SYLLABUS Tax court decisions as to whether a taxpayer's new residence results in a change in the taxpayer's domicile ordinarily involve questions of fact, which are reviewed to determine if there is sufficient evidence to support the tax court's decision. Once a taxpayer's Minnesota domicile is established, a rebuttable presumption is formed that the taxpayer remains domiciled in Minnesota and the taxpayer carries the burden of rebutting this presumption. The tax court properly conducted a fact-specific inquiry regarding the taxpayer's domicile and, when doing so, the court was not bound to conduct a formulaic application of the Minnesota Department of Revenue's 26 factors listed in Minnesota Rule 8001.0300, subpart 3 (2011). The taxpayer's acts and declarations that were intended to show a change in domicile from Minnesota to another state were insufficient to overcome the presumption that the taxpayer remained domiciled in Minnesota.
The opinion of the court was delivered by: Anderson, Paul H., J.
Dissenting, Anderson, G. Barry, J. Took no part, Page, J.
Office of Appellate Courts
ANDERSON, Paul H., Justice.
Kenneth B. Mauer, a Saint Paul, Minnesota native who at all times relevant to this case was employed by the National Basketball Association as a referee, did not file Minnesota income tax returns for the 2003 and 2004 tax years. Following an inquiry by the Minnesota Department of Revenue, Mauer filed a 2003 state tax return as a part-year Minnesota resident. The Department subsequently conducted a tax audit of Mauer, after which the Commissioner of Revenue determined that Mauer was a full-time, legal resident of Minnesota during the 2003 and 2004 tax years. Mauer filed an administrative appeal in which he asserted that, in July 2003, he established his domicile in Fort Myers, Florida, and therefore he was not required to file a Minnesota tax return as a full-time resident for either the 2003 or the 2004 tax year. After considering Mauer's administrative appeal, the Commissioner again determined that Mauer was a full-time Minnesota resident during the 2003 and 2004 tax years. Mauer appealed the Commissioner's determination to the Minnesota Tax Court, which affirmed the Commissioner. Mauer then filed a petition for certiorari with our court challenging the decision of the tax court.
Whether a taxpayer has changed domicile is ordinarily a question of fact, which means we review the court's decision to determine if there is sufficient evidence in the record to support the decision. Our review of the court's fact-specific analysis of the factors weighing for and against Mauer's continuing domicile in Minnesota shows that, when all the relevant factors are weighed and considered, including Mauer's acts and statements, there is more than sufficient evidence to support the tax court's decision. More specifically, the court correctly concluded that Mauer failed to carry his burden of overcoming the legal presumption that he remained domiciled in Minnesota during the 2003 and 2004 tax years. We affirm.
Relator Kenneth B. Mauer was born in 1955 in Saint Paul, Minnesota. After high school, Mauer attended Anoka-Ramsey Junior College, where he played baseball, basketball, and football competitively. During Mauer's freshman year at Anoka-Ramsey, he took a course in refereeing and thereafter he began to officiate football, baseball, and basketball games. As a result of this experience, Mauer realized that he "loved"
refereeing athletic games and decided to pursue a career as a professional referee. After one year at Anoka-Ramsey, Mauer earned a baseball scholarship to the University of Minnesota, graduating in 1977.
By the time Mauer was 24, he had begun attending National Basketball Association (NBA) summer camps so that he could advance his career as a professional basketball referee. Mauer began his professional career by refereeing NBA summer training games in Milwaukee, Detroit, and Chicago. In the winter, Mauer would return to Minnesota as well as referee high school and college football, basketball, and baseball games. In 1986, Mauer's work at the NBA summer camps paid off when the NBA hired him as a full-time referee. Employment as a referee with the NBA requires extensive travel nationwide between late September and early June. During the NBA season, Mauer spends as many as 27 days per month on the road. During the summer months, Mauer frequently travels abroad. Throughout his NBA career, and at least up through the disputed 2003-04 time frame in this case, Mauer continued to referee high school football games in Minnesota each fall.
In 1987, Mauer purchased six acres of land in Afton, Minnesota and retained an architect to design a large, year-round home for the property. Mauer began construction of the home in May 1990, and moved into the partially completed home in September 1991. Mauer completed and furnished the home as funds became available, and he completed the entire 10,600-square-foot home by 2002. During the time frame relevant to this case, Mauer carried insurance coverage for the Afton home in the amount of approximately $2,194,900. The Afton home was Mauer's sole residence until July 2003.
