In the Matter of John Gaied, Appellant,v.New York State Tax Appeals Tribunal, et al., Respondents.BriefN.Y.January 16, 2014 To be argued by: Robert M. Goldfarb Time requested: 15 minutes A.D. No. 513285 Court of Appeals of the State of New York IN THE MATTER OF THE PETITION BY JOHN GAIED, PETITIONER-APPELLANT, -AGAINST- NEW YORK STATE TAX APPEALS TRIBUNAL; NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE; AND THOMAS H. MATTOX AS NEW YORK STATE COMMISSIONER OF THE DEPARTMENT OF TAXATION AND FINANCE, IN HIS OFFICIAL CAPACITY, RESPONDENTS-RESPONDENTS, TO REVIEW A DECISION IN THE MATTER OF JOHN GAIED FOR REDETERMINATION OF A DEFICIENCY OR FOR REFUND OF NEW YORK STATE AND NEW YORK CITY PERSONAL INCOME TAXES UNDER ARTICLE 22 OF THE TAX LAW AND THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK FOR THE YEARS 2001, 2002, AND 2003. PURSUANT TO N.Y. TAX LAW SECTION 2016 AND N.Y. CIVIL PRACTICE LAW AND RULES, ARTICLE 78 BRIEF FOR RESPONDENT COMMISSIONER OF TAXATION AND FINANCE BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General ROBERT M. GOLDFARB Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Respondent Commissioner of Taxation and Finance The Capitol Albany, New York 12224 (518) 473-6053 (telephone) (518) 473-8963 (facsimile) Dated: August 9, 2013 Reproduced on Recycled Paper TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES iii PRELIMINARY STATEMENT 1 ISSUE PRESENTED 2 FACTS 3 A. Petitioner's Businesses and Three-Apartment Property in New york 3 B The First Floor Apartment 4 C. The Second Floor Apartment 6 D. The Basement Apartment 7 E. Additional Proof 8 ADMINISTRATIVE PROCEEDINGS 10 A. The ALJ Decision 10 B. The Tax Appeals Tribunal Decision 11 THE APPELLATE DIVISION DECISION 13 ARGUMENT THE TRIBUNAL'S DETERMINATION THAT PETITIONER QUALIFIED AS A "STATUTORY RESIDENT' OF NEW YORK UNDER TAX LAW § 605(b)(1)(B) IS RATIONAL AND SUPPORTED BY SUBSTANTIAL EVIDENCE 15 1 Table of Contents (cont'd) PAGE ARGUMENT (cont'd) A. Tax Law § 605(b)(1)(B) Requires Only That A Taxpayer "Maintain" A Permanent Place Of Abode In New York That Is Available For His Use And Spend Over 183 Days Of The Taxable Year In The State 17 B. Substantial Evidence Supports The Tribunal's Determination That Petitioner Maintained The Three- Apartment Property And That It Was Available For His Use During The Years In Issue 23 CONCLUSION 32 11 CASES TABLE OF AUTHORITIES PAGE El-Tersli, Matter of v. Commissioner of Tax. and Fin., 14 A.D.3d 808 (3d Dep't 2005) 17,23 Gaied, Matter of v. Tax Appeals Tribunal, 101 A.D.3d 1492 (3d Dep't 2012) 11,12,24,25 Jennings v. New York State Office ofMental Health, 90 N.Y.2d 227 (1997) 14 Morris, Matter of v. New York State Dep't of Tax. and Fin., 183 A.D.2d 5 (3d Dep't 1992), rev'd on other grounds, 82 N.Y.2d 135 (1993) 21 Orens, Matter of v. Novello, 99 N.Y.2d 180 (2002) 16 Orvis, Matter of v. Tax Appeals Tribunal, 86 N.Y.2d 165 (1995) 14,22 Pell, Matter of v. Board of Educ. of Union Free Sch. Dist. No.1, 34 N.Y.2d 222 (1974) 24 People ex rel. Mackall v. Bates, 278 A.D. 724 (3d Dep't 1951) 17,23 Siemens Corp., Matter of v. Tax Appeals Tribunal, 89 N.Y.2d 1020 (1997) 13-14 Smith, Matter of v. State Tax Comm'n, 68 A.D.2d 993 (3d Dep't 1979) 17 Stranahan, Matter of v. New York State Tax Comm'n, 68 A.D.2d 250 (3d Dep't 1979) 25 ill Table ofAuthorities (cont'd) CASES(cont'd) PAGE Tamagni, Matter of v. Tax Appeals Tribunal, 91 N.Y.2d 530, cert. denied, 525 U.S. 931 (1998) 15,16,26 300 Gramatan Ave. Assocs., State Div. of Human Rts., 45 N.Y.2d 176 (1978) 14 STATE STATUTES C.P.L.R. article 78 13,24,25 Tax Law § 605(b)(1) 13,15 § 605(b)(1)(A) 15 § 605(b)(1)(B) passim § 689(e) 14 § 2016 13 STATE RULES AND REGULATIONS 20 N.Y.C.R.R. § 105.20(e)(1) 20 FEDERAL STATUTES 26 U.S.C. § 2(b)(1)(B) 23n MISCELLANEOUS Barker, Matter of, DTA. No. 822324 (2011) 18 Blacks Law Dictionary (5th ed. 1979) 16 IV Table ofAuthorities (cont'd) MISCELLANEOUS (cont'd) PAGE CCH-EXP, NY-TAX-ANALYSIS § 3.42[2] (2005) 17 Evans, Matter of, DTA. No. 806515 (1992) 18 New York City Admin. Code § 11-1705(b)(1)(B) 15 Webster's New Collegiate Dictionary (1981) 20 v PRELIMINARY STATEMENT Petitioner John Gaied appeals from a judgment of the Appellate Division, Third Department, entered on December 27, 2012 (1033-1038).1 The judgment confIrmed a decision of the Tax Appeals Tribunal (14-36) holding that petitioner was taxable as resident of New York State for the years 2001, 2002 and 2003 because he qualified as a "statutory resident" under Tax Law § 605(b)(1)(B). Both New York domiciliaries and "statutory residents" are taxed as New York residents on their income from all sources, rather than on only their New York source income, as in the case of non-residents of New York. However, a "statutory resident" is a concept unique to the tax laws that is distinct from a "domiciliary" for tax purposes. Enacted to discourage tax evasion by individuals with residences in New York, § 605(b)(1)(B) does not require that a taxpayer actually dwell in a New York residence. Rather, a taxpayer who is not a New York domiciliary may nevertheless be a "statutory resident" for personal income tax purposes if two objective