findings of fact conclusions of law … orders/2012/mauer v cor 10... · findings of fact...
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STATE OF MINNESOTA TAX COURT COUNTY OF RAMSEY REGULAR DIVISION Kenneth B. Mauer, Appellant,
FINDINGS OF FACT CONCLUSIONS OF LAW ORDER FOR JUDGMENT
vs. Docket
No. 8117
Commissioner of Revenue, Dated: January 20, 2012 Appellee.
________________________________________________________________
The Honorable George W. Perez, Chief Judge of the Minnesota Tax Court, heard
this matter on January 12, 2011, at the Minnesota Judicial Center, St. Paul, Minnesota.
Bradford S. Delapena, Attorney at Law, represented the Appellant.
Rita Coyle De Meules, Assistant Attorney General, represented the Appellee,
Commissioner of Revenue.
Both parties submitted post-trial briefs. The matter was submitted to the Court for
decision pursuant to Minn. Stat. § 271.20.
The Court, having heard and considered the evidence adduced at the hearing,
and upon all of the files, records and proceedings herein, now makes the following:
FINDINGS OF FACT
1. Kenneth B. Mauer (“Appellant”) was born and raised in St. Paul, Minnesota, and
attended high school and college in Minnesota. Stip. ¶ 4.
2. In 1986, Appellant began working for the National Basketball Association (“NBA”)
as a professional basketball referee. Appellant worked as an NBA referee during
calendar years 2003 and 2004, the tax years at issue (“Tax Years.”) He is a
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member of the National Basketball Referee’s Association (“NBRA.”) Stip. ¶¶ 7,
62.
3. In 1987, Appellant purchased a six-acre plot in Afton, Minnesota (“Afton house.”)
Appellant hired architect Gregory Hallbeck to design a year-round, large, log-
cabin style residence for the property. Stip. ¶ 8. Appellant broke ground in May
1990. In September 1991, Appellant moved into his partially completed house.
Over the next fifteen years, Appellant finished and furnished separate rooms and
sections of his Afton house. Stip. ¶ 9. His Afton house has 10,600 square feet.
Tr. at 129. Appellant obtained a homestead classification in October 1991. Stip.
¶ 8.
4. Appellant is responsible for the maintenance and upkeep of his Afton house and
has never tried to rent it. Stip. ¶ 9.
5. Appellant’s work as an NBA referee requires him to travel to game sites
throughout the United States and Canada during each NBA season. Specifically,
Appellant travels extensively each year between late September and early June.
Stip. ¶ 11.
6. During the Tax Years, NBA referees were assigned to officiate up to 82 pre-
season and regular season games per year. Stip. ¶ 12.
7. Collective bargaining agreements between the NBA and the NBRA contain rules
regulating referee travel and governing referee reimbursement for travel and
accommodation expenses. Stip. ¶ 13.
8. Under NBA rules referees were permitted to return home between games, rather
than travelling to the next assigned city. Stip. ¶ 16.
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9. Appellant scheduled his own flights during the Tax Years. Stip. ¶ 18.
10. In September 2003, Appellant designated his “home airport” as Fort Myers on the
air travel election form provided by the NBA. Jt.1 Ex. 3; Stip. ¶ 15.
11. In 1994, the Internal Revenue Service initiated “Operation Slam Dunk,” an
investigation into whether NBA referees had evaded federal income tax through
their use of airline ticket refund policies. The Justice Department subsequently
indicted 22 referees, including Appellant. Appellant was convicted of three
counts of tax evasion and endeavoring to obstruct and impede due
administration of tax laws. Stip. ¶¶ 27, 28; Tr. at 132-36. Appellant’s final day of
home confinement that he served in Minnesota was June 30, 2003. Stip. ¶ 29.
12. On July 1, 2003, Appellant flew from Minneapolis to Fort Myers for three days to
search for a new home. Stip. ¶ 30. On July 3, 2003, Appellant signed a purchase
agreement to buy a townhouse in the residential development of Heritage Palms
in Fort Meyers, Florida for $235,038. Stip. ¶ 30. The Fort Myers townhouse has
2,000 square feet. Tr. at 155, 282. On July 4, 2003, Appellant left Florida and
flew to Kentucky. He then flew back to Minnesota on July 7, 2003. Ex. 5; Stip. ¶
30.
13. On July 3, 2003, Appellant obtained a Florida driver’s license and surrendered
his Minnesota driver’s license. Ex. 29; Stip. ¶ 32. Also on July 3, 2003, he
registered to vote in Florida. Ex. 90. Appellant voted in Florida by absentee
ballot on November 2, 2004. Stip. ¶ 53.
1 Exhibits 1-92 are joint exhibits. Tr. at 330.
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14. On July 9, 2003, Appellant closed on the Fort Myers townhouse; he did not
personally attend. Ex. 6. Appellant purchased insurance for the townhouse
through a Florida insurance agency. Ex. 7; Stip. ¶ 31.
15. On July 9, 2003, Appellant signed a formal Florida Declaration of Domicile before
a Minnesota public notary. Ex. 8; Stip. ¶ 34.
16. Appellant remained in Minnesota until July 11, 2003, when he left for vacation.
He returned to Minnesota on July 27, 2003, and remained in Minnesota until
August 8, 2003, when he left on another personal trip. He returned to Minnesota
on August 17, 2003. Stip. ¶ 30.
17. During the off-season and before the start of the 2004-05 regular season,
Appellant’s non-game related travel began and ended in Minnesota, including
when he traveled to Florida. Ex. 40.
18. On August 12, 2003, Appellant hired Dave Goldberg, of Heritage Tax and
Consulting, in Florida to assist him with his Florida taxes. Stip. ¶ 35; Ex. 9.
19. On August 27, 2003, Appellant moved some furniture and personal belongings,
including a car, from Minnesota to Fort Myers. Stip. ¶ 36; Ex. 28. A fair amount of
Appellant’s personal belongings remained in his Afton house, requiring Appellant
to carry personal property insurance coverage of $1.6 million during the Tax
Years and through 2006. Ex. 31; Tr. at 214.
20. Appellant contacted Minnesota officials to request removal of homestead
classification for his Afton house. Stip. ¶¶ 37, 38. Minnesota changed Appellant’s
classification for his Afton house to non-homestead for the 2004 assessment
year. Exs. 10-12.
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21. Appellant received homestead classification for the Fort Myers townhouse in
2004.
22. After purchasing the Fort Myers townhouse in July 2003, Appellant informed the
NBA that Fort Myers was his primary address. Stip. ¶ 15. The NBA Referee
Address for the 2003-04 and the 2004-05 seasons listed Appellant’s Fort Myers
address and the Afton address. Ex. 15.
