‘Domicile’ Ruling Undercuts ‘Bright-Line’ Ohio Residency Statute

In the state of Ohio, the answer to whether a person is eligible to claim non-resident status for tax purposes has always been answered by R.C. 5747.24, the state’s “bright-line” residency statute. But in the year 2015, that precedent was set on its head by the Ohio Supreme Court’s 5-2 ruling in Cunningham v. Testa, which determined that the common law understanding of “domicile” is contained within the existing bright-line statute. 

What Does This Ruling Mean?

It means that for those trying to claim non-residency, the previously existing method is no longer in play and the procedure is now a straightforward analysis of the facts that are discovered in each individual case.

In order for the previous law to regain its relevance, it will be necessary for the state legislature to revisit and amend it in order to place a limit on the definition of ‘domicile’ that is the same as that contained in the original bright-line statute. Only by doing this will the lawmakers be able to make clear that they are working to eliminate the rule that was just established.

The new interpretation, as determined by the court, indicates that in order to successfully obtain non-residency status in Ohio under the statute, there must be an irrebuttable presumption. According to 4757.24(B)(1), it is necessary to file an “Affidavit of Non-Ohio Domicile” attesting to the answers to two established tests for the specified tax year.

Established Tests of Residency

The first of these is that there were “no more than 182 (currently 212) contact periods in the state,” and the second is that the taxpayer is able to identify “at least one abode outside this state.” Critically, if the state is able to identify a “false statement” within this application, then under statute 5747.24(C), their application will be rejected and they will be determined as having been a state resident.

In handing down its majority ruling, the Court indicated that, “although the bright-line statute creates an irrebuttable presumption, it does not affect the substantive [common] law of domicile” and that “by clear implication, R.C. 5747.24 incorporates the common law of domicile and preserves it.”

In clarifying the interpretation of the common law, the court went on to say, “the issue of domicile is one of intent determined by the facts of the individual case…. the acts and declarations of the person … and “accompanying circumstances.” They clarified these by citing specific examples of “evidentiary factors”: “filing federal income tax returns, voting, automobile registration or location of spouse and children.”

Though these ruling may seem like common sense, the facts in the case at hand were highly specific. The Cunningham family’s mail was, in fact delivered to the address of their home in Cincinnati rather than to the address of their Tennessee property. Their residential history in the region included three different houses during the course of having raised their family, with the most recently owned home being located in the Indian Hill neighborhood. Both adults’ driver’s licenses were issued in the state of Ohio, and both had participated in the 2008 elections as Ohio voters. 

In light of these factors, the Court’s decision indicated two things: first, that when the common law of domicile is not supported, then a statement that is submitted to indicate a non-Ohio domicile can be interpreted as false, and second, that it is the responsibility of the tax commissioner to establish “a substantial factual basis” in order to make this determination.

Importantly, the Court indicated that the purposes of the statute cannot be frustrated in the pursuit of the truth. In the case of the Cunninghams, the fact that the family had filed for a tax break – the Ohio homestead exemption – was interpreted as supporting the finding that the  non-domicile application was in fact, a false statement.

As a result, even though the family had substantially established and met the required elements outlined under R.C.5747.24(B)(1), proving both that they had out an out-of-state abode and that they had met the required number of contact periods to qualify for non-Ohio domicile status, the fact of their homestead application contradicted those facts and was considered to be what was most important to the case.

The decision by the court was not unanimous. Justice French dissented, indicating that the statute makes allowances for the type of false statement represented by the homestead application only as a predicate fact, and that the ruling  by the majority represented a defeat of the statute’s goal, and “essentially renders the ‘bright-line’ non-residency status established by R.C.5746.24(B) moot, as the commissioner could always challenge the veracity of the statement that the taxpayer was not domiciled in Ohio.”

Justice French went on to indicate that her colleagues’ argument regarding the false statement fell short. She said, “Two different taxes – the state income tax and the local real estate tax – have statutory provisions that create two different tax breaks. It lies well within the authority of the legislature to adopt different domicile standards for two completely different tax provisions….There is no reason why the taxpayer cannot claim the benefit of both tax breaks.”

There is no doubt that the Court’s decision will lead to a good deal of additional legal action being pursued by the tax commissioner.


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