factors are satisfied: (1) the taxpayer 1 Record references are to the Record on Appeal. "maintains" a permanent place of abode in New York; and (2) the taxpayer is present in the State for over 183 days during the year. The Tribunal's determination was based on substantial evidence that petitioner maintained a three-apartment residential building in New York, close to his two New York businesses, that was available for his use and was in fact used by petitioner and his family (there is no dispute that petitioner was present in the State for over 183 days during each year at issue). The Appellate Division correctly confirmed the determination and its judgment should be affirmed. ISSUE PRESENTED Whether the Tax Appeals Tribunal's determination that petitioner maintained a permanent place of abode in New York during the tax years at issue, and therefore qualified as a "statutory resident" under Tax Law § 605(b)(I)(B), is rational and supported by substantial evidence. The Appellate Division answered in the affirmative. 2 FACTS A. Petitioner's Busine~sesand Three-Apartment Property in New York During the years at issue, petitioner was a domiciliary of New Jersey (159). He owned two businesses in Repairs Plus, at , and Ash Auto Corp., at (161, 222-223, 243). As the owner and operator of Ash Auto, a 24-hour service station, petitioner was required to work long hours, including covering shifts when employees failed to show up (163-166, 243). Petitioner's New Jersey residence was about 28 miles from his businesses, a 30 to 45 minute drive depending on traffic and the route taken (183, 260). On November 29, 1999, petitioner purchased a three-unit residential property at , which is approximately two miles from his businesses (120, 167-169). The building contained a one-bedroom basement apartment and one two- bedroom apartment on each of the other two floors (181-182). A boiler in the basement heated the entire building, but each apartment received separately-metered electric and gas service (176, 182, 223-234). 3 The residence contained a total of 3,917 square feet of living area, 16 rooms, including 6 bedrooms and 4 baths (781). Petitioner paid the expenses for the property's upkeep during the years in issue (84). Petitioner submitted a one-page "tenant history" for the three apartments that purported to show the occupants and periods of vacancy and also submitted listings for gas and electric service at the apartments (982, 1004-1006).2 Petitioner did not, however, provide any rental income and expense accounting ledgers, bank statements, or cancelled rent checks for the units during the years in issue (211-212). Petitioner provided four lease agreements which, as explained below, are inconsistent with the "tenant history" in several respects. B. The First Floor Apartment Since he purchased the building in November 1999, petitioner has permitted his parents to reside rent-free in the first floor apartment at the MacFarland Avenue building (171-172, 227). Petitioner testified that his parents relied on him for 100% of their support (175-176). During the years in issue, petitioner claimed head of household filing 2 On the "tenant history," "Apt.!" refers to the first floor apartment, "Apt. 2" refers to the second floor apartment and "Apt. 3" refers to the basement apartment (181-182). 4 status and claimed his parents as dependents on his federal, New Jersey and New York State tax returns (195-196, 260, 456-535, 974-998). Petitioner would stay overnight at the first floor apartment on occasion during the years in issue, "[s]ometimes every month" (229). Petitioner testified that he would only stay there when his parents requested it, because he preferred to be at his New Jersey home (175). Petitioner testified that he would sleep on the couch and that he did not keep clothing or personal possessions at the apartment (173, 175). Since November 1999, electric and gas service for the first floor apartment has been billed to and paid by petitioner (176, 1006). During the years in issue, petitioner also maintained a telephone number in his name in the first floor apartment (177). Petitioner kept keys to the other MacFarland Avenue property apartments at the first floor apartment (177). 5 c. The Second Floor Apartment Petitioner's "tenant history" indicates that the second floor apartment was occupied from August 3, 1999 through August 8, 2002 by Debra Watts and Joseph Trivaski, and from August 8, 2002 through January 11, 2003 by Mr. Trivaski alone (982). However, the only lease agreement with Mr. Trivaski submitted by petitioner was for the period June 2001 through June 2003, identifying the first floor apartment as the subject of the lease (1019-1022). Since at least January 15, 2003, petitioner's sister, Nermid Gaied Armanious, and brother-in-law, George Armanious, lived in the second floor apartment (178, 260, 982).3 No lease or evidence of rental payments from petitioner's sister and brother-in-law was provided. George Armanious and Nermid Gaied Armanious filed a joint New York State nonresident income tax return for 2003, listing a New Jersey address (260, 281). Petitioner also submitted a lease agreement with Nouh Abdelshied, petitioner's father (226-227), for the second floor apartment 3 The record reflects that petitioner's sister worked at one of his businesses, Ash Auto Corp., for minimal wages (260). 