New York: Tax Court clarifies test of intent for purposes of establishing domicile

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New York’s Division of Tax Appeals recently issued an opinion that clarified its test of intent with regard to a purported new domicile. Generally speaking, the test is “whether the place of habitation is the permanent home of a person, with the range of sentiment, feeling and permanent association with it.” The court noted that under the usual analysis, it acknowledges a taxpayer’s declarations, but these are less persuasive than actions demonstrating the taxpayer’s “general habit of life.” Applying that here, the court concluded that the taxpayer, Gregory Blatt, had proved, by clear and convincing evidence, that he intended to, and did, change his domicile from New York City to Dallas, thus justifying a cancellation of the deficiency of $430,065.00, plus interest and penalties. 

This case turned on whether the court agreed with Blatt that for the tax years 2009 and 2010, he had changed his domicile from New York to Texas, which rendered his presentation of the facts especially important. Indeed, in the New York Division of Tax Appeals, which some consider to be the most aggressive for these kinds of audits, Bloomberg declared that “it was the compelling story that carried the day.” 


For each of the tax years at issue, 2009 and 2010, Blatt had filed New York State Nonresident and Part-Year Resident Income Tax Returns. Pursuant to an audit finding that he was domiciled in New York, the Division of Taxation (Division) issued a Notice of Deficiency, dated June 4, 2013, asserting that Blatt owed personal income taxes in the above-stated amount. 

The court’s opinion included 91 findings of fact, culled from the 114 that Blatt submitted, setting forth the following narrative. In 2003, Blatt began working in New York City as General Counsel at InterActiveCorp (IAC), which at the time was a public company that owned multiple large consumer internet businesses, including In 2005, he purchased a $2.4 million apartment on West 11th Street. 

In 2006, Blatt and IAC executed an employment agreement, effective November 21, 2006, which specified that Blatt’s principal place of employment was at the company’s offices located in New York City. His title was Executive Vice President, General Counsel & Secretary of IAC. 

In August 2008, IAC restructured itself and split into five pieces, which decreased the scope and prestige of Blatt’s job, leading him to start searching for other opportunities. His boss, Barry Diller, IAC’s Chairman and CEO, with whom he shared his concerns, suggested that he think about taking a leadership position at Dallas-based, to determine whether to keep or sell it, because its growth had been flat. This coincided with a major change in Blatt’s personal life, the break-up of a long-term relationship, which made him ready to contemplate leaving New York. He actually did so in February 2009, when he became’s CEO. 

At that time, Blatt did not want to give up his corporate position at IAC, so negotiated an arrangement whereby he spent the majority of his working time in New York, and one-third to one-half of that in Dallas. 

In March 2009, Blatt signed a one-year lease for a one bedroom apartment in Dallas. Prior to July of that year, he commuted between Manhattan and Dallas, and was reimbursed for his travel, car, and living expenses in Dallas. 

Blatt loved his job at and the city of Dallas, so fully committed to both in May 2009. Effective November 6, 2009, he amended his employment agreement with IAC to reflect his sole title of CEO at, in Dallas, relinquishment of his responsibilities at IAC in New York City, and related details. Following that, Blatt ceased completing the required continuing legal education courses for practicing attorneys, and did not renew his New York State Bar membership. Even so, for financial reasons, he maintained his apartment in New York City, though this meant that from July 2009 forward, the value of the reimbursements was included as ordinary taxable income and reflected as such on his W-2, triggering additional tax liability. Finally, in the fall of 2009, Blatt listed his New York City apartment for sale. 

The court’s rationale

Pointing to statutory law, the court recognized that one is subject to tax as a New York state or city resident when he maintains a “permanent place of abode…on more than 183 days during a given taxable year.” 

The court also acknowledged that a taxpayer’s domicile is the place that he intends to be his permanent home; the place to which he returns after an absence. To determine one’s intentions, the court will give his declarations “due weight, but they will not be conclusive if they are contradicted by such individual’s conduct.”

This is why Blatt’s “compelling story” was so important. Of special significance to the court were the elimination of Blatt’s status at IAC corporate, his new principal place of employment in Dallas, and the listing of his New York apartment for sale, along with affidavits from three colleagues affirming that Blatt was based in Dallas, and that each affiant considered Blatt to be living in Texas. 

In addition, the record showed that Blatt had a robust social life in Dallas. Additionally, particularly relevant were the facts that during 2009, he joined a gym, used physicians and a chiropractor in Dallas, switched his prescriptions to a Dallas pharmacy, invested $10,000 in his apartment, obtained a Texas driver’s license and registered to vote in Texas, moved his dog to Dallas, changed his address with the United States Postal Service, notified banks and credit card companies of his Dallas address, and sold his New York City apartment in October 2010.

Another significant fact was that in September 2010, when Blatt’s boss at IAC, Barry Diller, who was its founder, Chairman and CEO, informed Blatt that he wanted to step down, Blatt did not consider himself to be a candidate. The court characterized this as a “revealing lack of action that evidenced, inter alia, petitioner’s mind set at the time that he viewed Texas as his home.” 

All in all, the court observed that although Blatt was domiciled in New York City prior to July 2009, he was not within New York state or city for more than 183 days during 2009 or 2010. During the audit period, Blatt spent a few more days within Texas than within New York.

The court went on to explain Blatt’s return to New York. Despite his success in Dallas, Blatt’s mindset began to change when Jack Welsh, an advisor to IAC, took Blatt to lunch to discuss his return to IAC as CEO, largely because his performance at had been so impressive. Thereafter, effective December 1, 2010, Blatt executed a new employment agreement with IAC, as its CEO. 

The original plan was for him to operate mostly out of Dallas, while also utilizing offices in New York City and Los Angeles. But by the summer of 2011, Blatt realized this was not workable and moved back to New York City. 

In the end, for the tax period at issue, the court concluded that Dallas, with its range of sentiment, feeling and permanent association with it, was Blatt’s place of habitation, his permanent home.

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