STATE OF MINNESOTA TAX COURT

COUNTY OF RAMSEY REGULAR DIVISION





William D. Larson,


Appellant,

FINDINGS OF FACT

CONCLUSIONS OF LAW

ORDER FOR JUDGMENT




vs.


Docket No.

8125 R



Commissioner of Revenue,




Dated: January 11, 2012


Appellee.




The Honorable George W. Perez, Chief Judge of the Minnesota Tax Court, heard this matter on April 6 and 7, 2011, at the Minnesota Judicial Center, St. Paul, Minnesota.

Sue Ann Nelson, Attorney at Law, represented the Appellant.

Jeremy D. Eiden, Assistant Attorney General, represented the Appellee, Commissioner of Revenue.

The matter was submitted to the Court for decision pursuant to Minn. Stat. § 271.20.

The Court, having heard and considered the evidence adduced at the hearing, and upon all of the files, records and proceedings herein, now makes the following:


FINDINGS OF FACT


  1. In 1957, after serving in the U.S. Marines, William D. Larson (“Appellant”) returned to Minnesota and joined the family trucking business, Larson Transfer & Storage Co., Inc. Stip.1 ¶ 11; Tr.2 at 21.

  2. In 1957, Appellant married and had two children. This marriage lasted until 1978. Throughout the marriage the family lived in Minnesota. Stip. ¶ 15.

  3. In 1981, Appellant moved to Las Vegas, Nevada, and in 1984, at the request of his daughter, Appellant moved to Phoenix, Arizona until 1988. Stip. ¶ 16.

  4. In 1987, Appellant’s son, Eric, was born in Minnesota.

  5. In 1989, Appellant moved back to Minnesota. Stip. ¶ 17.

  6. Appellant’s sister, three children and four grandchildren reside in Minnesota.

  7. Appellant was not physically present in Minnesota or Nevada for more than 182 days in any of the tax years between 1999 and 2006. Stip. ¶¶ 3, 29.

  8. The tax years at issue are 2002–2006 (“Tax Years.”) Appellant was a single individual for the Tax Years. Stip. ¶¶ 1, 3.

  9. Appellant filed his Minnesota individual income tax return (Form M-1) for the tax year 1998 as a Minnesota resident. He was physically present in the state of Minnesota for more than 182 days in the tax year 1998 and maintained an abode in the state. Stip. ¶ 4.

  10. For the tax years 1999 through 2006, Appellant filed Minnesota individual income tax returns (Forms M-1) as a nonresident, attaching a Form M-1NR to each return and paid income tax as a nonresident. Stip. ¶¶ 5, 7; Exs. 40-44.

  11. Appellant filed amended Minnesota individual income tax returns (Forms M-1X) for the tax years 2005 and 2006 claiming Minnesota income tax refunds in the respective amounts of $21,085.00 and $34,745.00, plus interest. Stip. ¶ 7; Exs. 45-46.

  12. In June 2006, the Commissioner of Revenue (“Commissioner”) notified Appellant that his Minnesota income tax returns for tax years 2002, 2003, and 2004 were under review and audit. In March 2008, the Commissioner extended the audit to include Appellant’s Minnesota income tax returns for tax years 2005 and 2006. The Commissioner did not audit Appellant’s Minnesota income tax returns for tax years 1998, 1999, 2000 and 2001. Stip. ¶ 6.

  13. Following administrative appeals of the Commissioner’s proposed audit determinations that Appellant was a “resident” of the state of Minnesota for the Tax Years (Ex. 16), the Commissioner issued a Notice of Determination on Appeal on April 17, 2009 (“Order.”) Stip. ¶ 8; Ex. 25.

  14. The income tax set forth in the Order is for the Tax Years as follows below. Tax Year Income Tax

2002 $175,226

2003 $196,684

2004 $444,414

2005 $ 69,646

2006 $161,611


  1. In 1967, Appellant opened his first Peterbilt truck dealership. Stip. ¶¶ 11-12; Exs. 1, 2. Appellant’s Peterbilt truck dealership and leasing operations became the third largest Peterbilt dealership in North America. Stip. ¶ 12.

  2. Appellant started CitiCargo, a Minnesota company in the 1980’s. Stip. ¶ 1.

  3. Over time, Peterbilt designated Appellant to own and manage dealerships in the mid-western territory represented by Minnesota, Wisconsin, North Dakota, South Dakota, and Montana. Stip. ¶ 14.

  4. In 1967 through 2006, W.D. Larson Companies, Inc. (“Larson Companies”) owned 13 dealerships, 3 of which are in Minnesota. The other 10 are in the Dakotas, Montana, Wisconsin, and Ohio. Ex. 4.

