The Appellate Division, Third Department, has confirmed the New York State Tax Appeals Tribunal’s decision that a long-time New York State domiciliary failed to demonstrate that he had changed his domicile from New York to Florida in advance of recognizing a large gain on the sale of Florida property. Campaniello v. N.Y. State Div. of Tax Appeals Trib., No. 524039, 2018 NY Slip Op. 03400 (3d Dep’t, May 10, 2018).

Factual History. The petitioner, Mr. Campaniello, emigrated from Italy to New York in the 1960s. He established a successful retail furniture business in both New York and Florida, and opened a showroom in New York City in the 1970s. In 1979, he purchased a condominium apartment in the Bronx, where he lived with his wife and daughter. In 1981, he opened his first showroom in Miami, Florida, and purchased a condominium in Key Biscayne, Florida, where he would stay when conducting business in Florida. By 2007, he had acquired additional real estate holdings in New York, including two warehouses and co-op shares in a building in New York City, which he renovated and used to operate a second retail furniture showroom. During this same period, he also opened three additional retail furniture showrooms in Florida and acquired nine other residential and commercial properties in Florida. In November 2007, he sold one of his Florida properties for over $6.5 million, resulting in a long-term capital gain of approximately $5.3 million.

New York Filings. Through 2005, petitioner and his wife jointly filed New York State and City resident personal income tax returns, listing the Bronx condominium as their primary address. On December 7, 2007, less than one month after selling his Florida property, petitioner filed a New York nonresident and part-year resident personal income tax return for 2006, claiming the filing status of married filing separately and providing his Key Biscayne address. In October 2008, he filed a New York nonresident and part-year resident personal income tax return for 2007, reporting the capital gain from the November sale of the Florida property and indicating zero New York tax due. On both the 2006 and 2007 returns, the “no” box was checked in response to the question “Did you or your spouse maintain living quarters in NYS,” although the 2006 return petition also listed the Bronx as both his county of residence and his school district. For both 2006 and 2007, his wife filed New York State and City resident personal income tax returns, as married filing separately, showing her primary address as the Bronx condominium.

Audit and Decisions Below. In 2010, the Department of Taxation and Finance audited petitioner’s 2007 return, and concluded that petitioner failed to establish that, as of 2007, he had abandoned his New York domicile and acquired a new Florida domicile. The Department issued a notice of deficiency assessing tax, interest, and penalty of over $725,000, which petitioner challenged before the Division of Tax Appeals.

The Administrative Law Judge upheld the Department’s assessment, and the Tax Appeals Tribunal affirmed that decision. The Tribunal found that petitioner did not prove by clear and convincing evidence that he changed his domicile, relying on such facts as petitioner’s retention of his historic home in New York City, in which his wife continued to reside and where he spent at least 169 days during the year. The Tribunal concluded that the fact that he had a Florida apartment for many years and spent more time in Florida than in New York was outweighed by his many New York City ties. The Tribunal also rejected petitioner’s argument that the Tax Law unconstitutionally required a husband and spouse to have the same domicile, finding that while the regulations provide that “[g]enerally, the domicile of a husband and wife are the same,” they also acknowledge that a husband and spouse may have separate domiciles if they are “separated in fact.” 20 NYCRR § 105.20(d)(5)(i).

Third Department Decision. The Third Department confirmed the Tribunal’s decision. It noted, first, that once a domicile is established — as was the case for petitioner here — it continues until the individual moves to a new location with the intention of making a new “fixed and permanent home” in the new location, and that the party seeking to establish a change in domicile bears the burden to prove the change by clear and convincing evidence. 

Next, the court reviewed the petitioner’s arguments, and noted that he did not contend that his domicile changed from New York to Florida on a date certain. Instead, he claimed that, over time, as his Florida business interests grew and he spent an increasing amount of time in Florida, he had effectively abandoned his New York domicile and established a new domicile in Florida by, at the latest, 2007. The court agreed that, “[w]ithout question,” petitioner had demonstrated significant business ties to Florida, including his ownership and operation of four retail furniture showrooms and nine rental properties, and moving the personal belongings that were most important to him to Florida, such as his Ferrari and his sailboat. It also found that, if the ALJ and the Tribunal had made a contrary conclusion — that he had in fact changed his domicile — it “would not have been unreasonable.” 

However, the court concluded that there was no dispute that in 2007 the petitioner also maintained substantial contacts in New York, such as continuing to operate his New York furniture showroom, even though it was not as successful as his Florida showrooms, maintaining a warehouse and the administration and bookkeeping functions for his business in New York, continuing to see a New York doctor, and spending 169 days in New York. The court also found that the Tribunal “reasonably deferred” to the ALJ’s finding that petitioner’s testimony regarding his intent to change his domicile to Florida “lacked credibility.” 

Because of the narrow standard of review in the Appellate Division, which requires a Tribunal decision to be affirmed if it is “rationally based and supported by substantial evidence,” the Third Department affirmed the Tribunal’s decision, deferring to the Tribunal and the ALJ despite having found that the opposite result might also have been reasonable.

The court also sustained the assessment of the negligence penalty, noting the “misrepresentations” on petitioner’s 2006 and 2007 returns that neither he nor his wife maintained living quarters in New York during these years, although his wife continued to live in the Bronx apartment and petitioner himself used that apartment, despite the claim by petitioner that these misrepresentations resulted from a mistake by his accountant. The court also dismissed in a footnote the petitioner’s contention that the decision unconstitutionally limits the ability for him and his wife to “enjoy a marital relationship whereby they choose to ‘live apart together,’” finding that there was nothing in the Tax Law or regulations that required a husband and wife to have the same domicile, and that it was the petitioner’s own continued contacts with the State and his Bronx domicile that were the significant factors.


his case illustrates the difficulty faced by a long-time New York domiciliary in establishing a change of domicile, particularly without a defining event that can demonstrate a clear break with the historic home and the establishment of a new domicile. The law is clear that the party seeking to demonstrate a change in domicile must prove that change by clear and convincing evidence, and here both the ALJ and the Tribunal were not convinced that the petitioner had clearly demonstrated a change in domicile.

However, it does seem unusual for the court — after concluding that the facts supporting change of domicile were strong enough that, had the ALJ and the Tribunal reached the opposite decision, that too would have been reasonable and supported by substantial evidence — to nonetheless sustain the negligence penalty.