23. The NBA annually publishes the NBA Officials Media Guide. This guide includes
contact information for NBA communications personnel, short profiles of NBA
referees, and an overview of the work of the referee and the basketball game
rules. The NBA Officials Media Guide for the 2003-04 and 2004-05 seasons
listed Afton, Minnesota as Appellant’s residence. Exs. 18-19.
24. On or about July 15, 2003, Appellant entered into a one year agreement with his
friend and Minnesota licensed realtor, Richard Lesch, to sell the Afton house.
Stip. ¶ 50, Ex. 27.
25. On September 30, 2003, Appellant signed and dated a document titled “New
York State, City of New York, and City of Yonkers Certificate of Nonresidence
and Allocation of Withholding Tax.” Appellant listed the Fort Myers residence as
his “Street Address.” Ex. 17.
26. On December 2, 2003, the NBA general counsel sent Appellant a letter that
informed Appellant that since he actually and primarily traveled out of Minnesota
and not Fort Myers, Florida, in October and November of 2003, his air allowance
would be reduced accordingly. Ex. 22.
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27. On January 14, 2004, the NBA general counsel again informed Appellant that his
air travel allowance would be reduced because of flights not taken from/to Fort
Myers, and instead, made to/from Minnesota. Ex. 23.
28. During the Tax Years, Appellant served as a game referee or official for youth
football games in Minnesota, including Minnesota high school football games for
which he was paid by the Minnesota State High School League. Stip. ¶ 56, Tr. at
140, 214-15.
29. Appellant was a member of the Minnesota Officials Association and/or Capital
City Officials Association (n/k/a St. Paul Officials Association), a Minnesota
organization that provides trained officials for Minnesota football and other
athletic events. Stip. ¶ 72.
30. On August 31, 2004, Appellant purchased a second residential property, as an
investment, just down the street from his Florida townhouse. Stip. ¶ 38.
Appellant purchased insurance for his Florida investment property through a
Florida insurance agency. Ex. 32.
31. During the Tax Years, Appellant owned and registered vehicles in both Florida
and Minnesota.
a. A 2004 Lexus GX-470 registered and maintained in Minnesota. Stip. ¶
63(a).
b. A 1993 Lexus LS-400 registered and maintained in Minnesota until late
2003. Stip. ¶ 63(b).
c. A 1989 Rolls Royce registered and maintained in Minnesota. Stip. ¶ 63(c).
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d. A 1988 Honda Accord registered and maintained in Florida from August
2003 through 2004. Stip. ¶ 63(d).
32. During the Tax Years, Appellant maintained bank accounts in both Florida and
Minnesota. Stip. ¶ 67. Appellant maintained the following bank accounts:
a. A checking account at Bank of America, in Tampa. This account was
opened in 2003. Stip. ¶ 67(a).
b. A checking account at Wells Fargo Bank in Minneapolis. This account was
opened prior to 2003, and was maintained throughout the Tax Years. Stip.
¶ 67(b).
c. A line of credit at U.S. Bancorp in Minneapolis. This account was opened
prior to 2003, and was maintained throughout the Tax Years. Stip. ¶ 67(c).
Appellant conducted significant transactions through this account. Ex. 83.
33. In December 2003, the NBA deposited Appellant’s Salary equally between his
Minnesota and his Florida bank accounts. Ex. 84; Tr. at 218-21.
34. Appellant used the services of Minnesota accountants, a Minnesota dentist, a
Minnesota insurance agent/broker, and a Minnesota real estate agent/broker.
Appellant also used the services of a Florida accountant and a Florida insurance
broker. Stip. ¶ 70.
35. During the Tax Years, Appellant received mail at both his Florida townhouse and
Minnesota house. Appellant continues to use his Afton address; no mail
forwarding address is on file with the Afton post office. Ex. 89.
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36. The percentage of time (not counting hours of employment) that Appellant was
physically present in Minnesota and each jurisdiction other than Minnesota: Ex.
40.
a. In 2003, Appellant was physically present in Minnesota for 118 days
between January 1 and July 1, and 85 days between July 3 and
December 31 for a total of 203 days. Appellant was physically present in
Florida on July 3, 2003, when he purchased his Fort Myers townhouse,
and for an additional 23 days between July 1 and December 31, 2003.
After he purchased the Florida residence he spent 26 days in Florida and
73 days traveling.
b. In 2004, Appellant was physically present for 181 days in Minnesota, 64
days in Florida, and 121 days in other locations.
37. Appellant has two golf memberships, one for each house he owns in the Heritage
Palms community in Fort Myers.
38. Appellant filed for 2003 and 2004 New York Nonresident and Part-year Resident
individual income tax returns. Exs. 34, 37. On these returns, Appellant listed his
Fort Myers residence as his mailing address.
39. In June 2004, Appellant notified the Internal Revenue Service about his Florida
address. Ex. 36; Tr. at 193.
40. In October 2005, Appellant filed a 2003 Minnesota individual income tax return
as a part-year resident after receiving a notice from the Department of Revenue
requesting that return. Appellant did not file a Minnesota individual income tax
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return for tax year 2004, and did not report any Minnesota-source income for
2004. Stip. ¶ 65.
41. Appellant was single during the Tax Years.
42. On March 31, 2009, the Commissioner issued a Notice of Determination on
Appeal affirming the Commissioner’s Audit Report and assessing $97,055.04 in
tax, penalty and interest for the individual income tax periods ending December
31, 2003, and December 31, 2004. Ex. 41.
Conclusions of Law
The Order of the Commissioner of Revenue, dated March 31, 2009, is hereby affirmed.
IT IS SO ORDERED. LET JUDGMENT BE ENTERED ACCORDINGLY. A STAY OF FIFTEEN DAYS IS HEREBY ORDERED. THIS IS A FINAL ORDER.
______________________________________________________________
BY THE COURT, George W. Perez, Chief Judge MINNESOTA TAX COURT
DATED: January 20, 2012
Memorandum
Background
Kenneth B. Mauer (“Appellant”) was born and raised in St. Paul, Minnesota, and
attended high school and college in Minnesota. While in college and thereafter, Appellant
refereed high school and college football, baseball, and basketball games. In 1986,
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Appellant began working for the National Basketball Association (“NBA”) as a professional
basketball referee. Appellant worked as an NBA referee during calendar years 2003 and
2004 (“Tax Years”) and is a member of the National Basketball Referee’s Association.
Appellant continued to referee high school games in Minnesota during the Tax Years.
In 1987, Appellant purchased a six-acre plot in Afton, Minnesota (“Afton house.”)
Appellant hired architect Gregory Hallbeck to design a year-round, large, log-cabin style
residence for the property. Appellant broke ground in May 1990. In September 1991,
Appellant moved into his partially completed house. Over the next fifteen years,
Appellant finished and furnished separate rooms and sections of his Afton house. His
Afton house has 10,600 square feet.