  5. In 1967 through 2006, Appellant’s businesses were located in Minnesota, South Dakota, North Dakota, Wisconsin, Montana, California, Kentucky and Ohio, and his investment real estate properties were located in Minnesota, Nevada, Texas, Wisconsin and Mexico. Stip. ¶¶ 11-14; Stip. Exs. 1-3.

  6. In 1967 through 2006, Appellant created multiple different companies owned and managed under the umbrella of Larson Companies, a Minnesota corporation. Stip. ¶ 12; Exs. 1, 2, 4.

  7. In 1967 through 2006, Appellant owned no Nevada businesses. Exs. 1, 2, 4.

  8. For the Tax Years, Appellant served as chairman of Larson Companies, and was compensated as chairman. Tr. at 115. He signed all personal guarantees for business credit for the businesses. Tr. at 186.

  9. Between 1990 and 2005, the Peterbilt Corporation adopted a strategy of locally owned and managed dealerships within a territory. Appellant was chosen to own and manage Peterbilt dealerships in Minnesota, Wisconsin, North Dakota, South Dakota, and Montana. Stip. ¶ 14.

  10. Between 1998 and 2002, Appellant sold his companies F.B. Hart, Hart Truck Rental, and Transport White GMC dealership to meet Peterbilt franchise requirements. Stip. ¶¶ 14.b, 26.

  11. In 1997, Appellant became interested in purchasing the Las Vegas Peterbilt dealership. The Peterbilt Corporation mandated that Appellant sell his Minnesota and Wisconsin dealerships as a condition of purchasing the Las Vegas dealership, and that he live in Nevada so there would be local management. Stip. ¶ 23; Tr. at 131-32.

  12. In 1998, a Minnesota law firm drafted the contracts for sale of Larson Companies. Tr. at 146-47. Appellant retained the services of Ralph Thomas to find a buyer for his Minnesota and Wisconsin Peterbilt dealerships and entered into negotiations to sell his stock in Larson Companies (and many of his Minnesota Peterbilt dealerships) for $45 million; however, the deal fell through before its closing date of November 1, 1998. Also, Appellant did not purchase the Las Vegas dealership. Tr. at 131-32,156.

  13. In 1998, Appellant purchased and homesteaded a condominium, 205 E. Harmon Avenue, Unit 401 (“Unit 401”) at the Marie Antoinette in Las Vegas, Nevada. Stip. ¶ 24.

  14. Appellant did not make a homestead election on any Minnesota property. Tr. at 62.

  15. Appellant registered to vote in Nevada in 1998. Stip. ¶ 24.

  16. Appellant obtained a Nevada driver’s license and canceled his Minnesota driver’s license in 1998. Stip. ¶ 24.

  17. After the early 1990’s, Appellant’s employees Glenn Evans and Al Ostehage, handled day-to-day affairs. Stip. ¶ 19. Appellant’s managers consulted him on various business decisions regarding financing, buying a building, selling some trucks, and employee litigation. Mr. Ostehage would consult Appellant regarding updates on the business, if they were adding trucks to the fleet, and also about the approval of acquisitions of assets with long term financial deals. Tr. at 180-81.

  18. Larson Companies is owned by the W.D. Larson Revocable Trust (“Trust”),

which Appellant’s Minnesota attorneys drafted and executed in Minnesota in 2000. Ex. 10; Tr. at 133-34. The Trust was established under the trust laws of Nevada. The Trust was amended in Minnesota on February 28, 2006. Ex. 10.

  1. The Trust did not transfer control of the companies; it established an ordered way to control the companies at Appellant's passing. Ex. 10; Tr. at 133-35.

  2. The Trust also owns All Wheel Financial, Inc. in Bloomington, Minnesota and Marketing Underwriters Acquisitions, Inc. in Bloomington, Minnesota.

  3. From 2001 through 2003, Appellant purchased five additional units at the Marie Antoinette (205 E. Harmon, #1005, #311, #1008, #124, and #402) in Nevada to be used as investment properties. Stip. ¶ 27.b.

  4. For the tax years 2002 and 2003, Appellant reported rental income from the 401 Unit in Las Vegas. Exs. 40, 41.

  5. In 2005, Appellant purchased a home in Mexico for personal and rental use. Stip. ¶ 27.c.

  6. In 2006, Appellant purchased 2857 Paradise Road #106, Las Vegas, Nevada and claimed it as his primary residence. Tr. at 59; Ex. 3. This property is also a rental/investment property as it was converted after Appellant purchased 2877 Paradise Road, #3401, Las Vegas, Nevada in 2007. Tr. at 60-61.

