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STATE OF MINNESOTA IN SUPREME COURT A08-2281

Tax Court

Meyer, J. Dissenting, Page, J. Took no part, Dietzen, J.

Geronimo Sanchez, et al., Relators, vs. Commissioner of Revenue, Respondent. ________________________ Paul A. Banker, Jeffery J. McNaught, Jessica L. Meyer, Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota, for relators. Lori Swanson, Attorney General, Rita Coyle DeMeules, Assistant Attorney General, St. Paul, Minnesota, for respondent. ________________________ SYLLABUS Tax courts finding that taxpayers lacked the intent to effect a change of domicile is supported by the record. Affirmed. Considered and decided by the court without oral argument. Filed: August 20, 2009 Office of Appellate Courts

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OPINION MEYER, Justice. Relators, Geronimo and Kathleen Sanchez, appeal from a Minnesota Tax Court decision finding they were domiciled in Minnesota during the entire 2004 tax year and, thus, responsible for Minnesota income tax during that period. We affirm. The Sanchezes became Minnesota residents in October 1998 when the United States Army transferred Geronimo Sanchez from his former station overseas. In

November 1998, they purchased a home in Apple Valley, Minnesota. Before coming to Minnesota, the Sanchezes had no connection to Minnesota. Geronimo Sanchez retired in 2000, and the couple began to make improvements to their home in Apple Valley in anticipation of selling it. The couple also purchased a motor home and began traveling extensively, spending winters in Texas. In the spring of 2003, they listed their home for sale, but took it off the market 6 months later because it did not sell. They again listed their home in the spring of 2004, and it sold. The closing date was set for June 18, 2004. In May 2004, the Sanchezes traveled to South Dakota. The record is not clear as to how many days the Sanchezes actually spent in South Dakota, because they did not keep records, but in their brief the Sanchezes stated that they "took several trips to South Dakota ." The tax court found, based on the Sanchezes estimate, that the Sanchezes were present in South Dakota for approximately 10 days during 2004 , and that all of their time spent in South Dakota preceded the June 18, 2004, closing on their home in Apple Valley.

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The Sanchezes affidavit submitted to the tax court stated that during their visits to South Dakota, they retained a mailing address from My Home Address, Inc.,1 a company in Emery, South Dakota. Then, using their South Dakota address, the Sanchezes applied for and received South Dakota drivers licenses, opened a checking account, obtained credit cards, registered their vehicles, and registered to vote. They also notified their insurance providers of their new address. The Sanchezes did not rent or purchase

property in South Dakota, as they planned to travel and wanted to avoid the expenses and obligations of home ownership. Their affidavit states that they intended to return to South Dakota to rent or buy a home. After their visits to South Dakota, the Sanchezes returned to Minnesota and stayed here until closing on the sale of their home on June 18, 2004. They then moved from Minnesota and have not resided in the state since that date. For the remainder of 2004, the Sanchezes traveled in their motor home to 13 states, the District of Columbia, and Canada, and did not return to either Minnesota or South Dakota. They did not seek medical services in 2004, but they received dental services in California. The Sanchezes filed their Minnesota 2004 tax return as "part-year residents," believing that they were

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My Home Address provides a home base and home address arrangement for traveling individuals, and acts as a mail forwarding service. The company provides information and assistance with registering to vote, obtaining absentee ballots, registering vehicles, registering boats, obtaining drivers licenses, and obtaining licenses to hunt and fish in South Dakota. My Home Address also provides and coordinates referrals to connect new residents to professionals in areas such as banking, legal services, medical and dental services, insurance, and accounting.

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Minnesota residents until June 18, 2004, and South Dakota residents after that date.2 They also claimed Minnesota homestead status on their property tax filings through June 18, 2004. The Commissioner of Revenue (the Commissioner) audited the Sanchezes 2004 tax return. Based on the legal presumption that the Sanchezes domicile continued to be Minnesota in the absence of proof establishing domicile in another state, the Commissioner treated the couple as full-year residents of Minnesota and assessed additional income tax, penalties, and interest for 2004. The Commissioner denied the Sanchezes administrative appeal, and the Sanchezes appealed to the Minnesota Tax Court. Both parties filed cross-motions for summary judgment and, after a hearing, the tax court granted the Commissioners motion. Applying the standards established in the administrative rules of the Department of Revenue for determination of domicile, the tax court concluded that the Sanchezes had not established domicile in South Dakota and were responsible for income taxes in Minnesota for the full year. This appeal followed. We review an order granting summary judgment to determine if the lower court erred in applying the law and whether any material facts are disputed. Chapman v. Comm'r of Revenue, 651 N.W.2d 825, 830 (Minn. 2002). The tax courts conclusions of law and interpretation of statutes are reviewed de novo. Id. Decisions that involve questions of fact are reviewed "to determine whether there is sufficient evidence to support the decision." Miller's Estate v. Comm'r of Taxation, 240 Minn. 18, 20, 59
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South Dakota has no income tax, so no partial-year filing was necessary in that

state.

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N.W.2d 925, 926 (1953). Whether departure from an established domicile and residence in a new state effects a change in domicile is "ordinarily a question of fact, depending . . . upon the purpose and intent of the change." Davidner v. Davidner, 304 Minn. 491, 494, 232 N.W.2d 5, 7 (1975). The issue on appeal is whether the tax court correctly found that the Sanchezes actions failed to demonstrate either physical presence, or an intent to establish domicile, in South Dakota in 2004. In Minnesota, "[a]ll net income of a resident individual is subject to tax." Minn. Stat.

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