The determination of who is taxable as a resident for New York State and City personal income tax purposes has challenged tax practitioners for years, leading to significant audit scrutiny and litigation. Recently, the New York State Tax Appeals Tribunal, the highest administrative appeal forum for New York tax disputes, issued an opinion that shed some light on what a “permanent place of abode” is for purposes of the statutory resident test. Below is a summary of this decision, which may assist CPAs to leverage this holding when determining whether an individual is, in fact, a statutory resident of New York State/City.

New York tax law has guidelines for determining who is a resident of New York State for personal income tax purposes; New York City has similar rules, although New York State actually administers the city’s personal income tax. One element of the guidelines applies to nonresident individuals who may be classified as “statutory residents” of New York State/City, and who are taxable as New York residents, if they maintain a “permanent place of abode” in the state and spend more than 183 whole or part days in the state during such year [New York Tax Law section 605(b)(1)(B)]. If an individual is deemed to be a statutory resident of New York for a given tax year, all the individual’s income, including compensation, income from a trade or business and investment income, will become subject to New York State/City personal income taxes.

Unfortunately, New York statutes and regulations do not provide a clear definition of the term “permanent place of abode” in the tax law. Historically, the term has been broadly interpreted to include a part-time residence, such as a small rented apartment used occasionally when working late at the office, a room at a church rectory that the individual had part-time access to and used as a part-time residence, and other uncommon situations where the use of a dwelling place in New York caused unsuspecting individuals to suddenly find themselves facing a residency-focused tax examination. This variability has ultimately created much uncertainty for tax practitioners attempting to provide accurate guidance to clients at risk of audit, and for general tax planning purposes.

Fortunately, a recent decision by the New York Tax Appeals Tribunal, In the Matter of Leslie Mays, DTA No. 826546 (December 21, 2017), now provides some clarity on how the Department of Taxation and Finance (DTF) might determine whether a person’s dwelling is a permanent place of abode for residency purposes.


In 2014, the New York Court of Appeals attempted to formulate a working definition of what it means to “maintain a permanent place of abode” in Matter of Gaied v. New York State Tax Appeals Tribunal [22 NY3rd 592 (February 18, 2014)]. John Gaied was domiciled and lived in New Jersey, but owned an automotive repair business in Staten Island, N.Y. He commuted daily from his home in New Jersey to work. Gaied purchased a multifamily apartment building on Staten Island located in the same neighborhood as his business. His motivation for acquiring the building was twofold: as a place for his elderly parents to live, and as an investment property.

Gaied’s parents lived in a first-floor apartment and relied on him for their support—they were his dependents for tax purposes. He never lived at their apartment and did not keep any clothing or other personal effects there; however, he sometimes stayed overnight in the apartment to attend to his parents’ medical needs, and on those occasions, he slept on a couch.

For each of the tax years questioned by the DTF, Gaied filed nonresident income tax returns in New York. After the personal income tax audit was concluded, the DTF issued a Notice of Deficiency indicating that Gaied owed an additional $253,062 in New York State and City income taxes. The DTF determined that he was a “statutory resident” of New York within the meaning of the Tax Law because he spent over 183 days in New York City and maintained a “permanent place of abode” (the apartment where his elderly parents resided) in the Staten Island property during those years.

Gaied sought a redetermination of the deficiency. He conceded that he was in New York City more than 183 days during each year at issue, but he challenged the determination that he maintained a permanent place of abode at the Staten Island property, since he would stay at the apartment only when he had to take care of his parents’ health needs. He argued that there was no bed available for him, and he was forced to sleep on a couch. He also testified that he did not keep any personal property in the apartment. The Administrative Law Judge (ALJ) issued a determination sustaining the deficiency, and thereafter, Gaied filed an appeal.

The Tax Appeals Tribunal initially reversed the ALJ’s determination, saying that Gaied did “not have living quarters at his parents’ apartment” and therefore did not maintain a permanent place of abode in said apartment. The DTF moved for reargument, contending that the Tribunal’s decision failed to consider precedent establishing that to be deemed a statutory resident under the New York Tax Law, a taxpayer need not actually reside in the permanent place of abode, but only needed to maintain it. On reargument, the Tax Appeals Tribunal upheld the ALJ’s determination, holding that Gaied was a statutory resident of New York State/City for the years at issue.

The New York Court of Appeals ultimately reversed the Tax Appeals Tribunal based on a more direct approach toward the meaning of maintaining a permanent place of abode, ruling that Gaied was not a New York resident for income tax purposes. Specifically, the Court reached two conclusions. First, some basis had to exist to conclude that the dwelling was used as a residence; second, the taxpayer must have a “residential interest in the property,” that is, the taxpayer must have living quarters at the place of abode.