Appellant testified that after his conviction in Minnesota for three counts of tax
evasion and endeavor to obstruct and impede due administration of tax laws, he
decided to move to Florida in July of 2003. On July 1, 2003, Appellant arrived in Fort
Myers, Florida and viewed over 20 properties. On July 3, 2003, he entered into a
purchase agreement for a townhouse in the Heritage Palms development community
(“Fort Myers townhouse.”) The purchase price was approximately $235,038 and the
townhouse consisted of about 2,000 square feet. Appellant also registered to vote in
Florida and applied for a Florida driver license before returning to Minnesota (via
Kentucky) on July 7, 2003.
Appellant contacted Minnesota officials to request removal of homestead
classification for his Afton house. Minnesota changed Appellant’s classification for his
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Afton house to non-homestead for the 2004 assessment year. Appellant received
homestead classification for the Fort Myers townhouse in 2004, but not for 2003.
Appellant moved some furniture and personal belongings, including a car, from
Minnesota to Fort Myers in August 2003. A fair amount of Appellant’s personal
belongings remained in the Afton residence, requiring him to carry personal property
insurance coverage of $1.6 million during the Tax Years and through 2006.
In August 2004, Appellant bought a second townhouse in the same Heritage
Palms development community. Appellant maintains homeowner’s insurance on both
Florida properties from a Florida insurance agent.
After Appellant purchased the Florida townhouse, he spent 85 days in
Minnesota, 26 days in Florida, and 73 days traveling. Appellant spent a total of 203
days in Minnesota in 2003. In 2004, Appellant spent 181 days in Minnesota, 64 days in
Florida, and 121 days in locations other than Minnesota or Florida.
Appellant is responsible for the maintenance and upkeep of his Afton house and
has never tried to rent it. Appellant kept three Minnesota registered vehicles at his Afton
house and one registered vehicle in Florida during the Tax Years.
On or about July 15, 2003, Appellant entered into a one year agreement with his
friend and real estate agent, Richard Lesch, to sell his Afton house. It was not listed for
sale using the Multiple Listing Service (MLS) or any other listing service. His Afton
house was not listed in any luxury homes sales magazine. A lockbox was not used and
there were no “for sale” signs used outside the house. His Afton house was not shown
to any potential buyers, nor were there any open house events. Mr. Lesch testified that
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he produced and distributed flyers for the sale of the Afton house. Mr. Lesch could only
recall distributing flyers at the 3M offices. Mr. Lesch could not produce copies of the
flyers, nor did he have any records of any potential buyers. The asking price was $3.1
million. The only evidence in the record to indicate the Afton house was for sale was
Appellant’s agreement with Mr. Lesch. While Mr. Lesch offered suggestions to list the
house or lower the asking price, Appellant rejected such suggestions. His Afton house
did not sell and Appellant made no further effort to see it sold.
Appellant testified that he would “never go to Florida in July, August and
September, ever.” Appellant has ‘”never wanted to and never will” spend time in Florida
in those months “because of the humidity and the hurricanes. I am not going to, I don’t
have to.”
After buying the Florida townhouse and returning to Minnesota, Appellant left for
vacations in July and August. In August and September 2003, Appellant left from
Minnesota for short trips to Florida, returning to Minnesota to officiate at high school
football games. In September, Appellant left for a vacation in Phoenix, again returning
to Minnesota in time to officiate a football game before leaving for NBA camp.
After he bought the Florida townhouse, Appellant notified the NBA of his new
Florida address. He did so because in that NBA season (2003-04), the NBA based
referee travel “from where you lived.” The referee address list made available at the fall
2003 camp included both Appellant’s Florida and Minnesota addresses. The NBA
continued to use Appellant’s Afton, Minnesota address through the 2004 tax year for tax
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purposes. Appellant used his Florida address for New York. Appellant waited until June
2004 to notify the Internal Revenue Service about his Florida address.
Once the NBA season started, Appellant made his own travel arrangements. For
the first month, October 2003, Appellant’s NBA travel started primarily from Minnesota,
with returns to Minnesota between game assignments. With one exception–a trip at the
end of the month from a Texas game assignment to Florida–Appellant returned to
Minnesota from his October game assignments. Between the start of the NBA season in
October 2003, and December 2003, Appellant was physically present in Minnesota on
36 days, only 1 day (October 23) which was a game assignment. Over those same 3
months he was in Florida for 15 days, 2 days (November 12, December 9) which were
game assignment days.
The NBA expressed concern about Appellant’s travel arrangements during the
2003-04 season because it had paid Appellant’s travel allowances based on his
designated use of Fort Myers as his “home airport.” The NBA had learned that
Appellant was “actually and primarily traveling out of a home based on Minneapolis,
Minnesota – not Fort Myers.” In January 2004, the NBA notified Appellant that it would
not pay a requested air travel allowance for a January 11 flight to Fort Myers because
Appellant was staying in Minnesota “during that period and would not, in fact, travel to
Fort Myers.”
In 2004, Appellant spent 181 days in Minnesota, 64 days in Florida, and 121
days in other locations. Appellant was not in Minnesota in March 2004. He spent no
time in Florida in July and September, 2004. He left from and returned to Minnesota for
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game assignments in January and February 2004. Appellant was in Florida for 2 days in
April 2004 for a game assignment. He traveled to all of his game assignments in April
2004 by leaving from and returning to Minnesota. Similarly, in May 2004, Appellant
arranged his travel between game assignments by leaving from and returning to
Minnesota.
In the off-season before the start of the 2004-05 regular season, Appellant’s non-
game related travel began and ended in Minnesota, including when he traveled to
Florida.
Appellant’s NBA salary was deposited into his Minnesota bank account through
November 2003. He opened a bank account in Fort Myers, Florida, in December 2003,
and thereafter, one-half of his NBA salary was deposited in the Florida bank account,
with the balance continuing to be deposited in his Minnesota account. There was no
other evidence of financial accounts opened or used in Florida other than the one bank
account.
Appellant maintained and used, in 2003-04, longstanding Minnesota professional
relationships. He used the services of a Minnesota realtor (Mr. Lesch) for his real estate
needs in Minnesota and Florida. He has used two different Minnesota accountants. He
used a Minnesota accountant (Mr. Deegan) to advise him on the steps to take to
establish a claim to Florida residency. Mr. Goldberg, the Florida accountant, was
retained after Appellant bought the Florida house to provide information “to him [on] how
he becomes a Florida resident.”
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During the Tax Years, Appellant received mail at both his Florida townhouse and
Minnesota house. Appellant continues to use his Afton address; no mail forwarding
address is on file with the Afton post office.