  7. Appellant’s Minnesota real estate holdings were investment properties and always listed for sale. Stip. ¶ 27.a; Exs. 3, 17; Tr. at 49, 62-74. Appellant’s Minnesota properties are (Ex. 3):

  1. Indian Mound Road, Wayzata; purchased in 1998, put on the market the same day, and sold in 1999; Tr. at 62-63;

  2. Harrington Road in Wayzata; purchased in 1999 and sold in 2006; Tr. at 65-66;

  3. Bohn's Point Road in Wayzata, purchased in 2006; Tr. at 67; Ex. 3.

  4. Wayzata Boulevard, Wayzata, purchased in 2002 and currently being rented; Tr. at 64;

  5. A Tonka Bay lot, purchased in 2004 and sold in 2006; Tr. at 68-69;

  6. Fox Street, Orono, bought and sold the same day in 2006; Tr. at 69-70;

  7. Manitoo Trail, Grand Marais, purchased in 2002; Tr. at 71-72;

  8. Old Long Lake Road, Orono, purchased in 1996 and sold in 2010; Tr. at 72-73;

  9. Lindgren Lane, Independence, purchased in 2004; Tr. at 73; and

  10. Circle Road, Excelsior, co-owns with sister and purchased in 2002; Tr. at 69, 73-74.

  1. Appellant’s Wisconsin properties are: three properties on North Filter Bay

Road purchased in 1987 and 1994 and also one property on Airport Road

purchased in 1998 and sold in 2009, all in Hayward, Wisconsin. Tr. at 72;

Ex. 3.

  1. Appellant’s Texas properties are: on Leonard St., on Canton, and two

properties on Gillespie, all in Dallas, Texas. Ex. 3.

  1. Appellant registered 2 cars in Nevada and 12 cars in Minnesota. Ex. 25.


Vehicle Description

Time Period

Sold/Returned (if known)

State of Registration

Physical Location

1988 Bentley

current


Nevada

Nevada

2000 GMC Savanna

current


unknown

Wisconsin

1999 Chrysler 300

current


Mexico

Mexico

2003 VW Jetta

current


Mexico

Mexico

2004 Jeep Cherokee

current


Mexico

Mexico

1999 Cadillac

current


Minnesota

Minnesota

1994 Chevrolet Camaro

current


Nevada

Nevada

2005 Suburban

2005


Mexico

Minnesota

2005 Power Wagon

2005


unknown

Minnesota

2005 Dodge Durango

2004-2006

12/06

Minnesota

Minnesota

2005 Dodge Ram

2004-2008

03/08

Minnesota

Minnesota

2003 Jeep Wrangler

2005-2007

06/07

Minnesota

Minnesota

2003 Ford F150

2003-2007

03/07

Minnesota

Minn./Nev.

2004 Jeep Cherokee

2004-2007

08/07

Minnesota

Texas

2004 Mercedes S600

2005-2007

03/07

Minnesota

Unknown

2003 Cadillac Escalade


2003

Minnesota

Wisconsin

2003 Cadillac Escalade


2004

Minnesota

Wisconsin

2006 Jeep Commander (2)

2006


Minnesota

Minnesota

2006 Bentley Cont’l GT

2006

06/06

Texas

Texas

2006 Chrysler 300

2005

08/05

Minnesota

Minnesota


  1. Appellant registered 22 recreational vehicles in Minnesota and Wisconsin.

Ex. 25.

Vehicle Description

State of Registration

Physical Location

1985 Yamaha BW Bike (2)

Wisconsin

Wisconsin

1986 Honda Motorcycle

Wisconsin

Wisconsin

1987 Honda Motorcycle

Wisconsin

Wisconsin

1991 Polaris Snowmobile

Wisconsin

Wisconsin

1992 Polaris Snowmobile

Wisconsin

Wisconsin

1993 Yamaha Badger (2)

Wisconsin

Wisconsin

1994 Polaris Snowmobile (2)

Wisconsin

Wisconsin

1995 Polaris Magnum (3)

Wisconsin

Wisconsin

1995 Polaris 400

Minnesota

Minnesota

2000 Polaris Snowmobile (3)

Wisconsin

Wisconsin

2004 Bombardier ATV

Minnesota

Minnesota

2004 Suzuki 650

Minnesota

Minnesota

2005 Polaris Sportsman (2)

Minnesota

Minnesota

2005 Yamaha Rhino

Minnesota

Minnesota


  1. During the Tax Years, Appellant had four bank accounts in Minnesota and one in Nevada. Exs. 27-36, 50. The Nevada bank account was closed in 2004 and the funds were deposited into Appellant’s Minnesota bank accounts. Exs. 27-35; Tr. at 206.

  2. The most active bank account was in Minnesota (“Associated Bank 80.”) Exs. 33-35.

  3. Appellant maintained one bank account in Nevada since 1998. Ex. 50.

  4. All credit card bills and bank statements were sent to a Minnesota address, where Ms. Busta, a personal assistant, collected and paid the accounts. Exs. 36-39; Tr. at 123-29. This mailing address has always been in Minnesota. Tr. at 191. During the Tax Years, no mail was sent to or received at any of Appellant’s Nevada addresses, other than the first statement for his Nevada bank account. Ex. 50.