Mays—the Story Continues

Although the plain language of the Court’s decision in Gaied may have eliminated some of the discord between the DTF and many tax practitioners regarding the definition of a permanent place of abode, the issue was recently reexamined in Mays. The legal question in Mays was whether the taxpayer maintained a permanent place of abode in New York City during 2011.

If permanence was established, the Tribunal required an analysis of whether the taxpayer “maintained” the dwelling or had a residential interest in it.

In January 2011, Leslie Mays moved into a furnished corporate apartment in New York City after accepting a position with Avon Products, Inc. (Avon). Avon paid the rent and the other expenses related to the apartment. The apartment was fully furnished, and Mays had exclusive use of it for approximately four months. Her stay at this apartment was temporary in nature—it would last until she could find suitable housing elsewhere—and her use of the apartment was contingent on her remaining an employee of Avon. In June 2011, Mays moved into her fiancé’s apartment in New York and lived there for the remainder of the year; therefore, she had access to a dwelling in New York for virtually the entire year, although she had use of the corporate apartment only for a temporary period.

The DTF determined that the corporate apartment Mays occupied constituted a permanent place of abode, and therefore deemed her to be a statutory resident for all of 2011. An ALJ affirmed the DTF’s conclusion, and Mays filed an appeal with the New York State Tax Appeals Tribunal, which rendered its decision in December 2017.

On appeal, Mays asserted that the corporate apartment was not a permanent place of abode because her stay there was temporary—that is, not “permanent.” She also argued that even if the corporate apartment was a permanent place of abode, she did not “maintain” it, since Avon paid the rent and the other expenses of the apartment. Finally, she claimed that the combined stay at the corporate apartment and her fiancé’s apartment did not satisfy the requirement that a dwelling need be maintained for “substantially all the taxable year” (11-month rule) for it to qualify as a permanent place of abode (20 N.Y.C.R.R section 105.2). The Tribunal rejected all of Mays’s arguments, citing prior cases that refuted the arguments point by point. The Tribunal upheld the ALJ’s decision and ruled against the taxpayer, providing some insightful and precedential guidance as to what is a permanent place of abode.

The Tribunal’s analysis followed a rather novel schematic to arrive at its decision. First, the Tribunal examined whether the dwelling exhibited the physical characteristics normally available for year-round habitation; if it did not, then the dwelling was not a permanent place of abode. If it did, the next question was whether the taxpayer had a legal right to occupy the apartment as a residence. If answered in the affirmative, and the taxpayer “exercised that right by enjoying their residential interest in the dwelling” (emphasis added), then the taxpayer maintained a permanent place of abode (contrary to Gaied, where the taxpayer owned a dwelling that did not qualify as a permanent place of abode because he did not use it as a residence). If, however, the taxpayer had no legal right to occupy the dwelling, factors indicating the taxpayer’s relationship to the dwelling were then analyzed, such as the physical aspects of the dwelling and the individual’s relationship to it, generally understood as the “permanence of the dwelling.”

Next, if permanence was established, the Tribunal required an analysis of whether the taxpayer “maintained” the dwelling—meaning the taxpayer “did what was necessary to continue” her living arrangements in a permanent place of abode—or had a residential interest in it. If so, then the conclusion should be that the taxpayer maintained a permanent place of abode despite a lack of a legal right to occupy the dwelling.

The Tribunal affirmed that the ALJ correctly determined that Mays maintained a permanent place of abode based on the above analysis, stating that all that was required for Mays to be deemed to maintain the apartment was for her to do whatever was necessary to continue her living arrangements there—that is, maintain her employment with Avon, “from which the right to reside at the apartment arose; that she had exclusive use of the apartment for the duration of her stay, and that she was able to extend that stay by request [prior to moving into her fiancé’s apartment].”

Providing a Clearer Picture

The decision in Mays now provides additional clarity and a more detailed analysis of the framework of facts and circumstances necessary to determine whether a person who has use of a dwelling in New York is maintaining a permanent place of abode. There is still, however, no “one size fits all” definition under either the New York residency statutes, the regulations, or applicable case law; therefore, tax practitioners should note the recent guidance provided by the Mays decision if it pertains to their clients’ facts and circumstances. Unfortunately, it is unlikely the DTF will be deterred by this decision from continuing to aggressively target individuals for residency examinations who have access to a permanent place of abode in New York.

Corey L. Rosenthal, JD is a principal at CohnReznick LLP, New York, N.Y.
Fred Komarow is a senior tax consultant at CohnReznick.