6 for February 2002 to February 2003, at a monthly rent of $950 (1014-1017). This lease is inconsistent with petitioner's "tenant history" indicating that his parents occupied the first floor apartment and that Ms. Watts and/or Mr. Trivaski occupied the second floor apartment from August 3, 1999 through January 11, 2003 (982). The lease provision showing rental payments from his parents to him is also inconsistent with petitioner's testimony that his parents were dependent on him for 100% of their support. D. The Basement Apartment The "tenant history" submitted by petitioner indicates that the basement apartment was occupied at times and sometimes vacant (982). The only pertinent leases provided, however, are with Corrine Mollica on September 1, 2003 for an unspecified term, and with Mykhaylo Dubnytsy for the period May 2002 to May 2003 (1018, 1023-1026). And the Dubnysty lease is inconsistent with petitioner's "tenant history," which states that the basement apartment was occupied by Yvonne Gundi from May 2002 through June 30, 2002 and was vacant from July 2002 through August 2, 2002 (982). 7 E. Additional Proof Petitioner filed New York State nonresident income tax returns for all three years at issue. His 2001 and 2002 returns indicate his mailing address as Old Bridge, New Jersey (456, 472), while his 2003 return indicates his mailing address as (497). Petitioner also listed the MacFarland Avenue building as his address for all notices to be sent to the landlord in the apartment leases that were produced (1014-1026). On or before October 18, 1992, when he resided at Fillmore Place In Staten Island, petitioner registered to vote in New York State (206-207, 1002). New York City voter registration records indicate that petitioner voted in the general elections in 1992, 2000 and 2004 (1003). In 2004, petitioner changed the address for his New York voter registration to the MacFarland Avenue residence (293). Petitioner did not submit any New Jersey voter registration documentation (208). In each of the years at issue, petitioner filed a federal tax Schedule E that reported, among other things, income and expenses from rental real estate listed as a one-family home at 8 (460, 486, 504). However, petitioner did not produce any book or records to substantiate the rental income or expenses reported (211-212). Additionally, petitioner answered "No" to this question posed on the Schedule E: "Did you or your family use ] during the tax year for personal purposes for more than the greater of: 14 days, or 10% of the total days rented at fair market value?" (460, 486, 504). In December 2003, petitioner sold his New Jersey residence to satisfy outstanding federal tax obligations for 2002 and put his furniture in storage in New Jersey (184-187). He stayed with an uncle in New Jersey until he renovated the boiler room at the MacFarland Avenue property to make an additional apartment, in which he began to reside in 2004 (188-194). Albert Gaied, petitioner's brother, filed New York State resident income tax returns for 2001-2004 using the MacFarland Avenue address (260, 280). Petitioner did not present testimony or submit affidavits from his brother, sister, brother-in-law or uncle regarding the MacFarland Avenue property. 9 ADMINISTRATIVE PROCEEDINGS Mter an audit, the Division of Taxation issued petitioner a Notice of Deficiency asserting additional New York State and City personal income tax due for the years 2001, 2002 and 2003 (37-39). The Notice of Deficiency was based on the Division's determination that petitioner was a New York State and City statutory resident because he spent over 183 days in New York City and maintained a permanent place of abode at the MacFarland Avenue residence during each of those years. A. The ALJ Decision Mter a hearing, an ALJ sustained the Notice of Deficiency, finding that petitioner maintained the MacFarland Avenue property during the years at issue and stayed there overnight on occasion (40-51). The ALJ found petitioner's claim that the building was solely an investment property to be insufficiently supported, based on "limited documentation" and petitioner's "vague testimony" (50). The ALJ found petitioner's claim that he did not have unfettered access to any of the apartments, including the one maintained for his parents, to be "incredible" (50). Accordingly, the ALJ concluded that petitioner had 10 maintained a permanent place of abode in New York during the years at issue and was properly deemed a statutory resident (51). B. The Tax Appeals Tribunal Decision In its initial decision dated July 8, 2010, the Tribunal reversed the ALJ's determination (52-65). The Tribunal found that petitioner maintained the MacFarland Avenue property and that he stayed there overnight during the years in issue (64). However, because petitioner did not sleep in a bedroom or bed when he stayed in the apartment occupied by his parents, the Tribunal concluded that petitioner did not maintain a permanent place of abode in New York City during this period (64-65). The Division moved for reargument of the Tribunal's decision (103-113). The Division argued that the Tribunal overlooked or misapprehended precedent holding that to qualify as a statutory resident under Tax Law § 605(b)(1)(B), a taxpayer need not actually dwell in the permanent place of abode, but rather only maintain it (108-112). 