Residency

[Kram BergGold]

My client was in Africa serving in the Peace Corps for two years. During this time we filed US returns but no state returns as he was not residing anywhere in the US. He returned on August 2, spent a few days at his parents house in MA (where he grew up) and then basically travelled around the US and Europe till Oct 7 when he began living at his parents house in MA and working a little.. Would you start Ma residency on Aug 2 or Oct 7?

[AuditorTurnedGood]

Well, in MN

a person is determined to be a resident of the state until they are out of the state more than 183 days AND establish permenant domicile in another place. My gut tells me since the Peace Corps stint was limited to 2 years (I assume) from the beginning that the residence in Africa wouldn't be a domicile for MN purposes, and he would have remained an MN resident the entire time he was in Africa. Not sure how MA handles this one.

[Burke]

I assume he was not working while he was doing this travelling around? I would use Oct. 7.

[joanmcq]

I agree with auditor. If the Peace Corps stint is temporary, depending on MA rules on change of domicle (and I believe you have to have the intent to establish elsewhere), domicle stays in the last state in which you resided before you went overseas.

[erchess]

I am almost sure

that if a NC resident went into the Peace Corps for two years, briefly returned to NC, then spent time touring the US before coming back to NC that NC would take the position that he was an NC Resident the whole time. At least in NC the rule is that if you are at one time domiciled in NC you continue in that status until you are domiciled elsewhere. I don't think you change your domicile by being in the Peace Corps or Vista or by traveling around the US or the world and at least for NC purposes you don't go from NC Domicile to No Domicile. Once domiciled in NC you continue in that status until you are domiciled in some other specific place.

By the way, I don't think it is possible to be required to file a Federal Return yet not be domiciled in a particular US State and subject to its income tax if any.

[JohnH]

If the client lived in MA before entering the Peace Corps and then returned there, then MA may take the position that he never gave up his residency while working in Africa. The state has a fairly thorough discussion of the subject here:

http://www.mass.gov/?pageID=dorterminal&L=5&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Current+Year+Tax+Information&L4=Guide+to+Personal+Income+Tax&sid=Ador&b=terminalcontent&f=dor_help_guides_abate_amend_personal_issues_nonresidents&csid=Ador

The issue of residency may turn on such factors as whether he maintained a MA drivers license, voter registration, etc.

But if he was not a resident during the period of absence, I'd use the Oct 7 date for the beginning date. After all, it could have been his INTENT not to return to MA during his absence and then he changed his mind after the period of travel.

[Davc]

After all, it could have been his INTENT not to return to MA during his absence and then he changed his mind after the period of travel.

But as noted above, most states,(All that I've researched) require the establishment of a new domicile to complete change of domicile. (Which trumps "residency")

[JohnH]

You're right, but we are speculating on whether there's any wiggle room here aren't we?

[Nashville]

States Overlap

States have absolutely no qualms about legislating against the impermeability of matter, and the fact that this may overlap some other state or location is of no concern to them whatsoever. They fashion unto themselves their own definitions of nexus and residency, and are not obligated to honor any other states' definition.

There are such things as multistate compacts and the almost universal "credits for taxes paid to other states", but there need to be more Supreme Court decisions and guidance to stop this money grab. The fact that the other location is "Africa" makes it even easier on MA or MN because there will be virtually no opposition from anyone, and also there would be no "credit for taxes paid to other states."

While we are on the subject, some time ago there was a case involving a NY resident who worked in NJ, and then stopped commuting so he could work at home via telecommunications. Both states claimed nexus on this case. Does anyone know how this turned out??