  5. Appellant’s father was a founding member of the Sons of Norway Lodge in

Minnesota and Appellant remains a member in honor of his father. Tr. at 103.

  1. During the Tax Years, Appellant used the Minneapolis/St. Paul airport as his

origination airport 77 times and flew in to Minneapolis/St. Paul 64 times. Exs.

36, 48.

  1. During the Tax Years, Appellant originated flights from Las Vegas 22 times;

and flew into Nevada 15 times. Exs. 36, 48.

  1. During the Tax Years, Appellant spent more time in Minnesota than any other

place. Stip. ¶ 29.

  1. In 1999, he spent 21 days in Nevada and 87 days in Minnesota. Stip. ¶ 29.

For 1999, Appellant spent the most of his time in Mexico. Tr. at 51.

  1. The percentage of time Appellant spent in each area per year. Stip. ¶ 29.

Tax Year

Minnesota

Nevada

Mexico

1999

24%

6%

36%

2001

38%

10%

26%

2002

42%

15%

28%

2003

44%

6%

23%

2004

46%

11%

22%

2005

43%

10%

24%

2006

35%

14%

18%


  1. The days Appellant spent in each area per year. Stip. ¶ 29.

Tax Year

Minnesota

Nevada

Mexico

1999

87

21

130

2001

138

35

95

2002

154

53

103

2003

159

21

83

2004

169

41

82

2005

156

35

86

2006

126

52

65


  1. Appellant’s attorneys and accountants are located in Minnesota; he did not

have regular attorneys in Nevada. Tr. at 90. Ms. Busta, who is located in

Minnesota, sets up financing for his property acquisitions, acquires and

sells real estate, and sets up tenants to lease his properties.

Tr. at 188.

  1. Appellant’s doctor appointments for 2005 and 2006 were in Minnesota,

Florida, and Texas. Ex. 25. Appellant consulted a Nevada doctor for his knee and skin allergies. Tr. at 94. His knee replacement surgery was performed during the Tax Years in Minnesota. Tr. at 92.

CONCLUSIONS OF LAW

  1. Appellant was a resident of the state of Minnesota under Minn. Stat. § 290.01, subd. 7(a) (2006) for the tax years 2002 through 2006.


  1. The Order of the Commissioner of Revenue, dated April 17, 2009, as revised, is hereby affirmed.


IT IS SO ORDERED. LET JUDGMENT BE ENTERED ACCORDINGLY. A STAY OF FIFTEEN DAYS IS HEREBY ORDERED. THIS IS A FINAL ORDER.

BY THE COURT,








George W. Perez, Chief Judge

MINNESOTA TAX COURT




DATED: January 11, 2012


Memorandum


Background

The issue in this case is whether William D. Larson (“Appellant”) was a resident of Minnesota for income tax purposes for the tax years 2002 through 2006 (“Tax Years”) under Minn. Stat. § 290.01, subd. 7(a) (2006).

The Commissioner of Revenue (“Commissioner”) determined that Appellant was a resident of the state of Minnesota for the Tax Years. The Commissioner issued a Notice of Determination on Appeal on April 17, 2009, (“Order”) with individual income tax and interest due.

Appellant claims he changed his domicile from Minnesota to Nevada in 1998 when he purchased 205 E. Harmon, Unit 401, Las Vegas, Nevada (“Unit 401 Condominium”) and attempted to sell his companies (“Larson Companies”) and purchase a Peterbilt dealership in Las Vegas. During this time, Appellant was diagnosed with and treated for kidney cancer. During 1999 through 2006, Appellant filed Minnesota individual income tax returns as a non-resident. Although the tax years at issue are from 2002 through 2006, we also examine Appellant’s actions during the 1998 time frame when Appellant claims he changed his domicile. The following are Appellant’s acts and circumstances relating to Minnesota and Nevada.

Family

Appellant was born and raised in Minnesota, and his family continues to live in Minnesota. In 1957, Appellant married and had two children. Appellant had a second son, Eric, in 1987, in Minnesota. During the Tax Years, Appellant had one minor child, Eric, in school in Minnesota. Appellant’s three children and four grandchildren live in Minnesota. Appellant provides housing for his son Eric and Eric’s mother, Appellant’s sister, and his other son.

Property

Appellant owns multiple properties. In 1998, Appellant purchased Unit 401 Condominium. Shortly thereafter, Appellant or his appointed agents moved clothing and wine from Appellant’s wine collection from Minnesota to Las Vegas. Appellant homesteaded the Unit 401 Condominium and gave up homestead classification on any other properties. He later purchased apartments #311, #1008, #124, and #402 at the same apartment complex in November 2002, February 2003, August 2003 and December 2003, respectively. Appellant sold Unit 401 Condominium in November 2006, #1008 in April 2006, and the other three in July 2006. In May 2006, Appellant purchased apartment #106 at 2857 Paradise Road, Las Vegas. It was not sold during the Tax Years.