Standard of Review
Orders of the Commissioner are presumed correct and valid. Minn. Stat. §
271.06, subd. 6 (2008); Jansen v. Commissioner of Revenue, Docket Nos. 7695 et al.
(Minn. Tax Ct. June 2, 2005). The taxpayer bears the burden of demonstrating the
challenged order is incorrect. Wybierala v. Commissioner of Revenue, 587 N.W. 2d
832, 835 (Minn. 1998). “Placing the burden of proof on the taxpayer in civil tax cases is
in accordance with the common law principle of placing the burden on the party who
has particular knowledge of the relevant facts.” F-D Oil, Co. Inc. v. Commissioner of
Revenue, 560 N.W.2d 701, 707 (Minn. 1997) (citations omitted).
Minnesota Statute Section 271.06, subd. 6 provides that the Tax Court shall hear
every appeal de novo. A trial de novo means “a case shall be tried the same as if it had
not been tried before. . .” Stronge & Lightner Co. v. Commissioner of Taxation, 36
N.W.2d 800, 807 (Minn. 1949). In addition, upon a trial de novo, a taxpayer may
introduce evidence. The decision of the court “may or may not be based upon the same
evidence as the commissioner had.” Id.
Issue
The issues are: (1) whether Appellant was a resident of Minnesota for income tax
purposes for the Tax Years under Minn. Stat. § 290.01, subd. 7(a) (2006); and (2) if so,
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does Commissioner’s application of Factor W2 of the Residency Rule violate the
Commerce Clause of the United States Constitution; and further (3) does
Commissioner’s application of Factor W of the Residency Rule violate the Equal
Protection provisions of the United States and Minnesota Constitutions.
For the reasons set forth below, we find that Appellant was a resident of
Minnesota for the Tax Years and that Commissioner’s application of Factor W of the
Residency Rule does not violate the Commerce Clause of the United States
Constitution or the Equal Protection provisions of the United States and Minnesota
Constitutions.
Applicable Authority
In Minnesota, “[a]ll net income of a resident individual is subject to tax.” Minn.
Stat. § 290.014, subd. 1 (2008). The definition of “resident” applicable here is “any
individual domiciled in Minnesota.” Minn. Stat. § 290.01, subd. 7(a) (2008).
“Domicile” is defined in Minnesota Rules 8001.0300, subp. 2:
The term ‘domicile’ means the bodily presence of an individual
person in a place coupled with an intent to make such a place
one's home. The domicile of any person shall be that place in
which that person's habitation is fixed, without any present
2 Factor W: Percentage of time (not counting hours of employment) that the person is physically present in Minnesota and the percentage of time (not counting hours of employment) that the person is physically present in each jurisdiction other than Minnesota.
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intentions of removal therefrom, and to which, whenever absent,
that person intends to return.3
The taxpayer has the burden of proving a new domicile outside of Minnesota.
Sanchez v. Commissioner of Revenue, 770 N.W.2d 523 (2009). No formula exists for
determining a change in one’s domicile. Commissioner of Revenue v. Stamp, 296
N.W.2d 867, 870 (Minn.1980), but once established, a domicile is presumed to continue
until the contrary is shown. Minn. R. 8001.0030, subp. 2. One may, therefore, live in
another state for a period of time without affecting or altering domiciliary status in
Minnesota. Sanchez, 770 N.W.2d at 526; Sandberg v. Commissioner of Revenue, 383
N.W.2d 277, 283 (Minn. 1986). Because the intent to remain in a fixed place is
determinative, mere physical removal is insufficient. The inquiry focuses on intent,
examining actions and words to discover that intent. Sanchez, 770 N.W.2d at 526;
Sandberg, 383 N.W.2d at 283.
Furthermore, an existing domicile is presumed to continue until a new one is
established. Manthey v. Commissioner of Revenue, 468 N.W.2d 548, 550 (Minn.
1991); Page v. Commissioner of Revenue, Docket No. 4011 (Minn. Tax Ct. Mar. 12,
1986). A new domicile is proved by showing both a physical presence and intent to
make a home in the new place. Stamp, 296 N.W.2d at 870.
When one announces an “intent to make a new abode one’s home,
the trier of fact may consider the acts and circumstances of that person
in evaluating the sincerity of the announced intent.” Comm’r of Revenue v. Stamp, 296 N.W.2d 867, 870 (Minn.1980) Intent is evaluated on a case-by-case
3 Minn. R. 8001.0300, subp. 2.
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basis, and a taxpayer’s actions are of more significance than his or her statements. Minn. R. 8001.0300, subp. 2.
Sanchez, 770 N.W.2d at 526.
To aid the trier of fact in determining whether a taxpayer remains domiciled in
Minnesota for tax purposes, the Department of Revenue compiled a list of 26 factors to
consider in determining whether or not a person is domiciled in this state, no single one
of which is determinative. Minn. R. 8001.0300, subp.3 (2007).
Minn. R. 8001.0300, subp.3 (2007). Considerations. The following
items listed will be considered in determining whether or not a
person is domiciled in this state:
A. location of domicile for prior years;
B. where the person votes or is registered to vote, but casting an illegal vote does not establish domicile for income tax purposes;
C. status as a student;
D. classification of employment as temporary or permanent;
E. location of employment;
F. location of newly acquired living quarters whether owned or rented;
G. present status of the former living quarters, i.e., whether it was sold, offered for sale, rented, or available for rent to another;
H. whether homestead status has been requested and/or obtained for property tax purposes on newly purchased living quarters and whether the homestead status of the former living quarters has not been renewed;
I. ownership of other real property;
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J. jurisdiction in which a valid driver's license was issued;
K. jurisdiction from which any professional licenses were issued;
L. location of the person's union membership;
M. jurisdiction from which any motor vehicle license was issued and the actual physical location of the vehicles;
N. whether resident or nonresident fishing or hunting licenses purchased;
O. whether an income tax return has been filed as a resident or nonresident;
P. whether the person has fulfilled the tax obligations required of a resident;
Q. location of any bank accounts, especially the location of the most active checking account;
R. location of other transactions with financial institutions;
S. location of the place of worship at which the person is a member;
T. location of business relationships and the place where business is transacted;
U. location of social, fraternal, or athletic organizations or clubs or in a lodge or country club, in which the person is a member;
V. address where mail is received;
W. percentage of time (not counting hours of employment) that the person is physically present in Minnesota and the percentage of time (not counting hours of employment) that the person is physically present in each jurisdiction other than Minnesota;
X. location of jurisdiction from which unemployment compensation benefits are received;
Y. location of schools at which the person or the person's spouse or children attend, and whether resident or nonresident tuition was charged; and
Z. statements made to an insurance company, concerning the person's residence, and on which the insurance is based.
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Any one of the items listed above will not, by itself, determine domicile.
