A New York State Administrative Law Judge has held that the CEO of Match.com ("Match") changed his domicile from New York to Texas for New York State and City personal income tax purposes, despite his maintenance of substantial connections to New York during the years in question. Matter of Gregory Blatt, DTA No. 826504 (N.Y.S. Div. of Tax App., Feb. 2, 2017). The ALJ rejected the Department of Taxation and Finance's argument that Mr. Blatt's ownership of an apartment in New York City, and the substantial renovations made to the property, were indicative of his intent to remain domiciled in New York City.

Facts. Gregory Blatt was originally from Massachusetts and first moved to New York City in 1992 to attend Columbia Law School. Beginning in 2003, Mr. Blatt began work as the General Counsel for InterActiveCorp ("IAC"), a publicly traded corporation that owned multiple large Internet companies. In 2006, Mr. Blatt executed an employment agreement with IAC, pursuant to which his title was "Executive Vice President, General Counsel & Secretary," and specifying that his principal place of employment was in New York City. As General Counsel of IAC, Mr. Blatt oversaw a legal department of approximately 50 people.

For the first 13 years that he was resident in New York City, Mr. Blatt lived in the same rent-stabilized apartment that he occupied during law school. In late 2005, he purchased a multimillion-dollar condominium in downtown Manhattan. For the next 18 months, Mr. Blatt renovated the apartment, working closely with an architect on what Mr. Blatt described as "his own artistic creation." In addition to his home, Mr. Blatt owned a car in the city and kept a boat in the Hamptons.

Following a corporate restructuring in 2008, Mr. Blatt became dissatisfied with the scope of his employment at IAC and began searching for other opportunities. In February of 2009, Mr. Blatt accepted an offer from IAC to assume the role of CEO at Match, one of the Internet companies owned by IAC. Though Match was based in Dallas, Mr. Blatt negotiated with IAC to remain based in New York City and keep his corporate titles with IAC, allowing him to retain a "safety net" to explore his new role at Match without having to commit to a move to Texas.

In March of 2009, Mr. Blatt signed a one-year lease for a one-bedroom apartment in Dallas and leased a car in Texas. Despite his initial hesitation, Mr. Blatt enjoyed working at Match and the increased responsibility commensurate with his new role as CEO. Mr. Blatt also came to enjoy living in the Dallas area, and, after discussions with his superiors at IAC, he entered into a new employment agreement in November of 2009. Under the new employment agreement, Mr. Blatt relinquished his corporate titles with IAC, retaining only the title of CEO of Match. The agreement also specified that his principal place of employment would be Dallas, Texas.

Thereafter, Mr. Blatt took various steps to create a new lifestyle in Texas. He rented an apartment and spent over $10,000 furnishing it. He ceased completing continuing legal education courses required for practicing attorneys and did not renew his New York State Bar membership. Mr. Blatt also developed strong ties to the Dallas area and spent considerable time with the family of a close childhood friend who was also living in Dallas. He changed his address with the U.S. Postal Service, obtained a Texas driver's license, registered to vote in Texas, and changed his bank account information and doctors. Beginning in the fall of 2009, Mr. Blatt also listed his New York City condominium for sale, eventually selling the apartment in October of 2010. Finally, Mr. Blatt moved his dog to Texas in November of 2009, which was a significant event for him. The dog was a large, elderly dog that Mr. Blatt had rescued from the ASPCA. An email Mr. Blatt sent around the time of the move to Dallas noted specifically that the "[d]og is the final step that I haven't been able to come to grips with until now. So [Dallas] is my new home."

The terms of his employment agreement also changed the tax treatment of his travel expenses. Prior to July 2009, his reimbursed automobile expenses and rent in Texas were treated as travel expenses and not income.

Following Mr. Blatt's move to Texas, the reimbursed expenses were treated as ordinary income and reflected as such in his form W-2.

During 2010, Mr. Blatt became aware of the opportunity to become CEO of IAC. In late 2010, as the possibility of that position became more certain, and having sold his condominium, Mr. Blatt leased an apartment in New York City. He ultimately accepted the CEO position, but made his intentions to remain in Dallas clear to IAC prior to accepting the job. Though he intended to remain in Dallas, the job of running IAC from Dallas proved too difficult, given that IAC's headquarters were in New York. Despite having renewed the lease on his Dallas apartment in February 2011, Mr. Blatt moved back to New York City in 2011 to work primarily from IAC's offices in New York City.

Reasoning that "the move of items near and dear tend[s] to demonstrate a person's intention," the ALJ found that "petitioner's dog was his near and dear item which reflected his ultimate change in domicile to Dallas."

Issue. Mr. Blatt filed New York State nonresident personal income tax returns for the tax years 2009 and 2010. Following an audit, the Department asserted that Mr. Blatt was a domiciliary of New York State and City, and issued a Notice of Deficiency, assessing additional personal income tax, interest, and penalties. Mr. Blatt was domiciled in New York State and City prior to July of 2009. The sole issue presented was whether Mr. Blatt had proven that he changed his domicile to Texas in 2009 and throughout 2010.

ALJ Determination. The ALJ held that Mr. Blatt had become a Texas domiciliary. The ALJ first noted that "domicile" is defined pursuant to regulation as "the place which an individual intends to be such individual's permanent home--the place to which such individual intends to return whenever such individual may be absent." See 20 NYCRR 105.20(d). The party alleging the change in domicile bears the burden of proof by clear and convincing evidence, and domicile is a question of fact that depends on a multitude of facts and circumstances that vary widely from individual to individual. Matter of Newcomb, 192 N.Y. 238, 250 (1908). Factors evidencing domicile include: retention of a permanent place of abode: the location of business activity; the location of family, social and community ties; and formal declarations of domicile.

The Department urged the ALJ to consider Mr. Blatt's New York City condominium an "extremely significant factor," especially given his close involvement in the lengthy renovations to the property. Though the ALJ did consider the apartment as a factor, she concluded that the totality of factors, coupled with Mr. Blatt's intentions during the years in question, demonstrated that he intended to change his domicile to Texas. The ALJ found that Mr. Blatt's decisions regarding where to live revolved largely around his employment opportunities. Following IAC's restructuring in 2008, Mr. Blatt was professionally unfulfilled and prepared for a change. Beginning in 2009, Mr. Blatt began the process of relinquishing his titles and responsibilities at IAC and designated Dallas as his principal place of employment. Mr. Blatt then took various declarative steps evidencing his intent to change his domicile, including, among others, the sale of his New York City apartment and the development of social and community ties to Dallas. The ALJ took specific note of Mr. Blatt's "final step" in relocating to Dallas: relocating his dog. Reasoning that "the move of items near and dear tend[s] to demonstrate a person's intention," the ALJ found that "petitioner's dog was his near and dear item which reflected his ultimate change in domicile to Dallas."

Additional Insights.

Issues of domicile are fact-intensive and often involve intensely personal factual inquiries examining a person's habits. Moreover, the burden of proof in domicile matters is upon the party asserting the change, and the burden is high: clear and convincing evidence. However, where changes of domicile are supported by reliable contemporaneous evidence demonstrating an intention to permanently move and to relinquish one's existing domicile, taxpayers will be able to meet this demanding burden of proof. As the ALJ noted in this case, "[t]he steps taken to effectuate a change in domicile occurred in a logical and reasonable sequence of events." Mr. Blatt was able to substantiate his claims with contemporaneous evidence, including emails and changes of address, and provided affidavits from those in his professional and personal circle substantiating his intent to permanently change his domicile to Texas.