In 2002 and 2003, Appellant reported rental income from the Unit 401 Condominium, his home in Las Vegas.

During the Tax Years, Appellant purchased and owned nine houses in Minnesota. Appellant stated that three of them were not purchased for investment reasons; one of those is where Appellant’s minor son and his mother live, and another is co-owned with Appellant’s sister. Of the remaining six, Appellant sold four: one in 1999, the other three in 2006.

Appellant owned 21 registered automobiles during the Tax Years. Of these 21 vehicles, 12 were registered in Minnesota, and 2 were registered in Nevada.

Appellant owned 22 all-terrain vehicles of various kinds. Of these, 5 were registered in Minnesota and 17 were registered in Wisconsin.

Appellant has 7 registered boats, 3 in Wisconsin, and 4 in Minnesota. Appellant also owns a Zeiman flat trailer that was registered in Minnesota.

Appellant applied for and received a Nevada driver’s license in 1998 and gave up his Minnesota driver’s license. He registered to vote in Nevada. He homesteaded his condominium at 205 E. Harmon Ave, Unit 401, Las Vegas, Nevada. Appellant did not make a homestead election on any Minnesota property.


Corporate Ownership

Appellant is the chairman of Larson Companies, and is compensated as chairman. He signs all personal guarantees for business credit for the businesses. Although Appellant does not handle day-to-day affairs of his businesses, Appellant’s managers consult him on many business decisions about: entering financing; buying a building; selling some trucks; or employee litigation.

Appellant started up a number of other corporate and commercial entities and these, along with Larson Companies, are all held by the W. D. Larson Revocable Trust. The Trust proclaimed to be established under the trust laws of Nevada. The W.D. Larson Revocable Trust was drafted by Appellant’s Minnesota attorneys in Minnesota and signed by Appellant in Minnesota on July 12, 2000.

In 1998, Appellant was negotiating to acquire the Las Vegas Peterbilt dealership, which required him to live locally. He entered into negotiations to sell many of his Minnesota dealerships. Ultimately, the sale of Larson Companies was unsuccessful. Appellant was also unable to purchase the Las Vegas dealership.

Bank Accounts

Appellant has at least eight bank accounts he uses for financial transactions. Of those eight, four are located in Minnesota, one in Nevada, one in Wisconsin, one in Mexico, and one in Texas. The Minnesota bank accounts were the most active. The Nevada bank account, which was opened in 1998 and closed in 2004, represents only a minimum of Appellant’s banking transactions. The Minnesota bank accounts were used to pay Appellant’s credit card and other bills, by Ms. Busta, Appellant’s assistant. Appellant’s bank statements and credit card bills were all sent to a Minnesota address.

Days and Travel

While we consider Appellant’s domicile under Minn. Stat. § 290.01, subd. 7(a), not subd. 7(b), it is noteworthy to examine where Appellant spent his time. Appellant was present in Nevada for 21 days in 1999, 35 days in 2001, 53 days in 2002, 74 days in 2003, 41 days in 2004, 35 days in 2005, and 52 days in 2006. During the same years, he was present in Minnesota for 87, 138, 154, 159, 169, 156, and 126 days, respectively. Appellant agrees he spent more time in Minnesota than in any other place. When traveling, the majority of Appellant’s flights departed from or arrived to Minnesota. Appellant departed Minneapolis/Saint Paul airport 77 times from 2002 through 2006, and arrived at Minneapolis/St. Paul 64 times. Appellant departed Las Vegas 22 times and arrived 15 times during the same period. When Appellant came to Minnesota, he visited friends and family, looked for investment properties, visited the properties he owned, and visited his businesses.

Additional Contacts

Appellant had a number of agents or professionals that managed his affairs. Appellant had relationships with four law firms in Minnesota. Appellant did not have any long term relationships with Nevada attorneys.

Appellant uses two accountants, both located in Minnesota. Appellant’s four brokerage accounts are in Minnesota and Texas.

Appellant’s doctor appointments for 2005 and 2006 were in Minnesota, Florida, and Texas. In 2005, Appellant had 15 doctor appointments: 13 in Minnesota and 2 in Florida. In 2006, he had 16 doctor appointments: 14 in Minnesota and 2 in Texas.