Minn. R. 8001.0300, subp.3 (2007).
Discussion
We apply the 26 factors to this case; no one factor is determinative. Instead we
consider all of Appellant’s “acts and circumstances” related to Minnesota and Florida.
Location of domicile for prior years
The parties agree that Appellant was domiciled in Minnesota prior to 2003.
Where the person votes or is registered to vote
On July 3, 2003, Appellant registered to vote in Florida. Appellant did not vote in
any jurisdiction in 2003, but in 2004, Appellant voted by absentee ballot on the second
of November.
Classification of employment as temporary or permanent and location of the employment
Appellant is a permanent employee of the National Basketball Association,
(NBA) which is headquartered in New York. As part of his work, he travels frequently
throughout the basketball eight month season.
Location of newly acquired living quarters whether owned or rented, and the ownership of any other real property
Appellant purchased a townhouse in Fort Meyers, Florida in July of 2003. On
August 31, 2004, Appellant purchased another townhouse as an investment property in
the same area.
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Present status of the former living quarters, i.e., whether it was sold, offered for sale, rented, or available for rent to another
Appellant entered into a one year agreement with his friend and real estate
agent, Richard Lesch to sell Appellant’s Afton house. The Afton house was not listed
for sale using the Multiple Listing Service (MLS) or any other listing service. The Afton
house was not listed in any luxury homes sales magazine. A lockbox was not used and
there were no “for sale” signs used outside the house.. The Afton house was not shown
to any potential buyers. Nor were there any open houses held. Mr. Lesch testified that
he produced and distributed flyers advertising the sale of the Afton house. Mr. Lesch
could only recall distributing flyers at the 3M offices. Mr. Lesch could not produce copies
of the flyers nor did he have any records of any potential buyers. The asking price was
$3.1 million. While Mr. Lesch offered suggestions to list the house or lower the asking
price, Appellant rejected such suggestions. The only evidence in the record to indicate
the Afton house was for sale was Appellant’s agreement with Mr. Lesch. The Afton
house did not sell and Appellant made no further effort to see it sold. Although Appellant
may choose any method he wishes to sell his home, we find no credible evidence to
establish that his Afton house listed for sale or of its market availability.
Whether homestead status has been requested and/or obtained for property tax purposes on newly purchased living quarters and whether the homestead status of the former living quarters has not been renewed;
In August of 2003, Appellant requested a homestead classification for his Florida
townhome and his homestead classification for his Afton house was removed for the
2004 assessment year. Appellant obtained homestead classification for the Florida
townhome in 2004.
21
Jurisdiction in which a valid driver's license was issued
On July 3, 2003, Appellant obtained a Florida driver’s license and surrendered
his Minnesota license.
Location of the person's union membership
Appellant is a member of the National Basketball Referee’s Association,
and has been since 1986. It maintains an office in Washington, D.C.
Jurisdiction from which any motor vehicle license was issued and the actual physical location of the vehicles
During the Tax Years, Appellant had four registered vehicles, three in Minnesota,
and one in Florida. Appellant’s 2004 Lexus GX-470, a 1993 Lexus LS-400, and a 1989
Rolls Royce Corniche, were registered and located in Minnesota, while Appellant’s
1988 Honda Accord was registered and located in Florida from August of 2003 through
2004.
Whether an income tax return has been filed as a resident or nonresident
Appellant filed his 2003 Minnesota individual income tax in 2005 as a part-year
resident. He did not file a 2004 Minnesota return, or report any Minnesota income.
Appellant also filed for 2003 and 2004 New York Nonresident and Part-year Resident
individual income tax returns.
Location of any bank accounts, especially the location of the most active checking account
Appellant had two bank accounts in Minnesota and one in Florida. In October
2003, Appellant directed the NBA to deposit his salary equally between his Minnesota
22
and Florida bank accounts. He also maintained a line of credit through which Appellant
conducted significant transactions during the Tax Years account. All of these were
either opened in 2003 or prior, and all were maintained throughout the years at issue.
During the Tax Years Appellant maintained active bank accounts in both Minnesota and
Florida, with more financial transactions occurring in Minnesota.
Location of business relationships and the place where business is transacted
Appellant used the services of Minnesota accountants, a Minnesota dentist,
insurance agent/broker, and real estate agent/broker. Appellant also used the services
of a Florida accountant and a Florida insurance broker.
Location of social, fraternal, or athletic organizations or clubs or in a lodge or country club, in which the person is a member
Appellant was a member of the Minnesota Officials Association and/or Capital
City Officials Association (n/k/a St. Paul Officials Association), a Minnesota organization
that provided trained officials for Minnesota football and other athletic events. In 2004,
Appellant had two memberships in the Heritage Palms Club house, a local golf course
and club house.
Address where mail is received
Appellant received mail at both his Florida townhouse and Minnesota house.
Appellant continued to use his Afton address; no mail forwarding address was on file
with the Afton post office.
Percentage of time (not counting hours of employment) that the person is physically present in Minnesota and the percentage of time (not counting hours
23
of employment) that the person is physically present in each jurisdiction other than Minnesota
In 2003, Appellant was physically present in Minnesota for 118 days between
January 1 and July 3, and 85 days between July 3 and December 31, 2003, for a total
presence in Minnesota of 203 days in 2003. Appellant was physically present in Florida
on July 1, 2003, when he purchased his Fort Myers townhouse and for an additional 23
days between July 1, and December 31, 2003. In 2004, Appellant was physically
present 181 days in Minnesota, 64 days in Florida, and 121 days in other locations
Appellant claims he changed his domicile from Minnesota to Florida in July of
2003 when he purchased his Fort Myers townhouse, obtained homestead classification
for the 2004 assessment year, registered to vote, and acquired a Florida driver’s
license. Further, Appellant argues that he does not have to spend the three plus
months he is on vacation from his NBA job in Florida and that Commissioner only
considered Factor W, the percentage of time spent in Minnesota and the percentage of
time spent in other jurisdictions, in determining that Appellant did not change his
domicile from Minnesota to Florida. Appellant admits that he was domiciled in
Minnesota during the first part of 2003, January through June, thus, we examine
Appellant’s “act and circumstances” from July 2003 through December 2004.
Appellant claims that, on the advice of his accountant and others, he changed his
domicile from Minnesota to Florida in July 2003 when he purchased his Fort Myers
townhouse, obtained homestead classification for the 2004 assessment year, registered
to vote, and acquired a Florida driver’s license. While these are some of the factors to
24
consider in determining domicile, no one factor is determinative. We consider all 26
factors.