11 By decision dated June 16, 2011, the Tribunal, with one dissent, granted the Division's motion and, on reargument, affirmed the ALJ's determination (14-36). Upon further consideration, the Tribunal concluded that its initial decision was "an improper departure from the language of the statute, regulations, and controlling precedent" (28-29). The Tribunal found that petitioner maintained the three-apartment property, which met the physical attributes of a permanent place of abode (29-31). It emphasized that petitioner stayed overnight at the property on multiple occasions, listed the address under his name for the utility and telephone bills and listed the address as his on the apartment leases (30). The Tribunal further found that petitioner had unfettered access to the first floor apartment where he stored the keys to the other apartments (30). Finally, the Tribunal found insufficient proof that petitioner maintained the three apartments solely as an investments for rental and not for personal reasons (30-31). It noted that other members of petitioner's family resided at the property during the audit period and that there was no evidence that petitioner received rent payments from those family members or his parents. Accordingly, 12 the Tribunal held that petitioner had maintained a permanent place of abode in New York City during the period at issue (32). THE APPELLATE DIVISION DECISION The Appellate Division, with two justices dissenting, confirmed the Tribunal's determination as supported by substantial evidence. The court relied on the evidence that petitioner owned the MacFarland Avenue apartments, which were much closer to his New York businesses than his New Jersey residence; that he was a registered voter in New York during the years in issue; that he "maintained a telephone and the utilities In his own name at the [first floor] apartment, paid those bills as well as all other expenses for the apartment, retained unfettered access to the apartment, occasionally slept at the apartment, failed to establish that he kept the apartment exclusively for his parents, and did not prove that he held the property solely for investment purposes." Matter of Gaied v. Tax Appeals Tribunal, 101 A.D.3d 1492, 1494 (3d Dep't 2012). The court stressed that credibility determinations were within the province of the Tribunal 13 and that even if a contrary conclusion were reasonable, the Tribunal's determination was "amply supported by the record." Id. The dissenters would have found that petitioner did not maintain a permanent place of abode in New York City. They acknowledged that under Tax Law § 605(b)(1)(B), "[m]aintaining a dwelling does not necessarily equate to living or residing in such dwelling." Id. at 1495 (Malone, Jr., J., dissenting). In their opinion, however, the record established that petitioner bought the property as a place for his parents to live and as an investment. The dissenters acknowledged that petitioner occasionally stayed overnight at the apartment occupied by his parents, which was close to his New York businesses, but did so only when his parents requested, sleeping on a couch, and did not keep personal items there. With respect to the other two apartments, in the dissenters' view, "documentary evidence establishes that, except for a short period of time, those apartments were rented, and petitioner claimed the rental income on his fued tax returns." Id. Accordingly, the dissenters would have annulled the determination. 14 ARGUMENT THE TRIBUNAL'S DETERMINATION THAT PETITIONER QUALIFIED AS A "STATUTORY RESIDENT" OF NEW YORK UNDER TAX LAW § 605(b)(I)(B) IS RATIONAL AND SUPPORTED BY SUBSTANTIAL EVIDENCE The Appellate Division correctly sustained the Tribunal's rational interpretation of Tax Law § 605(b)(1)(B), finding substantial evidence that the statute applied here and properly declining to reweigh that evidence or disturb the Tribunal's credibility determinations. To qualify as a "statutory resident" under § 605(b)(1), a taxpayer does not actually have to reside in a permanent place of abode in New York, but rather only "maintain" a permanent place of abode that is available for his or her use. The record contains substantial evidence that petitioner maintained a three-apartment building close to his New York businesses and that he failed to establish that the apartments were not available for his use during the years at issue. In fact, the record reflects that the apartments were used by petitioner and his f~mily members. Accordingly, the Appellate Division correctly found no basis to disturb the Tribunal's holding. 