Standard of Review

Orders of the Commissioner are presumed correct and valid. Minn. Stat. § 271.06, subd. 6 (2008); Jansen v. Commissioner of Revenue, Docket Nos. 7695 et al. (Minn. Tax Ct. June 2, 2005). The taxpayer bears the burden of demonstrating the challenged order is incorrect. Wybierala v. Commissioner of Revenue, 587 N.W. 2d 832, 835 (Minn. 1998). “Placing the burden of proof on the taxpayer in civil tax cases is in accordance with the common law principle of placing the burden on the party who has particular knowledge of the relevant facts.” F-D Oil, Co. Inc. v. Commissioner of Revenue, 560 N.W.2d 701, 707 (Minn. 1997) (citations omitted).

Minnesota Statute Section 271.06, subd. 6 provides that the tax court shall hear every appeal de novo. A trial de novo means “a case shall be tried the same as if it had not been tried before. . . “ Stronge & Lightner Co. v. Commissioner of Taxation, 36 N.W.2d 800, 807 (Minn. 1949). In addition, upon a trial de novo, a taxpayer may introduce evidence. The decision of the court “may or may not be based upon the same evidence as the commissioner had.” Id.

Issue


The issue is whether Appellant was a resident of Minnesota for income tax purposes for the Tax Years under Minn. Stat. § 290.01, subd. 7(a) (2006). For the reasons set forth below, we find that Appellant was a resident of Minnesota for the Tax Years.

Appellant raised constitutional claims as part of his appeal.3 On his constitutional claims, Appellant must show that application of the law to him is unconstitutional beyond a reasonable doubt. For his equal protection claim, Appellant must show that the Commissioner’s application of the Minnesota domicile rules to a taxpayer that maintains residences in two states and travels for work is clearly arbitrary and has no reasonable basis. Schumann v. Commissioner of Taxation, 253 N.W.2d 130, 132 (Minn. 1977). No further evidence was offered about the claims at trial. The Commissioner argues that statutes are presumed constitutional and the Court must not conclude otherwise unless “absolutely necessary.” Stelzner v. Commissioner of Revenue, 621 N.W.2d 736, 740 (Minn. 2001). We agree. We find the Commissioner’s application of Minnesota's rules was constitutional.

Applicable Authority

In Minnesota, “[a]ll net income of a resident individual is subject to tax.” Minn. Stat. § 290.014, subd. 1 (2008). The definition of “resident” applicable here is “any individual domiciled in Minnesota.” Minn. Stat. § 290.01, subd. 7(a) (2008).

“Domicile” is defined in Minnesota Rules 8001.0300, subp. 2:

The term ‘domicile’ means the bodily presence of an individual

person in a place coupled with an intent to make such a place

one's home. The domicile of any person shall be that place in

which that person's habitation is fixed, without any present

intentions of removal therefrom, and to which, whenever absent,

that person intends to return.4


The taxpayer has the burden of proving a new domicile outside of Minnesota. Sanchez v. Commissioner of Revenue, 770 N.W.2d 523 (2009). No formula exists for determining a change in one’s domicile. Commissioner of Revenue v. Stamp, 296 N.W.2d 867, 870 (Minn.1980), but once established, a domicile is presumed to continue until the contrary is shown. Minn. R. 8001.0030, subp. 2. One may, therefore, live in another state for a period of time without affecting or altering domiciliary status in Minnesota. Sanchez, 770 N.W.2d at 526; Sandberg v. Commissioner of Revenue, 383 N.W.2d 277, 283 (Minn. 1986). Because the intent to remain in a fixed place is determinative, mere physical removal is insufficient. The inquiry focuses on intent, examining actions and words to discover that intent. Sanchez, 770 N.W.2d at 526; Sandberg, 383 N.W.2d at 283.

Furthermore, an existing domicile is presumed to continue until a new one is established. Manthey v. Commissioner of Revenue, 468 N.W.2d 548, 550 (Minn. 1991). A new domicile is proved by showing both a physical presence and intent to make a home in the new place. Stamp, 296 N.W.2d at 870.

When one announces an “intent to make a new abode one’s home,

the trier of fact may consider the acts and circumstances of that person

in evaluating the sincerity of the announced intent.” Comm’r of Revenue v. Stamp, 296 N.W.2d 867, 870 (Minn.1980) Intent is evaluated on a case-by-case basis, and a taxpayer’s actions are of more significance than his or her statements. Minn. R. 8001.0300, subp. 2.


Sanchez, 770 N.W.2d at 526.


To aid the trier of fact in determining whether a taxpayer remains domiciled in Minnesota for tax purposes, the Department of Revenue compiled a list of 26 factors to consider in determining whether or not a person is domiciled in this state, no single one of which is determinative. Minn. R. 8001.0300, subp.3 (2007).