Appellant contends that Commissioner only counted the number of days where
Appellant spent time under Factor W in determining Appellant did not change his
domicile from Minnesota to Florida. We do not agree. While we do consider the number
of days Appellant spent in Minnesota and Florida, we also consider Appellant’s pattern
of travel during his non-working days and vacation days, as well as comparing the first
six months of 2003 when Appellant was domiciled in Minnesota with the first six months
of 2004, the following year when Appellant claims he domiciled in Florida. We also
consider where Appellant did his banking, where he maintained his business and family
relationships, where he maintained an abode, and the location of his personal
belongings and cars.
First, Appellant did spend significantly more days in Minnesota then Florida. In
2003, Appellant was physically present in Minnesota for 118 days between January 1
and July 3, and 85 days between July 3 and December 31, 2003, for a total presence in
Minnesota of 203 days in 2003. Appellant was physically present in Florida 23 days
between July 1 and December 31, 2003. In 2004, Appellant was physically present 181
days in Minnesota, 64 days in Florida, and 121 days in other locations. Where Appellant
spent most of his days is critical but we also consider the pattern surrounding
Appellant’s presence, in Minnesota, Florida and elsewhere.
Second, we examine Appellant’s travel pattern during his work season.
Appellant’s work as an NBA referee requires extensive travel during the eight month
25
season (October to May) which limits the time Appellant can spend in any one place.
Yet, under NBA rules, referees were permitted to return home between games, rather
than traveling to the next assigned city. Appellant testified the NBA allowed him to
make his own travel arrangements, and he did. Consequently, Appellant chose where to
fly home between game assignments. Despite informing the NBA that his home airport
was Fort Myers, the record indicates most of Appellant’s travel between games was to
and from Minnesota.
For example, starting the 2003-04 NBA season, in October Appellant flew out of
Minnesota after spending four days there, then returned to Minnesota for five more days
after completing his game assignments. Appellant then flew from Minnesota for one
game assignment, and then returned to Minnesota for seven more days, including a
game assignment in Minnesota, and then Appellant flew to Florida for three days. For
October, Appellant spent 16 days in Minnesota, 3 in days Florida and 12 days in other
locations. The succeeding months have a similar pattern, where Appellant travels
between games more often than not to Minnesota. The record indicates where
Appellant spent his days each month for the remainder of the 2003-04 NBA season.
See the table below. Ex. 40.
03-04 Season Minnesota Florida Other
October 16 3 12
November 12 5 13
December 8 7 16
January 12 7 12
26
February 14 6 9
March 0 11 20
April 20 2 8
May 24 3 4
Totals 106 44 94
With the exception of March, where Appellant spent no time in Minnesota, in all
other months during the NBA season, Appellant’s pattern, more often than not, was to
return to Minnesota between game assignments. This pattern continued during the
2004-05 NBA season. See the table below. Ex. 40.4
A
gain,
Appella
nt was
free to choose where to travel between game assignments yet, more often than not,
Appellant chose to return to Minnesota.
Third, Appellant’s NBA work allowed him vacation for the months of July, August
and September. Appellant testified that he would “never go to Florida in July, August
and September, ever.” Appellant has “never wanted to and never will” spend time in
Florida in those months “because of the humidity and the hurricanes. I am not going to, I
4 We did not consider the remainder of the 2004-05 NBA season because it’s after the Tax Years.
04-05 Season Minnesota Florida Other
October 12 7 12
November 7 8 15
December 8 6 17
Totals 37 21 44
27
don’t have to.” It is, however, Appellant who claimed to change his domicile from
Minnesota to Florida. Yet during July, August and September of 2003, Appellant spent a
total of 11 days in Florida and a total of 49 days in Minnesota, this is the same
timeframe during which Appellant claims he changed his domicile from Minnesota to
Florida. In 2004 during July, August and September, Appellant spent a total of 7 days in
Florida and a total of 61 days in Minnesota. Appellant was free to choose where to
spend his vacation time and the record is clear when Appellant is free to where to spend
his vacation, he chose Minnesota.
Furthermore, when we compare the first six months of 2003 when Appellant was
domiciled in Minnesota with the first six months of 2004, the following year when
Appellant claims he domiciled in Florida, Appellant’s travel patterns are similar. For
example, Appellant spent 118 days in Minnesota and 5 days in Florida during the first
six months of 2003 and 93 days in Minnesota and 36 days in Florida during the first six
months of 2004. In considering all the circumstances involving Factor W, we find
Appellant does not meet Factor W.
We consider where Appellant conducted his active banking and conclude that it
was in Minnesota. Appellant had two bank accounts in Minnesota and one in Florida. In
October 2003, Appellant directed the NBA to split his salary between his Minnesota and
Florida bank accounts. He also maintained a line of credit with another Minnesota bank
from which he conducted significant transactions during the Tax Years.
Next, we consider where he maintained his business and family relationships.
Appellant used the services of Minnesota accountants, a Minnesota dentist, insurance
28
agent/broker, and real estate agent/broker. Appellant also used the services of a Florida
accountant and a Florida insurance broker. As to memberships, Appellant was a
member of the Minnesota Officials Association and/or Capital City Officials Association
(n/k/a St. Paul Officials Association), a Minnesota organization that provided trained
officials for Minnesota football and other athletic events. In 2004, Appellant had two golf
memberships in Florida. Appellant was single with no children during the Tax Years and
family consisted of his parents and siblings, who reside in Minnesota. We find that
more of Appellant’s business and family contacts were in Minnesota.
Further, we consider the Afton house that Appellant maintained in Minnesota,
along with his personal belongings and cars. In 1987, Appellant purchased a six-acre
plot in Afton, Minnesota (“Afton house”) with a commanding a view of the St. Croix
River. Appellant hired an architect to design a year-round, large, log-cabin style
residence for the property. Appellant broke ground in May 1990. In September 1991,
Appellant moved into his partially completed house. Over the next fifteen years,
Appellant finished and furnished separate rooms and sections of his Afton house.
Although Appellant moved some of his personal belongings from Minnesota to Fort
Myers in August 2003, there remained a fair amount of Appellant’s personal belongings
in his Afton house, requiring him to carry personal property insurance coverage of $1.6
million during the Tax Years and through 2006. Also, Appellant had four registered
vehicles, three in Minnesota, and one in Florida. Appellant’s 2004 Lexus GX-470, a
1993 Lexus LS-400, and 1989 Rolls Royce were registered and located in Minnesota,
while Appellant’s 1988 Honda Accord was registered and located in Florida from August
of 2003 through 2004. Thus, Appellant’s luxury home, valuable collectables, and classic
29
car were all kept in Minnesota, not Florida, where Appellant claims he domiciled in
2003.