15 In this article 78 proceeding pursuant to Tax Law § 2016, if the Tribunal's interpretation of a tax statute "is not irrational or contrary to the plain meaning of the statute, it is entitled to deference." Matter of Siemens Corp. v. Tax Appeals Tribunal, 89 N.Y.2d 1020, 1022 (1997). Put differently, as petitioner concedes (Br. at 34), this Court will not disturb the Tribunal's interpretation and application of a statute unless it is arbitrary and capricious. See Jennings v. New York State Office of Mental Health, 90 N.Y.2d 227, 239 (1997). Petitioner bore the burden of proof at the administrative hearing to show that the assessment was erroneous, see Tax Law § 689(e), and it was within the province of the Tribunal to weigh the evidence and assess the credibility of witnesses or documents. See Matter of Orvis v. Tax Appeals Tribunal, 86 N.Y.2d 165, 179-80 (1995). The Tribunal's factual findings will be upheld if they are supported by substantial evidence, meaning "such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact." 300 Gramatan Ave. Assocs. v. State Div. of Human Rts., 45 N.Y.2d 176, 180 (1978).4 These principles require an affirmance here. 4 Petitioner now asserts that "there was no basis for the Third Department to apply 16 A. Tax Law § 605(b)(I)(B) Requires Only That A Taxpayer "Maintain" A Permanent Place of Abode in New York That Is Available For His Use And Spend Over 183 Days Of The Taxable Year In The State. Tax Law § 605(b)(1) sets forth the definitions of a "resident individual" for personal income tax purposes. Section 605(b)(1)(A) includes, with exceptions, an individual "who is domiciled in the state," i.e., one who maintains a residence-in-fact to which he or she intends to return when absent. Section 605(b)(1)(B) provides an alternative definition, commonly referred to as a "statutory resident," embracing a person who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty- three days of the taxable year in this state ... See New York City Admin. Code § 11-1705(b)(1)(B) (providing same definition of city resident for city tax). a 'substantial evidence' standard"(Br. at 34), but petitioner correctly invoked this standard of review in his petition (12). Moreover, petitioner does dispute facts found by Tribunal. For example, petitioner claims that two of the three apartments were rented to tenants throughout the audit period (Br. at 7, 34). However, the Tribunal found petitioner's proof of rental lacking and that petitioner's family members resided in those apartments at times, with no evidence that petitioner received rent from them (31). As discussed below (infra, Point B), substantial evidence supports these findings. 17 Thus, "any person who maintains a permanent place of abode in this State, and spends in excess of 183 days here, is deemed a resident for State income tax purposes." Matter of Tamagni v. Tax Appeals Tribunal, 91 N.Y.2d 530, 534-35, cert. denied, 525 U.S. 931 (1998). Intended to "discourage tax evasion" by those who "really and [for] all intents and purposes [are] residents of the state," ide at 535, the statute accomplishes this purpose through a purely objective test. If you "maintain" a permanent place of abode in New York and spend over 183 days in the State, you are "deemed," id., a state resident for income tax purposes, regardless of your subjective intent.5 Under these circumstances, New York's taxation of the individual's entire income is "justified by the protections and services which the State affords its residents and which residents, through contacts with the State sufficient to classify them as residents, are privileged to enjoy." Tamagni, 91 N.Y.2d at 543. 5 "The vast majority of States join New York in utilizing definitions of residency for income tax purposes that include another category of taxpayers in addition to domiciliaries. In fact, by requiring both a permanent place of abode in this State, and presence for more than half of the year, New York's definition of "resident" is far less expansive than some." Tamagni, 91 N.Y.2d at 535. 18 The statute does not define the term "maintains" and thus it should be construed "using its usual and commonly understood meaning." Matter of Orens v. Novello, 99 N.Y.2d 180, 185-86 (2002) (internal quotation marks omitted). To "maintain" means to "hold or keep in an existing state or condition." Blacks Law Dictionary, at 859 (5th ed. 1979). Thus, a taxpayer who keeps available living space in New York is maintaining it within the statutory meaning. Thus, petitioner incorrectly asserts that "[m]erely maintaining a dwelling isn't enough to subject a taxpayer to resident taxation; rather, ... the question is whether a taxpayer was 'living or residing' in such a dwelling" (Br. at 21-22). The Legislature could have, but did not, require that the individual "live" or "reside" in the New York abode for over 183 days or some other period of time. Rather, the plain language of the statute requires only that the taxpayer "maintain" the permanent place of abode in the State, not that he or she actually dwell in it for any period. See, e.g., Matter of El-Tersli v. Commissioner of Tax. and Fin., 14 A.D.3d 808, 810 (3d Dep't 2005) (taxpayer "maintained" permanent place of abode