On September 12, 1994, the Internal Revenue Service initiated "Operation Slam Dunk," an investigation into whether NBA referees were evading federal income taxes through the use of airline ticket-refund policies. As a result of this IRS investigation, the United States Department of Justice indicted 22 NBA referees, including Mauer, for violation of federal tax laws. On July 11, 2000, Mauer was indicted on one count of endeavoring to obstruct and impede due administration of tax laws and four counts of tax evasion. A federal petit jury sitting in Minnesota found Mauer guilty on four out of the five counts, and on April 24, 2001, the United States District Court for the District of Minnesota sentenced Mauer to five months in prison, 800 hours of community service, and three years of supervised release, including five months of home confinement. The home-confinement part of Mauer's sentence was served in Minnesota. The last day of Mauer's home confinement under his federal sentence was June 30, 2003.
The next day, July 1, 2003, Mauer flew from Minnesota to Fort Myers, Florida. Two days later, Mauer signed a purchase agreement for a townhome in Fort Myers for a total purchase price of $235,038.51. That same day, Mauer obtained a Florida driver's license, surrendered his Minnesota driver's license, and registered to vote in Florida. On July 4, Mauer flew from Florida to Kentucky to visit family members, and then returned to Minnesota on July 7. On the same day he returned to Minnesota, Mauer's accountant sent him a letter with advice on how to establish Mauer's domicile in Florida. The accountant also advised Mauer to keep a detailed log of where he spent his time so that he could prove that he was in Minnesota for less than one-half of each year. On July 9, Mauer signed a Florida declaration of domicile before a Minnesota notary public. The closing on Mauer's Fort Myers townhome was on July 9, but Mauer did not attend the closing in person because he remained in Minnesota.
Over the next several months, Mauer traveled extensively between Minnesota, Florida, and other locations. On July 11, 2003, Mauer left Minnesota for a personal vacation to Europe, returning to Minnesota on July 27. He remained in Minnesota until August 8, when he left for a personal vacation to Saint Kitts. Mauer returned to Minnesota on August 17 and wrote in his travel log for that day that he had "returned home"--meaning Minnesota. On August 27, Mauer moved some of his household furniture and personal belongings from his Afton home to his Fort Myers townhome. Mauer returned to Minnesota one day later. In August and September 2003, Mauer left from and returned to Minnesota for several trips, including to Fort Myers and a vacation in Las Cruces, New Mexico. Mauer acknowledged that he remained in Minnesota during a significant portion of that fall so he could referee high school football games.
On August 27, 2003, Mauer filed an application seeking a homestead exemption for his Fort Myers townhome. Mauer purchased insurance for the Fort Myers townhome through a Florida insurance agent and engaged a Florida tax consultant to assist him with Florida tax issues. Later in the fall of 2003, Mauer contacted officials in Washington County, Minnesota, to request that they remove the homestead status from his Afton home.
After purchasing the Fort Myers townhome, Mauer provided the townhome's address to the NBA as his main residence. The official NBA referee list made available for the NBA's 2003 training camp included both Mauer's Afton and Fort Myers addresses. The NBA used Mauer's Afton address through the 2003-04 NBA season for tax purposes. Mauer made his own travel arrangements for getting to and from NBA games during the 2003-04 season, and he primarily traveled in and out of Minnesota.
Mauer's NBA pay was deposited into a Minnesota bank account through November 2003. In December 2003, Mauer opened a bank account in Fort Myers. From that point through the end of 2004, he had one-half of his pay deposited into his Florida account and one-half into his Minnesota account. The record contains 18 months of records for Mauer's Minnesota bank account, covering the last one-half of 2003 and all of 2004. During that time, Mauer wrote approximately 470 checks on the Minnesota account, or an average of 26 checks per month. The record contains only two months of records from the Florida bank account, during which time Mauer wrote 7 checks, or an average of 3.5 checks per month from the Florida account during the period in the record.
Between the start of the NBA regular season in October 2003 and the end of December 2003, Mauer was physically present in Minnesota on 36 days, including one game-day assignment. During that same period, Mauer was physically present in Florida for 15 days, two of which were game-day assignments. During the fall and winter months in late 2003, Mauer would often stay in Minnesota for four or five nights at a time. Mauer's longest stay in Fort Myers during that period was three nights. On December 28, 2003, Mauer flew to Fort Myers for a longer trip, a stay that he described in his travel log as a "vacation."
