluded that this evidence, much of which was
of a type that would be consistent with vacation home ownership or could be easily
altered, did not demonstrate an intent to change domicile to Vermont.  Given
the record before us, we conclude that the Commissioner’s conclusions are
fairly and reasonably supported by the findings of fact.
Affirmed.

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 
 
¶ 28.        
SKOGLUND, J., dissenting.   With all due respect to the majority
and the Commissioner of Taxes, the decision in this case is nonsensical.  On
appeal, this Court will grant deference to the Commissioner’s interpretation of
the tax statutes at play and will not set aside her conclusions of law “if they
are fairly and reasonably supported by the findings of fact.”  Piche v. Dep’t
of Taxes, 152 Vt. 229, 232, 565 A.2d 1283, 1285 (1989) (quotation omitted). 
To afford deference to the Commissioner in this case, I would have to ignore
the little voice of common sense yelling in my head.  The Commissioner’s conclusion
that taxpayer failed to prove a change in residence from New York City to
Chester, Vermont is not supported by the facts as found and should not be
affirmed.  
¶ 29.        
Taxpayer bought his home in Chester, Vermont in 1958.  At that time he
was still employed by the family business headquartered in New York City, where
the company owns a building purchased in 1973.  When working, taxpayer rented a
two-bedroom apartment in the building.  He partially retired in 1985 and began
to split his time between the apartment in New York and his Chester home.  In
1992, at the age of seventy-one, taxpayer retired more fully “but not
completely,” because as patriarch of the family, he is “always on call.”  
¶
30.        
Taxpayer testified he became a permanent resident of Vermont in 1998,
though in a letter to the commissioner dated March 5, 2008 he said he became a
permanent resident in 2000.  Since 1992, he has been registered to vote in
Vermont.  He owns six cars and all have been registered in Vermont for many
years.  On occasion, he has the cars serviced at Benny’s auto garage in
Chester.  He has held a valid Vermont driver’s license for the last thirty
years.  His final resting place will be in Vermont (he purchased a burial plot
in Chester in 1998).  He attends church in Vermont.  These findings by the
Commissioner lead me to believe he is a Vermont resident.  Apparently, I am
wrong.
¶
31.        
Alas, taxpayer has many of his bills, such as telephone and electric,
sent to the business address in New York where a long time secretary of the
family business writes the checks to pay the bills which taxpayer then signs. 
The secretary described herself in a letter to the Department in 2007 as taxpayer’s
“Health Care Assistant.”  The Commissioner noted that the bills were sent to
the New York address “so they would not go unopened in Chester while he was
away.”  The evidence shows that taxpayer’s personal bank checks list his
address in Chester, Vermont.  So, according to the Commissioner, if you are
ninety-three years old, as is taxpayer, and use a former employee in New York
City to assist you with your finances, your claim of Vermont residency is
called into question.     
¶ 32.        
Unfortunately, taxpayer needs to travel to New York City for medical
reasons, seeing one doctor once a month and another doctor twice a month.  When
he goes to New York for medical reasons, he stays one-to-three days each time
in the apartment now rented by his son, using the second (guest) bedroom.  The
Commissioner noted that he has no doctors in Vermont, weighing this against his
claim of residency.  Lesson to be learned—don’t use foreign doctors if you
claim Vermont residency.  Dartmouth-Hitchcock Medical Center in Hanover, New
Hampshire is apparently out.    
¶
33.        
Also detrimental to his claim of Vermont residency, taxpayer travels to
visit his adult children in San Francisco, Chicago and London each year and,
gasp, travels to Europe once or twice each year for two or three weeks and, the
Commissioner notes, “to other places as well.”  Obviously, if you expect to be
considered a Vermonter, you will not leave the state, ever.
¶ 34.        
In support of his claim of Vermont residency, the Commissioner found
that taxpayer moved much of his furniture from New York to Vermont, including
his Italian family antiques and art works.  All his personal belongings and
clothes are in Chester, along with items of family memorabilia, family albums
and his father’s and grandfather’s guns.  
¶ 35.        
At some point, taxpayer transferred all his assets to his sons and when
he needs money his son provides.  His property tax adjustment claim for 2007
shows household income of a $12,000 gift from his son.  Taxpayer files
no federal or state income tax returns so no personal income tax returns were
available as evidence of residence or domicile.  He receives mailings from AARP
and from the Social Security Administration at the Chester address.  But, oh
dear, his AARP membership expired in 2009.   He maintains a checking account
with a Vermont bank.  He shops in Chester.  When asked to produce copies of
credit card or debit card statements, taxpayer testified he doesn’t use a
credit card—“I always pay cash.”  For inexplicable reasons, this financial
picture was held against him by the Commissioner.
¶
36.        
For homestead purposes, a determination of domicile begins with a
factual determination by the Commissioner of Taxes of the taxpayer’s intent to
establish permanent residence.  32 V.S.A. § 5401(14).  An essential
ingredient of the intent requirement is the intent to give up the old domicile
and to remain at the new residence indefinitely.  Piche, 152 Vt. at 232,
565 A.2d at 1285.  The agency’s determination of domicile will be upheld if it
is fairly and reasonably supported by the findings of fact.  Id. 
According to the criteria listed in the definition of “domicile,” taxpayer long