Minn. R. 8001.0300, subp.3 (2007). Considerations. The following

items listed will be considered in determining whether or not a

person is domiciled in this state:

A. location of domicile for prior years;

B. where the person votes or is registered to vote, but casting an illegal vote does not establish domicile for income tax purposes;

C. status as a student;

D. classification of employment as temporary or permanent;

E. location of employment;

F. location of newly acquired living quarters whether owned or rented;

G. present status of the former living quarters, i.e., whether it was sold, offered for sale, rented, or available for rent to another;

H. whether homestead status has been requested and/or obtained for property tax purposes on newly purchased living quarters and whether the homestead status of the former living quarters has not been renewed;

I. ownership of other real property;

J. jurisdiction in which a valid driver's license was issued;

K. jurisdiction from which any professional licenses were issued;

L. location of the person's union membership;

M. jurisdiction from which any motor vehicle license was issued and the actual physical location of the vehicles;

N. whether resident or nonresident fishing or hunting licenses purchased;

O. whether an income tax return has been filed as a resident or nonresident;

P. whether the person has fulfilled the tax obligations required of a resident;

Q. location of any bank accounts, especially the location of the most active checking account;

R. location of other transactions with financial institutions;

S. location of the place of worship at which the person is a member;

T. location of business relationships and the place where business is transacted;

U. location of social, fraternal, or athletic organizations or clubs or in a lodge or country club, in which the person is a member;

V. address where mail is received;

W. percentage of time (not counting hours of employment) that the person is physically present in Minnesota and the percentage of time (not counting hours of employment) that the person is physically present in each jurisdiction other than Minnesota;

X. location of jurisdiction from which unemployment compensation benefits are received;

Y. location of schools at which the person or the person's spouse or children attend, and whether resident or nonresident tuition was charged; and

Z. statements made to an insurance company, concerning the person's residence, and on which the insurance is based.

Any one of the items listed above will not, by itself, determine domicile.

Minn. R. 8001.0300, subp.3 (2007).

Discussion

We apply the 26 factors to this case; no one factor is determinative. We consider all of Appellant’s acts and circumstances related to Minnesota and Nevada.

Appellant’s location of domicile for prior years

For most of his life, Appellant was a resident of and domiciled in Minnesota. There were, however, two exceptions. Between 1981 and 1984, he lived in Nevada and from 1984 to 1989, he lived in Arizona. In 1989, Appellant returned to and was domiciled in Minnesota.

Where the person votes or is registered to vote

In 1998, Appellant registered to vote in Nevada.

Classification and location of employment

Appellant was chairman of Larson Companies. Appellant argues that, as chairman of his business, Appellant was not an employee and was not involved in the day to day activities. However, Appellant, as chairman, remained active in the business of Larson Companies. For example, Appellant consulted with his managers on various business decisions regarding entering financing, buying a building, selling or adding trucks to the fleet, employee litigation, or approval of acquisitions of assets with long term financial deals. Appellant received compensation as chairman. Larson Companies is located in Minnesota.

Location of newly acquired living quarters whether owned or rented

In 1998, Appellant purchased Unit 401 Condominium in Las Vegas, Nevada.

Present status of the former living quarters, i.e., whether it was sold, offered for sale, rented, or available for rent to another


Of Appellant’s nine Minnesota properties, six were for sale and four sold during the Tax Years, excluding three owned by him but used by family, such as his son Eric, Eric’s mother, and his sister.

Whether homestead status has been requested and/or obtained for property tax purposes on newly purchased living quarters and whether the homestead status of the former living quarters has not been renewed


In 1998, Appellant opted for homestead status for Unit 401 Condominium in Nevada.

Ownership of other real property

Appellant owns property in Minnesota, Nevada, Texas and Mexico. Most of his property, nine houses, were located Minnesota, followed by seven properties in Nevada, four properties in Texas, and a property in Mexico.

Jurisdiction in which a valid driver's license was issued

As stipulated, Appellant cancelled his Minnesota driver’s license and applied for and received a Nevada driver’s license.



Jurisdiction from which any motor vehicle license was issued and the actual physical location of the vehicles


Appellant owns vehicles in Minnesota, Wisconsin, Nevada, and Mexico. Of the stipulated 21 vehicles, 12 are registered in Minnesota, 4 are registered in Mexico, 2 in Nevada, and 1 in Texas. However, the vehicles are not all present in the states in which they are registered. During the Tax Years, 7 vehicles were located in Minnesota and 1 vehicle split locations between Minnesota and Nevada.

Whether an income tax return has been filed as a resident or nonresident

Appellant filed his Minnesota individual income tax returns as a non-resident for the Tax Years.

Location of any bank accounts, especially the location of the most active checking account


Appellant had at least eight bank accounts that he used for financial transactions. Of those eight, four were located in Minnesota, one in Nevada, one in Wisconsin, one in Mexico, and one in Texas. Transactions at the four Minnesota banks represent by far the majority of all Appellant’s banking transactions. The Nevada bank account, which was opened in 1998 and closed in 2004, represents a minimal amount of Appellant’s banking transactions.