During the 2003-04 NBA season, the NBA expressed concern about Mauer's travel arrangements. The NBA gave Mauer a block travel stipend to cover his travel expenses and calculated that stipend based on Mauer having designated Fort Myers as his home airport. But the NBA learned that Mauer was, in fact, traveling in and out of Minneapolis-Saint Paul rather than Fort Myers, and believed that Mauer was being over- reimbursed for his travel. In January 2004, the NBA notified Mauer that it would not pay Mauer's requested January 11, 2004 travel stipend because Mauer was staying in Minnesota and was not actually traveling in and out of Fort Myers. The NBA and Mauer exchanged a series of contentious letters on the issue of whether Mauer was accurately reporting his travel locations, including a letter in which the NBA threatened Mauer with sanctions, up to and including termination of his employment as an NBA referee. Eventually, Mauer hired a travel agent who prepared a one-page handwritten travel cost summary showing that Mauer's designation of Fort Myers as his home airport cost the NBA $65,193.54, whereas a designation of Minnesota would have cost the NBA $66,806.49--an alleged savings to the NBA of $1,612.95. Following the receipt of this summary, the NBA relented on its internal inquiry into Mauer's travel expenses.
During the tax years at issue, Mauer owned and maintained four motor vehicles:
(1) a 2004 Lexus GX-470, which Mauer acquired in late 2003, and which was registered and garaged in Minnesota during the 2003 and 2004 tax years; (2) a 1993 Lexus LS-400, which was registered and garaged in Minnesota at least until late 2003; (3) a 1989 Rolls Royce Corniche, which was registered and garaged in Minnesota during the 2003 and 2004 tax years; and (4) a 1988 Honda Accord, which was registered and garaged in Florida starting in August 2003 through the end of 2004, and which was insured through a Florida insurance agent. There is some dispute over the location of the 1993 Lexus after late 2003. Mauer claims the tax court's finding that the 1993 Lexus was in Minnesota until late 2003 means that it was moved to Florida after that time; but there is no support for that claim in the record. In fact, as the Commissioner notes, one of the parties' joint exhibits shows that, at least through the end of 2004, Mauer insured the 1993 Lexus on the same Minnesota policy with his Afton home and other Minnesota property.
After purchasing the Fort Myers townhome, Mauer purportedly made efforts to sell his Afton home. In July 2003, Mauer contacted a friend, who was a licensed realtor, about selling the Afton home. The realtor was associated with a real estate brokerage firm with offices in Saint Paul, but was not himself a licensed broker. On July 15, Mauer and the realtor entered into a listing agreement for the sale of the Afton home. The only evidence in the record indicating that the Afton home was actually placed on the market is this listing agreement. The listing agreement did not mention the realtor's brokerage firm and did not include any other broker or firm to help list the Afton home for sale. In Minnesota, a broker is typically involved in the sale of real estate. See Minn. Stat. § 82.55, subd. 19 (2012). Mauer set the sale price for the home at $3.1 million. The realtor stated that he thought the suggested price was too high, but Mauer told the realtor that he "did not want to hear" what price the home should be listed for. Mauer asserts that he based the sale price upon an appraisal that a real estate professional prepared, but a copy of that appraisal was never produced for the record.
The Afton home was not listed with the Multiple Listing Service nor in any magazines, including a luxury homes magazine produced by the realtor's brokerage firm. Neither Mauer nor his realtor placed a "for sale" sign on the property, held any open houses, or showed the home to a potential buyer. The realtor testified that he produced flyers about the Afton home, but the only location where the realtor could recall placing the flyers was at the 3M offices. There is no record of the flyers or of any potential buyers or interested parties. The Afton home was never sold and Mauer and his realtor did not renew their listing agreement when it expired on July 15, 2004. During 2003 and 2004, Mauer maintained insurance on the Afton home, including coverage for $1.6 million worth of personal property.
In 2004, Mauer continued a travel schedule similar to his 2003 schedule, including extensive travel for both work and pleasure. On January 2, 2004, Mauer returned to Minnesota from what he described in his travel log as a "vacation" to Fort Myers. He stayed in Minnesota for four nights before traveling to Dallas, Texas, and Denver, Colorado. From Denver, Mauer again returned to Minnesota for three nights. Mauer then traveled to Chicago, Illinois, and Indianapolis, Indiana, before spending one day in Fort Myers. Mauer finished January with more extensive work travel, punctuated by a three-day stay in Minnesota and a two-day stay in Fort Myers. In February 2004, Mauer had a similar travel pattern: extensive work travel punctuated by extended stays in Minnesota of three, five, or six days, and shorter stays in Fort Myers. After Mauer's January 2, 2004 return from Fort Myers to Minnesota, Mauer did not spend his next full day in Fort Myers until at least January 30.*fn1 In March, Mauer traveled extensively and did not return to Minnesota. He stayed in Fort Myers for six nights at the ...