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Complex domicile issues in tax cases make for interesting competing narratives, P.2

Last time, we began discussing a recent tax case involving the issue of domicile. As we noted, the CEO of Match Group was successful in arguing that he had temporarily created a domicile in Texas, even though he still had ties to New York and eventually returned there.

According to commentators, Blatt’s decision to relocate his dog to Texas was probably the factual key to the decision. Whether or not that is true, it does go to show to trickiness, and potential arbitrariness, of domicile determinations and the potential impact it can have on tax liability. 

Part of the reason for the trickiness is that domicile depends on the intention of the individual to establish a permanent home to which one plans to return after being away temporarily. There can only be one domicile, but taxpayers can have multiple residences. Not every state bases its income tax residency requirements on domicile, though.

Georgia is a state which does not base residency requirements on domicile. Rather, residency depends on having a legal residence in Georgia. Residents of Georgia are required to file an income tax return if they filed a federal return, have income which is subject to Georgia income tax, or have an income that is greater than Georgia’s standard deduction and personal exemptions. Nonresidents who work in Georgia or who receive income from sources in Georgia must also file a Georgia income tax return, though, if they are required to file a Federal income tax return.

For those who have residences in Georgia and in other states, it is important to understand how residency requirements work and the impact their living situation has on income tax reporting requirements. In some cases, the facts can support favoring primary residency in one state over another for tax purposes, and this can lead to problems with tax authorities. For those who have such a situation, it can be helpful to work with an experienced attorney to understand the tax implications of living arrangements in advance, and it is certainly important to address income tax reporting issues related to residency when they arise. 

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Located in Atlanta, The Peck Group, LC, represents clients nationwide. Regionally, we are committed to serving clients in Fulton County and throughout the state of Georgia.