Hennepin County District Court File No. 02012943
Considered and decided by Lansing, Presiding Judge, Peterson, Judge, and
I. The department of revenue rule listing considerations for deciding whether a person is domiciled in Minnesota for income-tax purposes, Minn. R. 8001.0300 (2001), is not unconstitutionally vague.
II. The state's method for counting days spent in Minnesota for tax purposes is not preempted by 49 U.S.C. § 40116 (2000) in cases involving the domiciliary status of air-carrier employees.
The opinion of the court was delivered by: Lansing, Judge
Randall Enyeart was convicted for knowingly filing fraudulent tax returns, willfully evading income taxes, and intentionally evading motor-vehicle taxes, on the theory that he sought to avoid taxation by fraudulently creating the appearance that he was a resident of Alaska. On appeal from the judgment of conviction, Enyeart challenges the constitutionality of Minn. R. 8001.0300 (2001), the propriety of the jury instructions, the determination that federal law does not preempt Minnesota's method of calculating days spent in the state, and the admission of Minn. R. 8001.0300 into evidence. Because we conclude that the domicile rule is neither unconstitutionally vague nor preempted by federal law and that the district court did not abuse its discretion either in instructing the jury or in admitting the domicile rule into evidence, we affirm.
Randall Enyeart began working as a commercial pilot for Northwest Airlines (NWA) in 1979. He later married, had two children, and moved to Minnetonka. His children were enrolled in Minnetonka public schools, and he claimed Minnesota residency on his federal and state income-tax returns from 1993 until 1997.
In August 1997, Enyeart and his wife separated. Enyeart remained in the family's Minnetonka home, and his former wife and children moved to Deephaven. In December 1997, Enyeart notified NWA electronically that he had changed his residency to Alaska effective September 1997. But he continued to live in the Minnetonka house–and to homestead and insure it as a residence–until the house was sold in April 1999.
In early 1998, Enyeart completed a client-information form for accountant Linda Gasch, in which he indicated that he had moved his residence to Anchorage, Alaska. Relying on that information, Gasch listed Enyeart in his 1997 income-tax return as a part-year resident of Minnesota and a part-year resident of Alaska.
In April 1998, Enyeart filed a dissolution petition in which he indicated that he resided at the Minnetonka address and had been a Minnesota resident for not less than 180 days immediately preceding the commencement of dissolution proceedings. The dissolution judgment awarded Enyeart joint legal and physical custody of his two sons.
In November 1998, Enyeart applied for an Alaska driver's license. A certified record from Alaska indicates that Enyeart surrendered his Minnesota license. But according to Minnesota records, his license was not surrendered. Enyeart's 1995 Ford Expedition remained in Minnesota and was insured on the premise that it was garaged in Minnetonka. Also in November 1998, Enyeart registered to vote in Alaska. Up to that time, Enyeart had been registered to vote in Minnesota.
In connection with his 1998 state returns, Enyeart told Gasch that his residence continued to be in Alaska and that he was now flying international flights only. Based on that information, his Minnesota income taxes amounted to only $509. Had he claimed Minnesota residency in 1998, his state income tax would have been $14,471. Enyeart also claimed a homestead credit on his Minnetonka house for 1998 and received a $906 rebate. To be eligible for this property-tax rebate, the property must be (1) homesteaded, and (2) the taxpayer's "principal place of residence."
In April 1999, Enyeart purchased a townhouse in Shorewood, Minnesota. Enyeart paid the earnest money for the townhouse with a check from his NWA credit union bearing his Minnetonka address. And he bought homeowner's insurance. On May 3, Enyeart filed a homestead application for the townhouse, in which he indicated that he intended to occupy the property. Two weeks later, he filed a relative homestead application, listing his brother as the occupant and himself as the non-occupying owner. Enyeart listed the Minnetonka house as his current address.
Enyeart also executed a statement of occupancy in connection with a mortgage submitted for recording, indicating that he planned the townhouse to be his "principal residence." In an affidavit prepared by the title company for execution at closing, Enyeart indicated that he had lived at the Minnetonka address for the past ten years. And in a residential-loan application, Enyeart declared that he was the sole owner of the townhouse and that the townhouse was to be his principal residence. At closing, he provided the mortgage company with a copy of his Minnesota driver's license.
In September 1999, Enyeart's flight base moved from Minneapolis to Detroit, Michigan. Later that month, he applied for an automobile loan through the NWA credit union. In the application, Enyeart listed the townhouse as his residence and stated that he had lived there for four months. In October 1999, he applied for a home-equity loan that had an occupancy requirement. Enyeart used the townhouse as security.
In November 1999, Enyeart bought a 2000 Ford Expedition from a dealer in Buffalo, Minnesota, and paid with a check bearing his Shorewood address. The purchase agreement listed a Minnesota mailing address and Minnesota telephone numbers. Enyeart paid no sales tax on the vehicle because he told the dealer that he planned to transfer title to Alaska. Had he claimed Minnesota residency, the tax due on the vehicle would have been $1,422.18. Enyeart registered the Ford Expedition in Alaska in January 2000.
Even though he claimed Alaska residency and was based out of Detroit, Enyeart continued to have his NWA pay stubs and withholding information sent to the Minneapolis/St. Paul base during 1999 and 2000. Enyeart did not file a 1999 Minnesota income-tax return, claiming that he was an Alaska resident. Had he claimed Minnesota residency in 1999, he would have had to pay $11,454 in state income taxes.
In January 2000, Enyeart told Hennepin County officials that he had been a Hennepin County resident for the past ten years and had resided at the Shorewood address for the past nine months. In February 2000, he stated under oath that he lived at the Shorewood address and had lived there since April 1999. And in September 2000, he signed and filed emergency-notification cards with his sons' school that listed the Minnetonka address and Minnesota telephone numbers as his contact information.
In February and August 2000, Enyeart listed the Shorewood address in his application for a medical certificate of fitness, which he needed to maintain his commercial-pilot's license. Before then, he had used the Minnetonka address. Enyeart listed his Alaska address for the first time in February 2001. In December 2000, Enyeart applied for a second home-equity loan. Once again, Enyeart listed the Shorewood address as his current address and used the townhouse as security.
In his 2000 federal income-tax return, Enyeart continued to claim Alaska as his state of residence. Had he claimed Minnesota residency and filed a state income-tax return, he would have had to pay $15,036 in state income taxes.
Using Enyeart's flight schedules, bank records, Federal Aviation Administration records, and court documents, the state calculated the number of days Enyeart was present in Minnesota during the last three months of 1997 and the calendar years 1998, 1999, and 2000. The state attributed a day to Minnesota residency only if there was evidence that Enyeart was beginning or ending a flight in Minnesota or that he was conducting business in the state (closing a loan or attending a doctor's appointment, for example). The state did not count days in which Enyeart flew into or out of Minnesota in transit to another state or days in which Enyeart conducted business in another state. The state documented that in 1998 Enyeart spent 194 days in Minnesota and only twelve full days in Alaska. In 1999, Enyeart was in Minnesota 144 days and in Alaska two full days. In 2000, Enyeart was in Minnesota 186 days and in Alaska two partial days.
Enyeart's bank records indicate that between January 1998 and December 2000, Enyeart made 240 ATM transactions in Minnesota. During the same period, he made only three transactions in Alaska. Enyeart's bank records were mailed to his Minnetonka address until he moved in April 1999. His bank records for the remainder of 1999 and 2000 were mailed to his Shorewood address. Enyeart's ...