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IN THE OREGON TAX COURT MAGISTRATE DIVISION Income Tax MARTIN J. CARR and HOLLIE L. CARR, Plaintiffs, v. DEPARTMENT OF REVENUE, State of Oregon, Defendant. ) ) ) ) ) ) ) ) ) )

TC-MD 040979A

DECISION

Plaintiffs have appealed Defendant's assessment of personal income taxes for the 2001, 2002, and 2003 tax years. Plaintiffs represented themselves in their appeal. Defendant appeared through Ron Graham, of its staff. The issue in this appeal is whether Plaintiffs have sufficient nexus to the State of Oregon, despite Senior Chief Carr's status in this state as a serviceperson under active duty, to make them responsible for paying personal income taxes on their income. I. STATEMENT OF FACTS Plaintiffs are Senior Chief Martin Carr and his spouse, Hollie. Senior Chief Carr enlisted into the United States Navy on January 23, 1980, listing 2260 E. Desert Inn Road, Las Vegas, Nevada as his home of record. Senior Chief Carr has maintained that same address as his home of record for all 25 years of his military service. In February 1993 Senior Chief Carr was ordered to duty in Portland, Oregon. He had not lived in Oregon prior to that time. He completed his tour at Portland in April 1996 and was transferred to Los Angeles, California. In 1999 Senior Chief Carr was again ordered to Portland. He has subsequently requested reassignment to Oregon, and has been continuously present in this state since 1999. DECISION TC-MD 040979A 1

Plaintiffs' immediate family lives in Oregon. Plaintiffs purchased a home in Oregon in 2001. Their vehicles are registered in Oregon. Senior Chief Carr is not registered to vote in Oregon. He does not have an Oregon driver's license. He has no intention of remaining in Oregon once his military obligation is completed. There is no naval housing in Oregon available for Plaintiffs. Between June 1992 and June 2001 Plaintiffs' family lived at nine different addresses. Aside from the fact that some members of Plaintiffs' extended family live in Nevada, they have no connections to that state. Senior Chief Carr's home of record was owned by his parents until its subsequent sale. Plaintiffs have not provided any association with any other Nevada address. Plaintiffs do not own any real property in Nevada. Plaintiffs have not spoken of any intention of returning to Nevada. Plaintiffs' 1999 Chapter 7 bankruptcy petition listed a California domicile. II. ANALYSIS The Soldiers' and Sailors' Civil Relief Act was enacted to protect servicemembers from the unfortunate financial consequences of being posted to duty away from their homes. See 50 USCA App Sections 501 et seq. The Soldiers' and Sailors' Civil Relief Act was renamed and revised in 2003 to the Servicemembers Civil Relief Act, PL 108-189. The issue in this appeal is whether those laws, in either their original or revised forms, shield Plaintiffs from the responsibility of paying income taxes to the state of Oregon for the 2001, 2002, and 2003 tax years. The portion of the statutes at issue here differs in its original and revised versions, but not dramatically. The Soldiers' and Sailors' Civil Relief Act at section 574 states "(f)or the purpose of taxation of any person, or of his personal property, income, or gross income, by any state

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* * * such person shall not be deemed to have lost a residence or domicile in any state * * * solely by reason of being absent therefrom in compliance with military or naval orders, or to have acquired a residence or domicile in, or to have become a resident in or a resident of, any other state * * * while, and solely by reason of being, so absent." Section 511 of the Servicemembers' Civil Relief Act reads that a servicemember "shall neither lose nor acquire a residence or domicile for purposes of taxation with respect to the * * * income of the servicemember by reason of being absent or present in any tax jurisdiction of the United States solely in compliance with military orders." It has not been lost on the courts, when construing those statutes, that each version uses the word "solely," and that solely means "exclusively." See U.S. v. Minnesota, 97 F. Supp. 2d 973 (D. Minn. 2000). No serviceperson shall be deemed to have acquired a new domicile in the state of his or her posting "solely" because they are there under orders. Id. However, a state may tax a serviceperson as long as other factors exist, in addition to physical presence in the state, which leads to the conclusion that a serviceperson has affirmatively chosen the state of posting as home. Id. Have Plaintiffs chosen to make Oregon their home? Although Plaintiffs have unequivocally, and repeatedly, declared that they have done no such thing, the court is nonetheless of the opinion they, albeit perhaps unknowingly, have made Oregon their domicile. The test for domicile is an individual's overt acts, no one of which, including a statement of intent, is determinative. See Hudspeth v. Dept. of Revenue, 4 OTR 296, 298 (1971). And when all of Plaintiffs' overt acts are examined, the court is of the conclusion that they must be Oregon domiciliaries because, tenuous though their connection to Oregon is, it is nonetheless the strongest of all their associations.

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A person can have only one domicile at a time. Zimmerman v. Zimmerman, 175 OR 585, 591, 155 P2d 293 (1945). Plaintiffs plainly cannot support Nevada as their domicile. Although it is the state from which Senior Chief Carr enlisted in the Navy, Plaintiffs have no current connection to it. If Plaintiffs owned property in Nevada, had Nevada driver's licenses, voted in Nevada, registered their vehicles in Nevada, or spoke convincingly of an intention to return to Nevada, their case would be stronger. However, none of those things occurred. Moreover, Plaintiffs' 1999 bankruptcy declared that California, rather than Nevada, was their domicile. Although Plaintiffs' connections to Oregon are by themselves equivocal, they are nonetheless the most substantial of their associations with any state. Buying a home in 2001 shows a degree of stability previously lacking in Plaintiffs' lives. Registering cars in Oregon is also a declaration of where Plaintiffs had a intention to remain. Those points are not conclusive in themselves. They might be overborne by other factors. However, they stand in this appeal as the best indicators of that place which, during the years at issue, Plaintiffs had the intention to return when they were absent. dela Rosa v. Dept. of Rev., 313 Or 284, 289, 832 P2d 1288 (1992). A serviceperson may not be relieved from responsibility for state tax on the basis of a bare assertion of an address of record with the military. There is no evidence that Congress intended to go so far. Rather than confer immunity from tax, the federal legislation was designed to protect servicepeople from multiple taxes. That reasoning has been followed by this court as well as other jurisdictions, under circumstances where the serviceperson's connections to other states were much stronger than those at issue here. Wolff v. Baldwin, 9 NJ Tax 11 (NJ Tax Ct 1986); U.S. v. Minnesota, 97 F. Supp. 2d 973; and Roberts v. Dept. of Rev., TC-MD No 000199B (Sept 11, 2000).

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III. CONCLUSION The court takes all its appeals very seriously. It has taken particular pains to do so in this case, as it was aware Plaintiffs were proceeding without an attorney in a complicated matter with dramatic financial consequences to them. The conclusion of the court is that their appeal must be denied, because the protection from state tax offered by the federal legislation simply does not go so far. Plaintiffs are not shielded from all state taxes. They are only protected from the taxes imposed by states other than that of their domicile. Nevada was not their domicile. Oregon was. Now, therefore, IT IS THE DECISION OF THIS COURT that the appeal is denied. Dated this _____ day of November 2005.

____________________________________ SCOT A. SIDERAS MAGISTRATE

If you want to appeal this Decision, file a Complaint in the Regular Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563; or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR. Your Complaint must be submitted within 60 days after the date of the Decision or this Decision becomes final and cannot be changed.

This document was signed by Magistrate Scot A. Sideras on November 4, 2005 . The Court filed this document November 4, 2005.

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