Domicile of California Residency Issues
Domicile is defined as the location of your permanent home or the place you intend to return to whenever you leave. Domicile is the location where the taxpayer has the most permanent connections (including home and principal establishment) and intends to remain. Taxpayer intent is important but not enough on its own to determine domicile. An individual can only have one domicile at a time. (Cal. Code Regs. Title 18 Sec. 17014, Appeal of Anthony and Ann Eustachio 85 SBE 040)
In the Noble case, an appeals court ruled in favor of the FTB. This audit focused on the date the taxpayer moved out of California. The taxpayer claimed they had moved from California to Colorado during March 1994. They bought a home in Colorado in February 1994. The facts of the case showed that the taxpayer never moved into that property and eventually made it a rental. The taxpayers ultimately purchased and moved into a principal residence in Colorado during June 1994. The taxpayers were found to be residents of California until July 1994 for these reasons:
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They did not list their home in California for sale until June 1994.
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Their cars were registered in California.
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They had California driver’s licenses.
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Mr. Noble had a business in California.
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Their business and financial institutions were in California.
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They did spend more time in California during the period in question.
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Their doctors and dentists were in California.
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They belonged to California clubs.
FTB ruled Noble was a resident of California during the audit period. The Court of Appeals agreed with the lower court that the taxpayers had greater ties to California than Colorado. They also ruled that the date the Noble’s residence changed was later than claimed by the taxpayers. (Noble v. Franchise Tax Board (2004) 118 Cal. App. 4th 560)
“Residence” and “Domicile” Can be Different
Individuals may be residents of California while domiciled outside of the state when in California for an indefinite period. On the other hand, it may happen that individuals domiciled in California may be treated as a nonresident of California if they are outside California for an indefinite period. To illustrate the importance of domicile, in the event of any doubt about domicile, the FTB will presume the domicile has not changed.
Domicile Criteria
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California has separate definitions for domicile and for residence.
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It is possible to be domiciled in CA but not be a California resident.,
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It is possible to be domiciled in another state and still be a California resident.
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For tax purposes, the meaning of the term “domicile” is the place where you establish yourself and your family, not merely for a limited purpose.
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It is your true, fixed, and permanent home.,
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It is the place where, whenever you are absent, you intend to return.
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You can only have one domicile at a time.
Maintenance of a marital abode in California is an important factor in determining domicile.