Cunningham v. TestaCunningham v. Testa
Lead Opinion
{¶ 1} The issue in this case is whether a taxpayer’s explicit claim under
Background
{¶ 2} Appellee Kent Cunningham filed an “Affidavit of Non-Ohio Domicile” for tax year 2008 in March 2009, using the form prescribed by the tax commissioner. Cunningham filled in his name, social security number, and Cincinnati address. Cunningham declared under penalties of perjury that he “was not domiciled in Ohio at any time during taxable year 2008” and that he was domiciled in Tennessee. Cunningham did not identify his out-of-state abode. He stated that he would not be filing an Ohio individual income tax return for 2008 and affirmed that he “had fewer than 183 contact periods in Ohio during the taxable year.” Under former
{¶ 3} Neither of the Cunninghams filed an Ohio income tax return for 2008. They jointly filed a federal tax return using Form 1040, which listed their Cincinnati address as their home address.
{¶ 5} The Cunninghams filed a petition for reassessment. After additional correspondence, the tax commissioner issued his final determination, in which he discussed
{¶ 6} Thereafter, the commissioner considered the Affidavit of Non-Ohio Domicile, which was filed after the homestead-exemption application, and found that “[t]his sworn statement contradicts the petitioners’ prior sworn statement that they occupied, as their principal place of residence, their home in Cincinnati, and that the Tennessee home was either a second home or a vacation home.” Because of “contradictory statements made by the petitioners, the Tax Commissioner necessarily concludes that the petitioners’ Affidavit of Non-Ohio Domicile contains a false statement as described in
{¶ 7} The commissioner’s determination stated that “the petitioners provided no evidence of their contact periods with Ohio, other than as sworn on the statement.” As a consequence of these findings, the commissioner concluded that “the petitioners are not irrebuttably presumed under
{¶ 8} The Cunninghams appealed to the BTA. The BTA found that Kent had filed the domicile affidavit under
Analysis
Income tax and domicile
{¶ 9} Ohio’s income tax is levied “on every individual * * * residing in or earning or receiving income in this state.”
{¶ 10} Residents generally pay tax on all of their Ohio adjusted gross income,
{¶ 11} During the many years that the Cunninghams earned their income in Ohio from business and employment activities before their retirement, that income would have been taxable by Ohio regardless of their state of domicile. But by 2008 both had retired, and their income no longer consisted of wages or business income but was derived from sources such as pensions, interest, dividends, and IRA distributions, the allocation of which depends solely on where they are domiciled. See
Common-law domicile
{¶ 12} We recently stated that “domicile is ‘the technically pre-eminent headquarters that every person is compelled to have in order that certain rights and duties that have been attached to it by the law may be determined.’ ” Schill v. Cincinnati Ins. Co.,
{¶ 13} We have held that “for a change in domicile to be established, the person must have a physical presence in the new residence and intend to stay there.” Schill, ¶ 26, quoting Williamson at 624. Moreover, “ ‘[t]he essential fact that raises a change of abode to a change of domicile is the absence of any intention to live elsewhere * * *.’” Id., quoting Williamson at 624. See E. Cleveland v. Landingham,
{¶ 14} The Cunninghams state in their brief that they were both “common- law domiciliarles of Ohio during the 2008 tax year.” This concession is supported by various facts, including that Kent and Sue were both born, raised, and educated in Ohio; that they were married in Ohio; that they have lived in Ohio throughout their entire marriage up to the time of the BTA hearing in 2012 (except for several years in the 1970s); that their mail was generally delivered to their Cincinnati home and not forwarded to the Tennessee address; that they have lived in the Cincinnati area and raised a family there in three houses, including the home that they currently own in Indian Hill; and that they held Ohio driver’s
The “bright-line statute,”
{¶ 15} In 1993, the General Assembly enacted
{¶ 16} Pursuant to
{¶ 17} In 2006, the legislature amended the bright-line statute, creating a presumption of non-Ohio domicile for a taxpayer with 182 or fewer contact periods in Ohio. 151 Ohio Laws, Part V, 9463 (amending
{¶ 18} It is well settled that “ ‘the general assembly will not be presumed to have intended to abrogate a settled rule of the common law unless the language used in a statute clearly supports such intention.’ ” Mandelbaum v. Mandelbaum,
{¶ 20} At the time pertinent to this appeal,
[A]n individual who during a taxable year has no more than one hundred eight-two contact periods in this state, which need not be consecutive, and who during the entire taxable year has at least one abode outside this state, is presumed to be not domiciled in this state during the taxable year if [within a prescribed time], the individual files with the tax commissioner, on the form prescribed by the commissioner, a statement from the individual verifying that the individual was not domiciled in this state under this division during the taxable year.
The presumption that the individual was not domiciled in this state is irrebuttable unless the individual fails to timely file the statement as required or makes a false statement. If the individual fails to file the statement as required or makes a false statement, the individual is presumed under division (C) of this section to have been domiciled in this state the entire taxable year.
