Alleging Domicile on “God’s Earth” Despite Residence in a Municipality Will Not Excuse Requirement to Pay Municipal Taxes

(Per Rob Rutkowski) Credit unions do care where their members are domiciled for BSA purposes, as well as when they are presented with administration documents associated with an estate.

By Amanda R. Yurechko, Esq.

The Twelfth District Court of Appeals recently considered the issue of domicile versus residence in Middletown v. Myers, 193 Ohio App.3d 632, 2011-Ohio-2470.  The Defendant alleged that his domicile was “God’s earth” although he acknowledged that for the tax years in question, he had in fact, as the Court noted, “ate, breathed and slept at his Middletown residence”.  He also unquestionably received the city’s water service at that address.  While a somewhat absurd example, the Court did perform a thorough review of the arguments of residence versus domicile to reach its conclusion.

Residence, which denotes the place in which one physically lives for a period of time, is embodied in the definition of domicile. Domicile has traditionally been defined as a “residence in fact, combined with the intention of making the place of residence one’s home for an indefinite period.” Cleveland v. Surella (1989), 61 Ohio App.3d 302.  The primary distinction between the two is that while a person can have only one domicile at any given time, he or she may have more than one residence. Saalfeld v. Saalfeld (1949), 86 Ohio App. 225. Moreover, once a domicile has been established, it is presumed to continue until it is shown by a preponderance of the evidence that is has been abandoned in favor of a new one. Cleveland v. Surella (1989), 61 Ohio App.3d 302; Saalfeld, supra, 226.

The Ohio Revised Code defines someone as having a “domicile” in Ohio if they 1) have only one home, 2) it is located within Ohio, and 3) they live in it year-round. If a person owns other homes in other states, or spends significant time living out of the state, disclosure of this information is required for tax purposes, and it is the burden of the tax filer to prove they lived in the Ohio home for the required amount of time to establish residency. If a person spent her entire year outside of the state of Ohio, she did not have a domicile in Ohio that year. If a person spent some of his time domiciled in Ohio and some time domiciled elsewhere, the ORC provides a formula to measure “contacts” within the state of Ohio to determine if residency standards are met. Domicile, for Ohio income tax purposes, is defined in House Bill 73, Section 24, I (1), and the ORC, Section 5747.24.

In order to impose local taxes on a person who lives and works outside a municipality, but who maintains what appears to be a permanent residence inside the same municipality, be prepared to demonstrate evidence that the person intends to return to the municipality. For example, where a person has moved outside the municipality during a separation, for school or for a temporary job, evidence of their intent to return may include their remaining family residing at the permanent residence, his or her children continuing to attend a local school, utility bills continuing in his or her name at the permanent address, as well as maintaining the driver’s license and voter registration at that permanent address.

Additionally, review how often the person returns to the permanent residence and stays at that location.  While there is no bright line test to determine whether a person is domiciled within a municipality, so as to be considered a resident for tax purposes, all of the above factors, when viewed together, can create a situation where a person who has taken temporary residence outside the municipality, and earns income elsewhere, may be liable to the municipality for local taxes.

In Middletown v. Myers, the Defendant’s assertion that while his residence was in Middletown, he was not domiciled there was rejected in light of clear evidence to the contrary.  Likely, the issue you will face with residents of your community will not be so clear.  Be prepared to demonstrate evidence that the person intends to return to the municipality. For example, where a person has moved outside the municipality during a separation, for school or for a temporary job, evidence of their intent to return may include their remaining family residing at the permanent residence, his or her children continuing to attend a local school, utility bills continuing in his or her name at the permanent address, as well as maintaining the driver’s license and voter registration at that permanent address.

Additionally, review how often the person returns to the permanent residence and stays at that location.  While there is no bright line test to determine whether a person is domiciled within a municipality, so as to be considered a resident for tax purposes, all of the above factors, when viewed together, can create a situation where a person who has taken temporary residence outside the municipality, and earns income elsewhere, may be liable to the municipality for local taxes.

If you have any questions on this matter, please contact Ms. Amanda Yurechko, Esq. Amanda is an associate in Consumer & Commercial Collections of Weltman, Weinberg & Reis Co., LPA located in the Cleveland office. She can be reached at 216.685.1060 and ayurechko@weltman.com.

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