where, although taxpayer averred that his father and 19 brother lived in the apartment, there was no evidence that the taxpayer "terminated his lease on the Manhattan apartment and/or that he was not otherwise contributing to that household"); People ex rel. Mackall v. Bates, 278 A.D. 724 (3d Dep't 1951) (taxpayer "maintained" permanent place of abode in New York City apartment while he worked in vyashington where, although his wife occupied the apartment and took over its rental, "the apartment remained accessible to petitioner and he made continuous contributions to his wife's general support"); Matter of Smith v. State Tax Comm'n, 68 A.D.2d 993 (3d Dep't 1979) (residence qualified as permanent place of abode where, although it was put on the market, taxpayer continued to maintain it, furniture remained and telephone and utility service were continued); see also CCH-EXP, NY-TAX-ANALYSIS § 3.42[2] (2005) ("The statute refers to maintaining a permanent place of abode. This means that a person who contributes to the maintenance of a permanent place of abode in New York meets the statutory definition even if he actually resides elsewhere.") (364). The statute presumes that if the taxpayer maintains the abode, it is available for his or her use. 20 Petitioner misconstrues the Tribunal's decision as holding that a taxpayer's "mere property right in a dwelling" (Br. at 30) suitable for usage will trigger statutory residence under § 605(b)(1)(B). The Tribunal did not, as petitioner states, hold that a "taxpayer's 'relationship to the place' [is] irrelevant" and "all that matters is whether the individual has an ownership interest in a property suitable for habitation" (Br. at 22, 31). To the contrary, quoting its prior decision in Matter of Barker, DTA. No. 822324 (2011),6 the Tribunal stated that "establishing a legal relationship may not necessarily end the analysis" (28). Rather, the Tribunal explained that it had not adopted a "subjective standard" (28) in its decision in Matter of Evans, DTA. No. 806515 (1992), 7 and thus the taxpayer's "subjective use of the premises" (29), i.e., his or her subjective intent in maintaining the abode, is irrelevant. Moreover, if the Tribunal had actually "held that mere legal ownership of the [property] was sufficient" (Br. at 1), its decision would have been far shorter, ending at "[p]etitioner owned the property ..." 6 Available at http://www.nysdta.orglDecisions/822324.dec.pdf 7 Available at http://www.nysdta.orglDecisions/806515.dec.pdf. 21 (29) (suitability for habitation was not in issue). Instead, its decision addressed petitioner's relationship to the property at length and made ample findings, supported by substantial evidence, justifying its conclusion that petitioner maintained the apartments in New York to which he had access, and which he and his family in fact used, during the years at issue. Among other things, the Tribunal found that petitioner had not met his burden of proving that the three-apartment property was maintained solely as an investment for rental (30-31), which would not be an issue if the taxpayer's possession of a property interest in a habitable abode were the end of its analysis. And, contrary to petitioner's argument (Br. at 27), the Appellate Division confirmed the Tribunal's decision based on the Tribunal's findings (1035). Accordingly, petitioner's contention that the Tribunal applied a narrow "mere property right" test lacks merit. 22 B. Substantial Evidence Supports The Tribunal's Determination That Petitioner Maintained The Three-Apartment Property And That It Was Available For His Use During The Years In Issue. The Appellate Division properly sustained as supported by substantial evidence the Tribunal's determination that petitioner maintained a permanent place of abode in New York that was available for his use during the years in issue. Petitioner's brief suggests that the Tribunal found him to be a statutory resident based only on his maintenance of the one, first-floor apartment in which his parents resided (see Br. at 1, 13, 34). But there were two other apartments in the building, and petitioner failed to establish that these apartments were rented to third parties throughout the years in issue (or that he was actively seeking tenants during any period of vacancy). Petitioner's other family members resided in these other apartments at times, with no indication that they paid rent to petitioner. Because petitioner maintained these other apartments as well and they were available for petitioner's personal use, any of the three apartments alone sufficed to trigger petitioner's statutory residence under § 605(b)(1)(B). 