ago moved to Vermont with the intention of staying indefinitely.  The only
house he owns is in Chester, Vermont.  Items of significant value to him are in
Chester, he votes in Vermont, his cars are registered here, and he has a
Vermont driver’s license.  When he visits New York, he stays at his son’s
apartment in the spare room.  He is retired but still assists the family
business from time to time without remuneration.  His involvement in the family
business is not what is contemplated in § 3(d) “Relevant Factors” in the
Department’s regulations: “ ‘[a]ctively involved’ means the individual
participates in the day-to-day operation, or in a policy-making position, of a
business.”  Domicile Regulation § 3(d), 1 Code of Vt. Rules 10 060 039-6,
http://www.lexisnexis.com/hottopics/codeofvtrules.  There was no evidence
presented that taxpayer was involved in the day-to-day operation or still in a
policy-making position of any of the family New York businesses as anticipated
by the regulation.  
¶
37.        
The Commissioner concluded that taxpayer “ha[d] not broken his ties to
New York.”  She found his testimony that all his belongings were in Chester to
be “not persuasive,” apparently because he spends one or two weeks a month in
New York and “might have some personal belongings there.”  Apparently she did
not consider the fact that he might pack a suitcase for a one-to-three-day
visit.  She further found that the continuing availability of the New York
apartment to taxpayer, though he no longer rents same, shows at least some
continuing ties to New York.  What it actually shows is a continuing tie to his
son, who lets him stay at the apartment.  
¶
38.        
While taxpayer has been a registered voter in Vermont since 1992, the
Commissioner found his use of the absentee ballot “lessened” the evidence that
he is a registered voter in Vermont.  This should be concerning to those of us
who routinely use absentee ballots.  The Commissioner relied heavily on the
“one official record in evidence of [t]axpayer’s statement of domicile”—a
statement by an attorney for the family business, ADA Chester Corporation—that
states taxpayer was a resident of New York.  Of course, taxpayer never signed
that brief.   Not to mention that the brief was filed in a case against ADA
Chester, a Vermont corporation, in response to an “adverse cutting notice” from
the Department of Forests, Parks and Recreation.  Taxpayer is active in ADA
Chester, that is, he has active business involvement in a Vermont corporation. 
The Vermont corporation files federal and Vermont state tax returns.  Taxpayer
signs the income tax returns as president.  But, uh oh, the tax returns are
prepared by a New York accounting firm and their address is listed on the
filings.  This is the same firm that prepares tax returns for the other family
businesses.  Lesson to be learned:  when you seek to establish Vermont
residency, drop the old accounting firm you used for decades and hire a Vermont
firm.  
¶
39.        
Along this line of logic, the Commissioner wrote: “[i]t is reasonable
for someone Taxpayer’s age to have a secretary receive and process his bills
for his signature, but Taxpayer does not have this done by a person located in
Vermont; he continues to use the New York secretary for his routine paperwork. 
This is evidence of continuing ties to New York.”  So, as I understand this,
using an accountant from another state, say in New Hampshire, will cast doubt
on your claim to be a Vermonter.  As to taxpayer’s Vermont bank accounts, the
Commissioner found that his social security checks were deposited directly into
this account, but questioned why taxpayer didn’t provide bank records.  If
there is no dispute that taxpayer maintains a Vermont bank account where his
primary source of income is deposited, why does he have to expose his financial
records to the Commissioner?
¶
40.        
She then held that “[t]axpayer’s age and ongoing health issues make it
reasonable to continue to go to doctors who have treated him for years.  This
fact also demonstrates a continuing tie to New York as the domicile.”  This is
utter nonsense.  If it is reasonable to stay with a doctor who has treated you
for years, what does it matter if he works in New York City or in Vermont?  At
least she considered his purchase of a burial plot on the side of evidence
showing intent to remain in Vermont:  “[s]ince purchase of the plot was in the
year taxpayer asserts he became a permanent resident of Vermont [1998], it
seems to weigh in favor of a change of domicile to Vermont.”  
¶
41.        
The Commissioner concluded that the evidence in the case “quite possibly
fails even as a preponderance in favor of a change of domicile and certainly
does not meet the more stringent standard required.”  Amazing.  The facts as
found support taxpayer’s assertion that he is a Vermont resident.  In affirming
the Commissioner’s decision, the majority holds that “absent a prior
adjudication by the Commissioner or a court, a taxpayer not born in Vermont or
to parents domiciled in Vermont may be required to prove a change of domicile
for purposes of determining eligibility for the income-sensitive adjustment to
the statewide property tax.”  Ante, ¶ 20.  What? 
¶ 42.        
I dissent.

 


 


 


 


 


 


 


 


Associate Justice

 


[1] 
The statute was amended in June 2014 to define “homestead” as the “principal
dwelling . . . owned by a resident individual on April 1
and occupied as the individual’s domicile for a minimum of 183 days out of the
calendar year.”  2014, No. 174 (Adj. Sess.), § 58.


[2]
 Taxpayer does not challenge the Department’s heightened burden of proof for
change-of-domicile cases.  Cf. Huddleston v. Univ. of Vt., 168 Vt. 249,
254, 719 A.2d 415, 419 (1998) (concluding that university had implicit
authority to adopt clear-and-convincing evidence standard of proof in residency
determinations as long as constitutional rights were not implicated).  


