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Quazzo v. Department of Taxes

Supreme Court of Vermont

August 1, 2014

Ugo Quazzo
Department of Taxes

Editorial Note:

This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40

On Appeal from Superior Court, Windsor Unit, Civil Division. 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. SKOGLUND, J., dissenting.


Page 459

 Robinson, J.

[¶1] Taxpayer appeals the superior court's decision upholding a determination by the Commissioner of Taxes tat 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

Page 460

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 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.

Page 461

[¶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 driver's 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, [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, 85 S.Ct. 1301, 14 L.Ed.2d 223 (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 ...

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