Finally, in considering all of Appellant’s “act and circumstances,” the destination
of Appellant’s life is in Minnesota. Appellant is a highly mobile person with many
choices as to when and where to travel and more often than not, Appellant chooses to
travel to and from Minnesota. As the Minnesota Supreme Court reasoned in Luther v.
Commissioner of Revenue, when a person avails themselves of the many services,
benefits, and protections afforded by Minnesota, in return, Minnesota requires that
person to contribute to the costs associated with providing those services, benefits, and
protections by taxing that person as a resident of Minnesota. We find that Appellant did
not domicile in Florida for the Tax Years. Luther v. Commissioner of Revenue, 588
N.W.2d 502, 509 (Minn.), cert. denied, 528 U.S. 821 (1999). Therefore, we find
Appellant was domiciled in Minnesota for the Tax Years.
Constitutional Claims
Appellant raises two constitutional claims. First, that Commissioner’s application
of Factor W of the Residency Rule violates the Commerce Clause of the United States
Constitution, and second, that Commissioner’s application of Factor W of the Residency
Rule violates the Equal Protection provisions of the United States Constitution and the
Minnesota Constitution.5
First, Appellant claims Commissioner’s application of Factor W of the Residency
Rule violates the Commerce Clause of the United States Constitution. We do not agree.
5 The Erie Shuffle was completed on November 10, 2009, pursuant to Erie Mining Co. v. Commissioner of Revenue, 343 N.W.2d 261 (Minn. 1984).
30
The Minnesota Supreme Court recently held that “Because states have wide latitude in
establishing their taxation schemes, and statutes will be declared unconstitutional only
when absolutely necessary, [the taxpayer] bear[s] a heavy burden at each step of the
[Commerce Clause] inquiry.” Stelzner v. Commissioner of Revenue, 621 N.W.2d 736,
740 (Minn. 2001). Appellant has not met his heavy burden. Appellant focuses only on
his work travel when, in contrast, the totality of his “acts and circumstances” are
considered. In addition, the distinction on which Appellant rests his constitutional
claims–his “mandated” work travel–is controlled almost solely by Appellant. In this
circumstance, we concluded that the “minimal amount of time” spent in Florida “tended
to indicate that the Florida home was a vacation home rather than a primary home.”
There is no Commerce Clause violation in finding Appellant did not change his
Minnesota domicile, given that he arranges his travel to suit his personal preferences.
The premise of Appellant’s Commerce Clause claim is that the Commissioner’s
residency rule, in particular Factor W, makes it more difficult for him to establish
domicile in another state because he travels for work. He alleges that applying Factor W
without regard to mandatory, work-related travel, discriminates against him because it
deters him from actively pursuing his livelihood through travel. Appellant’s claim fails at
the initial inquiry, which considers whether application of Minnesota residency rules,
including Factor W, implicates the Commerce Clause. Stelzner, 621 N.W.2d at 740
(noting two-step inquiry for Commerce Clause challenges, beginning with whether
clause implicated). Appellant argues that his travel across states to work implicates the
Commerce Clause. The United States Supreme Court has recognized that
transportation of persons across state lines can implicate the Commerce Clause.
31
Camps Newfound/Owatonna v. Town of Harrison, Maine, 520 U.S. 564, 573 (1997).
However, this comment was made in the context of commercial activities that subjected
the taxpayer to the state’s tax. See Id. (noting that taxpayer’s camping services are
“unquestionably engaged in commerce, not only as a purchaser but also a provider of
goods and services”) (citations omitted); Chapman v. Commissioner of Revenue, 651
N.W.2d 825, 833 (Minn. 2002) (recognizing Minnesota’s AMT provisions implicate
commerce for purposes of individual taxpayer’s challenge because “paying and making
donations to charitable organizations across state lines” to organizations that are a
“substantial sector of the economy” implicates Commerce Clause).
In contrast, the Commerce Clause is not implicated when the taxpayer simply
seeks protection from a state tax because the taxpayer is deemed to be a resident of
the taxing state. General Motors Corp. v. Tracy, 529 U.S. 278 (1997) (“The dormant
Commerce Clause protects markets and participants in markets, not taxpayers as
such.”). Consequently, the Minnesota Supreme Court has twice held the Commerce
Clause is not implicated by this state’s application of residency rules to taxpayers
notwithstanding their interstate travel.
In Luther v. Commissioner of Revenue, the taxpayer challenged the
Commissioner’s application of the non-domiciliary residency rules because it impacted
her “right under the Commerce Clause ton interstate travel.” 588 N.W.2d 502, 511
(Minn. 1999). The Court rejected this argument:
Here, it is not Luther's movement across state lines that is being
taxed. Instead, Luther was required to pay Minnesota income tax
on her net worldwide income because, through her substantial
32
contacts with Minnesota, she availed herself of the many
services, benefits, and protections provided to her by Minnesota.
The requirement that she pay Minnesota income tax was triggered
by conduct that took place wholly within Minnesota and that did not substantially affect interstate commerce.6
Appellant deems Luther inapposite because the Court addressed Minnesota’s non-
domiciliary rules. But the Court’s reasoning applies equally to Appellant’s domiciliary
residency status because he also had “substantial contacts” with Minnesota and availed
himself of the “many services, benefits, and protections” the state provided. In short, his
domiciliary status was “triggered by” his Minnesota presence and contacts, not his
interstate travel.
In Stelzner, the taxpayers claimed a Nevada residence, but were present in
Minnesota more than one-half the year. 621 N.W.2d. at 738. They conducted their
business (foreign currency exchange services for casinos) through interstate travel and
transactions that “occurred primarily outside of Minnesota.” The taxpayers thus argued
that Minnesota’s tax on their income “burdens their ability to continue as major
participants in a competitive interstate market.” Id. at 741. The Court rejected this
argument because finding the taxpayers were Minnesota residents, and thus subject to
Minnesota’s income tax, resulted in no “more than an incidental impact on their cost of
doing business in interstate commerce.” Id.; see also 740-41 (noting Commerce Clause
requires a “substantial impact on an identifiable interstate economic activity or market,”
6 Id.
33
and incidental impact will not satisfy taxpayers’ burden to show unconstitutionality
beyond a reasonable doubt).
Luther and Stelzner dispose of Appellant’s argument that the Commerce Clause
is implicated here. The trial record establishes conclusively that Appellant alone
decided how he would arrange his travel–when he would return to Florida and when he
would continue his previous pattern of leaving from and returning to Minnesota. Any
difficulty that Appellant perceives in his ability to “free [himself] of Minnesota’s taxing
jurisdiction,” is wholly of his own making. Appellant’s personal travel decisions and
preferences do not implicate the Commerce Clause. Had Appellant intended to act upon
his claimed Florida domicile, presumably he would have traveled to Florida on any one
of the many days he had off between game assignments. Instead, Appellant exercised
the flexibility permitted to him by the NBA and returned to Minnesota even in the months
when he declared he “enjoyed” Florida, for example, January, February, and April-July.