23 First, there is no question that each of the three apartments had the physical attributes of a "place of abode." See 20 N.Y.C.R.R. § 105.20(e)(1). All three apartments had cooking and bathing facilities and were all suitable for year-round use, and thus each apartment met the physical requirements. In addition, petitioner owned the residences throughout the tax years at issue, during which time the physical attributes of the property, and petitioner's relationship to the property, did not fundamentally change. Thus, the permanence requirement is also satisfied. See Webster's New Collegiate Dictionary, at 847 (1981) (defining "permanent" as "continuing or enduring without fundamental or marked ·change"). Second, the Tribunal's finding that petitioner "maintained" the three-apartment property within the meaning of the statute is amply supported, a point that petitioner conceded before the Tribunal.8 Petitioner owned the residences and paid the expenses for the property's upkeep during the years at issue. He established and maintained an apartment on the first floor for his parents and paid all 8 As petitioner's then-counsel stated in oral argument before the Tribunal: "Here, obviously, John Gaied maintained the dwelling. He owned it, He paid the bills" (84). 24 of his parents' household expenses. The utility and telephone bills for that apartment were in petitioner's name and he paid those bills. This evidence supports the finding that petitioner "maintained" the place of abode during this period. See Matter of Morris v. New York State Dep't of Tax. and Fin., 183 A.D.2d 5,9 (3d Dep't 1992) (taxpayer maintained permanent place of abode because although he "may have used the [residence] during the relevant periods on a transient basis, he maintained it during the relevant periods on other than a transient basis") (emphasis in the original), rev'd on other grounds, 82 N.Y.2d 135 (1993). Third, substantial evidence supports the conclusion that petitioner had unfettered access to the first floor apartment at all times and the other apartments at least when they were vacant or occupied by his family members. The ALJ found petitioner's testimony that he never "carr[ied] a key" (173) to the first floor apartment, where his elderly mother and father (who had recurring medical emergencies) lived, and did not have keys for access to the other two apartments (1 77) to be 25 "incredible" (50).9 The Tribunal adopted the ALJ's credibility assessment (30) and there is no basis to disturb that credibility determination. Orvis, 86 N.Y.2d at 179-180. Fourth, petitioner failed to establish that he maintained the three residences exclusively as investments for rental and not for personal reasons. With respect to the first floor apartment, the Tribunal had a substantial evidentiary basis for fmding that it was not maintained exclusively for petitioner's parents. Petitioner provided the MacFarland Avenue address as his mailing address on his 2003 New York income tax return, he listed the building as his address on the leases that were produced, and he was registered to vote in New York during the years in issue. The Tribunal was also entitled to attach significance to the fact that the property was in the same neighborhood as petitioner's New York businesses, much closer than his New Jersey residence, and that petitioner stayed overnight in the apartment on multiple occasions. 9 In his opening statement at the hearing, petitioner's then-counsel implausibly represented that petitioner "had no keys to any apartment" (157), notwithstanding that petitioner owned them. Petitioner initially testified that he "never [had] the key" to the second floor and basement apartments, but then conceded that he "[a]ctually" kept those keys with his parents in the first floor apartment (177). The ALJ and Tribunal quite reasonably found that petitioner had a key to the first floor apartment where he kept the keys to the other apartments (30). 26 Under these circumstances, the Tribunal reasonably concluded that the apartment was maintained in part for petitioner's use. With respect to the second floor and basement apartments, other family members of petitioner, including his sister, brother-in-law and brother. resided at the property during the period at issue, and there is no evidence that petitioner received rent from these individuals. Because § 605(b)(1)(B) requires only that the taxpayer "maintain" the abode, the statute wo'uld apply even if the apartments had been kept vacant for petitioner's potential use. The use of the apartments by individuals with whom petitioner had a familial relationship does not change the fact that petitioner maintained the permanent place of abode within the statutory meaning. See El-Tersli, 14 A.D.3d at 810, Mackall, 278 A.D.2d at 33.10 Finally, petitioner's proof that he rented the second floor and basement apartments to unrelated tenants was deficient, based on, as the ALJ described it, "limited documentation" and petitioner's "vague 10 In fact, petitioner was entitled to claim head of household status for his dependent parents only if he "maintained" the place of abode in which his parents resided. See 26 U.S.C. § 2(b)(1)(B) (individual considered head of household if, inter alia, he "maintains a household which constitutes for such taxable year the principal place of abode of the father or mother of the taxpayer") 27 testimony" (50). As explained in detail above (supra, at 4-7), petitioner submitted a purported "tenant history" that was significantly inconsistent in several respects with the four leases he provided. ll And petitioner provided no rental