151 Ohio Laws, Part V, 9463.
{¶ 21} The Cunninghams argue that
{¶ 22} The statute is not as narrow as the Cunninghams claim. A statement verifying non-Ohio domicile can be false if it is not supported by the common law
{¶ 23}
is presumed to be not domiciled in this state during the taxable year if, on or before the fifteenth day of the fourth month following the close of the taxable year [i.e., April 15 of the following year for calendar-year taxpayers], the individual files with the tax commissioner, on the form prescribed by the commissioner, a statement from the individual verifying that the individual was not domiciled in this state under this division during the taxable year.
{¶ 24} There is no factual dispute concerning the two crucial elements under
{¶ 25} First, division (B) distinguishes verification of domicile from verification of contact periods and abode; it does not conflate them. The domicile statement itself asks for a declaration not only of contact periods and an abode outside Ohio. It also asks, on a separate line, for a declaration that the individual was not domiciled in Ohio during the tax year in question and for an identification of where the individual claims to have been domiciled during that year. It follows that verifying domicile is not the same as verifying the two statutory criteria.
{¶ 26} Second, division (B)(1) states that the taxpayer statement must verify two things: (1) that “[d]uring the entire taxable year, the individual was not domiciled in this state” and (2) that “[d]uring the entire taxable year, the individual had at least one abode outside this state [whose location must be identified].”
False statement under
{¶ 27} The tax commissioner found that Kent Cunningham’s verification of non-Ohio domicile was false in light of a contradictory statement, which had been made under penalties of perjury and with the purpose of obtaining the property-tax benefit of the homestead exemption for his Cincinnati home. The BTA disagreed, concluding, as the Cunninghams argue, that the statute permits a finding of falsity only for a false statement pertaining to contact periods and abode. As discussed above, we disagree. We hold that the tax commissioner stated a substantial basis for the false-statement finding: the contradictory application for the homestead exemption.
{¶ 28} The homestead-exemption application was dated January 24, 2008. It claimed the tax break both for the current year 2008 and as a belated application for 2007. It identified Sue Cunningham as the applicant. She identified herself as a “disabled person” as the basis for claiming the exemption. The application also identified Kent as the spouse of the applicant, the Cincinnati house as the home address, and the Tennessee home as “a second or vacation home.” Both Sue and Kent signed the application, asserting, under penalty of perjury: (1) “I occupied this property as my principal place of residence on Jan. 1 of the year(s) for which I am requesting the homestead exemption”; (2) “I currently occupy this property as my principal place of residence”; (3) “I have examined this application, and to the best of my knowledge and belief, this application is true, correct and complete.”
{¶29} As the tax commissioner found, the claim of homestead exemption contradicted the income tax affidavit in two respects: it asserted that the Cincinnati house was the principal place of residence and that the Tennessee house was a second or vacation home. For purposes of the homestead exemption,
{¶ 30} We conclude that there is a substantial factual basis for rejecting the claim of non-Ohio domicile as a false statement. (Our holding in this case should not be construed as impugning the motives of the taxpayer. The Cunninghams appear to have acted on the basis of a good-faith belief that the statements in the two affidavits were not contradictory.)
{¶ 31} The Cunninghams argue that the irrebuttable presumption provided by
{¶ 32} As noted,
Conclusion
{¶ 33} The BTA erred by reversing the tax commissioner’s denial of the irrebuttable presumption created under
Decision reversed.
Dissenting Opinion
dissenting.
{¶ 34} Kent Cunningham demonstrated that he performed the actions
{¶ 35} The key issue of statutory construction lies in whether the tax commissioner may make a finding that the taxpayer’s verification of out-of-state domicile is false. The majority holds that the commissioner may do so based on other information in his possession. But this interpretation contradicts the irrebuttability of the presumption that arises once a taxpayer has satisfied the three criteria, as Cunningham has done here. A contrary state of the facts can defeat a rebuttable presumption, but not an irrebuttable one. See Black’s Law Dictionary 957, 1377 (10th Ed.2014) (recognizing “irrebuttable presumption” as synonymous with “conclusive presumption,” which is “[a] presumption that cannot be overcome by any additional evidence or argument because it is accepted as irrefutable proof that establishes a fact beyond dispute”).
{¶ 36} I agree with the conclusion of the Board of Tax Appeals (“BTA”) that
{¶ 37} Whether a taxpayer is domiciled in Ohio is a finding of ultimate fact that includes a legal conclusion predicated on the underlying basic facts. In my view, the purpose of
{¶ 38} In Davis v. Limbach, BTA No. 89-C-267,
{¶ 39} Also unpersuasive is the majority’s acquiescence in the view that the Cunninghams’ homestead-exemption application contradicts the verification of non-Ohio domicile under
{¶ 40} The General Assembly had the authority to, and in my view did, decide to limit the reach of the state income tax as to persons who might otherwise qualify as residents under the common law. Doing so does not impair the General Assembly’s authority to confer a real estate tax benefit based on a broader common-law definition of domicile. And if the law does indeed do what I have described, there is no reason why the taxpayer cannot claim the benefit of both tax breaks.
{¶ 41} For these reasons, I would affirm the decision of the BTA and remand to the tax commissioner for a determination of the amount of Cunningham’s income, which must be removed from the tax assessment. Because the majority concludes otherwise, I dissent.