Location of social, fraternal, or athletic organizations or clubs or in a lodge or country club, in which the person is a member


As stipulated, the main organization in which Appellant is a member is the Stirling Club in Nevada. Appellant is a member of the Sons of Norway Lodge located in Minnesota.

Address where mail is received

All of Appellant’s mail was sent to a Minnesota address.

Percentage of time (not counting hours of employment) that the person is physically present in Minnesota and the percentage of time (not counting hours of employment) that the person is physically present in each jurisdiction other than Minnesota


Appellant claimed he intended to change his domicile in 1998, yet the following year, 1999, Appellant spent 36% of his time in Mexico, 24% in Minnesota and 6% in Nevada. Appellant acknowledges in each of the succeeding years, including the Tax Years, Appellant spent most of his time in Minnesota, followed by Mexico, then Nevada, as indicated by the table below.


Tax Year

Minnesota

Nevada

Mexico

1999

24%

6%

36%

2001

38%

10%

26%

2002

42%

15%

28%

2003

44%

6%

23%

2004

46%

11%

22%

2005

43%

10%

24%

2006

35%

14%

18%


Appellant claims he changed his domicile from Minnesota to Nevada in 1998 when he purchased his Unit 401 Condominium and attempted to sell his companies and purchase a Peterbilt dealership in Las Vegas. Further, Appellant claims he does not have to sever all family or business ties, such as his frequent visits to Minnesota, his, his business contacts, his family relationships, his continued activity of buying and selling investment properties, the presence of his bank accounts and numerous vehicles in Minnesota.

First, the Commissioner points out that in 2002 and 2003, Appellant reported rental income from Appellant’s stated home, Unit 401 Condominium in Las Vegas. Equally significant, Appellant indicated on Line 1b of each 1040 Schedule E (for 2002 and 2003) that he spent less than 14 days, or 10% of the time, at his home in Las Vegas. This is inconsistent with Appellant’s claim that his Las Vegas Unit 401 Condominium is his home residence. During trial, Appellant testified that Unit 401 Condominium was never rented because it contained his personal effects, and the reported rental income on his tax returns was an error. However, there was no attempt to amend or correct the 2002 or 2003 tax returns prior to trial. We accept the 2002 and 2003 tax returns as filed by Appellant.

Second, it is correct that one need not sever all family or business ties to Minnesota in order to be domiciled elsewhere. Also, any one of the 26 factors is not determinative of domicile. However, when all factors, along with Appellant’s acts and circumstances are considered in their totality, the evidence indicates Appellant’s continued presence in Minnesota. For example, most of Appellant’s business, be it Larson Companies or buying or selling real estate, occurred in Minnesota; most of his agents (and business relationships), attorneys, accountants, doctors, personal assistants, real estate agents, are located in Minnesota; his most active bank accounts are located in Minnesota; all his mail is received in Minnesota; and his family (children and grandchildren) which require his frequent visits, are located in Minnesota. We are mindful of Appellant’s attempt to change his domicile by buying a residence, attempting to sell his companies and considering buying a local dealership in Las Vegas; however, in considering all of Appellant’s acts and circumstances, the locus of Appellant’s life is in Minnesota.

Finally, Appellant is a person of great means, ability and mobility–he can reside anywhere he chooses, he can spend his days anywhere he chooses, and he can hire professionals to handle his affairs from anywhere he chooses, yet time and again Appellant chooses Minnesota. As the Minnesota Supreme Court reasoned in Luther v. Commissioner of Revenue, when a person avails themselves of the many services, benefits, and protections afforded by Minnesota, in return, Minnesota requires that person to contribute to the costs associated with providing those services, benefits, and protections by taxing that person as a resident of Minnesota. Luther v. Commissioner of Revenue, 588 N.W.2d 502, 509 (Minn.), cert. denied, 528 U.S. 821 (1999). Therefore, we find Appellant was domiciled in Minnesota for the Tax Years.

For all of the foregoing, we affirm the Commissioner’s Order dated April 17, 2009.

G. W. P.







1 Stipulation of Facts consists of ¶1–10; First Supplemental Stipulation of Facts consists of ¶11–30 and exhibits 1–4; Second Stipulation of Facts consists of ¶31–32 and exhibits 5-56. All will be cited as “Stip.”

2 The Transcript for the trial held on April 6, 2011, has been corrected and verified upon request of Appellant in a letter dated November 22, 2011. The court reporter’s explanations and corrections were filed with the Court on December 13, 2011. All correspondence with respect to the Transcript is part of the record.


3 The Erie Shuffle was completed on January 22, 2010, pursuant to Erie Mining Co. v. Commissioner of Revenue, 343 N.W.2d 261 (Minn. 1984).

4 Minn. R. 8001.0300, subp. 2.

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