income and expense accounting ledgers, bank statements or cancelled rent checks for the units during the audit period. The Tribunal was not required to credit petitioner's incomplete and inconsistent proof that failed to establish that these apartments were maintained exclusively for rental by third parties and unavailable for petitioner's use. The Appellate Division dissenters' contrary view was based on an improper reweighing of this evidence, which was the Tribunal's exclusive function. See Matter of Pell v. Board of Educ. of Union Free Sch. Dist. No.1, 34 N.Y.2d 222, 230 (1974) (in article 78 proceeding, "the courts have no right to review the facts generally as to weight of evidence, beyond seeing to it that there is substantial evidence") 11 Oddly, one of the leases is with Nouh Abdelshied, petitioner's father (226-227), for the second floor apartment for February 2002 to February 2003, at a monthly rent of $950 (1014-1017). This document contradicts petitioner's testimony that his parents occupied the first floor apartment and that they were entirely dependent on petitioner for their support. 28 (internal quotation marks omitted). In the dissenters' VIew, "documentary evidence establishes that, except for a short period of time, those apartments were rented, and petitioner claimed the rental income on his filed tax returns." 101 A.D.3d at 1495 (Malone, Jr., J., dissenting). While it is true that petitioner reported some rental income on his returns, he did not produce any books or records to substantiate that income (211-212), and thus the Tribunal had a sound basis for discrediting this proof. Given the paltry and inconsistent evidence of rental submitted by petitioner, the Tribunal was not required to ascribe the weight to this evidence that the dissenters did, and the dissenters' reweighing of this evidence departed from proper article 78 review. The dissenters also thought it significant that, unlike the taxpayers in cases cited by the majority, "petitioner did not change his residence from New York to elsewhere," but had his principal residence in New Jersey before and during the years in issue. 101 A.D.3d at 1495 (Malone, Jr., J, dissenting). But nothing in the statute gives any significance to that distinction. The statute requires only that a taxpayer maintain a permanent place of abode in New York and spend 29 over 183 days a year in the State, without regard to the taxpayer's prior principal residence or whether the taxpayer has recently changed his principal residence. See, e.g., Matter of Stranahan v. New York State Tax Comm'n, 68 A.D.2d 250, 251-53 (3d Dep't 1979) (Florida domiciliary's New York City apartment was permanent place of abode although she used the apartment "only occasionally, and, at most, for a few days at a time"). To the extent that petitioner's actual use of the property is relevant, petitioner admits that he stayed overnight at the property on many occasions, "sometimes every month" (229), permitting him to assist his parents in close proximity to his businesses in New York. Petitioner's motivation for staying at the apartment is not relevant here; the fact remains that petitioner maintained a permanent place of abode in New York that he used during the years at issue. Contrary to the dissenters' view, because petitioner maintained the apartments, the statute applies whether he slept on a couch, a bed, or other furniture when he stayed there. 30 Finally, the policy justifications for New York's tax residency rules are furthered by application of the statute here. "State universal income taxation of residents is justified by the protections and services which the State affords its residents and which residents, through contacts with the State sufficient to classify them as residents, are privileged to enjoy." Tamagni, 91 N.Y.2d at 543. Petitioner maintained the three apartments, located close to his two New York businesses, used them for his family and himself, and spent more than 183 days in the State during each year. These substantial contacts with the State hardly constitute "only a transitory connection and presence in New York" (Br. at 20), as petitioner contends. Petitioner's residential property and businesses enjoyed New York's protections and services, such as police and fire protection and utility infrastructure, enjoyed by domiciliaries as well, and thus the legislative intent underlying New York's statutory resident rule is furthered by its application here. The Appellate Division properly confirmed the Tribunal's determination that petitioner was a "statutory resident" of New York for the years at issue, and accordingly, this Court should affirm. 31 CONCLUSION The judgment appealed from should be affirmed. Dated: Albany, New York August 9,2013 Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Respondent Commissioner of Taxation and Finance BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General ROBERT M. GOLDFARB Assistant Solicitor General of Counsel By: £4t~~ ROBERT M. GLDFARB Assistant Solicitor General Office of the Attorney General The Capitol Albany, New York 12224 (518) 473-6053 Reproduced on Recycled Paper 32