Further, the Commissioner’s residency rules do not discriminate against
interstate commerce. See Mayo Collaborative Services, Inc. v. Commissioner of
Revenue, 698 N.W.2d 408, 411 n.2 (Minn. 2005) (listing 4-part test for Commerce
Clause challenge, with discrimination as third factor to consider) cert. denied, 546 U.S.
1171 (2006). Appellant controls the extent to which his travel is impacted by
Minnesota’s residency rules. Although Appellant informed the NBA that Fort Myers was
his home airport, the effect of that notice was to change the calculation of his
reimbursable travel expenses. His airport notice had no effect on his travel patterns
other than introducing additional trips to Florida on the few days when Appellant did not
choose to return to Minnesota. For example, Appellant’s travel pattern is similar from
34
January through July 2003, when Appellant was domiciled in Minnesota, to January
through July 2004, when Appellant claims to be domiciled in Florida.
The Commerce Clause is not intended to protect “state residents from their own
state taxes,” particularly when the taxpayer has the ability to effect a change in how the
state tax rules are applied. See Goldberg v. Sweet, 488 U.S. 252 (1989); see also,
Hillstrom v. Commissioner of Revenue, 270 N.W.2d 265, 269 (Minn. 1978) (rejecting
Commerce Clause challenge and noting, “what is involved here is not a tax on the right
to travel, but a tax on income realized while traveling.”). Thus, we find that
Commissioner’s application of Factor W of the Residency Rule does not violate the
Commerce Clause of the United States Constitution
Second, Appellant claims that the Commissioner’s application of Factor W of the
Residency Rule violates the Equal Protection provisions of the United States and
Minnesota Constitutions. Specifically, Appellant challenges the Commissioner’s
application of the residency rules to him, arguing that those rules distinguish between
his work travel outside of Florida in the winter, and “other similarly situated persons who
need not travel outside of Florida during the winter.” This claimed distinction, Appellant
argues, makes it more difficult for him to establish a domicile in another state. The
Commissioner’s residency rules create no impermissible classification, thus Appellant’s
Equal Protection claim fails as a matter of law.
Appellant has offered a comparison with a hypothetical taxpayer, and intends to
rely on the Tschida Affidavit as a non-hypothetical example. Mr. Tschida, an umpire for
Major League Baseball, travels extensively for game assignments, but the comparison
35
to Appellant’s work-related travel is inapt. For example, Mr. Tschida’s work travel can
extend over almost twelve months, e.g., from late January through mid-November. Mr.
Tschida’s travel is also governed by an agreement between his union and Major League
Baseball MLB. Mr. Tschida “rarely, if ever” has two or three days off between game
assignments (as does Appellant). In short, there is simply no reasonable way to
compare any alleged discrimination between Appellant, who arranges his travel to suit
his personal preferences, and Mr. Tschida, whose travel extends over a longer period of
time and who does not have the apparent flexibility in travel that Appellant enjoys. See
Dandridge v. Williams, 397 U.S. 471 (1970) (rejecting constitutional challenge to
maximum dollar limit on state benefits and noting “a State does not violate Equal
Protection Clause merely because the classifications made by its laws are imperfect;”
so long as there is some ‘reasonable basis,’ there is no discrimination “simply because
the classification ‘is not made with mathematical nicety or because in practice it results
in some inequality.’”).
Even assuming there was a valid comparison to use; Appellant’s claimed right to
travel is not impacted. The presumed constitutionality is overcome only when
“absolutely necessary” and only if Appellant demonstrates beyond a reasonable doubt
that an impermissible classification is made. State v. Benniefield, 678 N.W.2d 42, 48
(Minn. 2004).
Appellant argues that an intermediate level of scrutiny should govern his Equal
Protection claim. The cases on which he relies for that level of scrutiny do not apply to
the tax rules used to determine residency. For example, in Davis v. Davis, the
Minnesota Supreme Court recognized that “not every penalty in interstate travel triggers
36
the compelling-state-interest test.” 210 N.W.2d 221, 225 (Minn. 1973). In Davis, at
issue was a durational residency requirement that affected a party’s right to file a
dissolution action in Minnesota. When the party challenged that requirement, the Court
compared its effect on the right to travel, to residency restrictions involved in challenges
to receipt of state aid or welfare benefits. The Court concluded the rights affected by
residency requirement for welfare benefits versus a residency requirement for access to
state courts, are significantly different: the welfare benefits cases “involved the
individual’s subsistence and survival,” while the latter did not affect “the ultimate right to
file for divorce.” Id. at 225. Thus, the Davis court applied a rational basis standard of
review, and upheld the constitutionality of the challenged residency requirement. Id. at
226 (holding “statute does not deny equal protection if it is rationally related to a
legitimate governmental objective”).
The same rational basis scrutiny applies here. Appellant’s ability to establish that
he changed his domicile was not affected by the Commissioner’s consideration of his
time in Minnesota versus Florida. This is because Appellant controlled his travel. His
work-related travel is mandatory only in the sense of his obligation to show up for work–
that is, his contractual obligation to be present at the game site at the assigned time.
Under his 2003-04 contract with the NBA, there was no express deadline by which he
had to present for a game; under the 2004-05 contract (covering September-December
2004 of the Tax Years), he had to arrive in the game city slightly less than 24 hours
before the game. Outside of a game day obligation, Appellant’s ability to be in
Minnesota, or in Florida, is constrained only by his personal preferences.
37
Further, under either a rational basis test or an intermediate test, there is no
impairment of Appellant’s right to travel. This case is not, as Appellant argues, the
“mirror image” of cases involving challenges to residency requirements for state
benefits. At “stake, in [those] case[s] are payments for the basic necessities of life,” for
which “half a year is a long time to wait.” Mitchell v. Steffen, 504 N.W.2d 198, 202
(Minn. 1993). Appellant is not faced with foregoing the basic necessities of life, he
simply objects to any interference, even from state taxing authorities, with his decisions
on how he will arrange his travel. As he stated, he does not “want to be limited by what
[the NBA’s] travel arrangements” are for him, so he makes his own travel arrangements,
which “gives him the flexibility to fly when” he wants as long as he is present for game
assignments. Thus, we find that the Commissioner’s application of Factor W of the
Residency Rule does not violate the Equal Protection provisions of the United States
and Minnesota Constitutions.
Conclusion
For all of the foregoing, we affirm the Commissioner’s Order dated March 31,
2009.
G. W. P.
38
39