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SIMPLIFYING THE COMPLEX ISSUE OF DOMICILE LAW

SIMPLIFYING THE COMPLEX ISSUE OF DOMICILE LAW

By K. Susie Adams #134068

Although I am not a full-time RVer, my husband, James, and I have been dedicated to summer RV trips for the past 17 years. With our trusted Casita in tow, we have crossed the U.S. and traveled by RV in two-thirds of the lower 48 states. Six years ago, we made the decision to move to our country home Polk County, Texas. At that time, our children had graduated high school and we had a rather mobile main business. In no time, it appeared clear to me that we needed to meet the local community. The job of executive director of the Polk County Child Advocacy Center, Childrenz Haven, then fell into my lap. I ran that Center for five years, resigning on September 1, 2016. While running Childrenz Haven, I became friends with Escapees CEO Shawn Loring and eventually joined his firm, Loring & Associates.

Shawn and I began talking about legal matters and I asked him about the firm’s main focus in regards to Escapees. He answered, “domicile issues.” Now, I must admit, as he said this, I thought, “domicile…? That usually takes about half an hour of one lecture in law school because it’s pretty cut and dry—you are either domiciled in one place or another, end of story. And, really, who cares?” Now after several months working with Loring & Associates and working with the interesting and diverse full-time RV community, I realize what an important issue it can be and what huge costs one may pay if you get it wrong.

Generally, “domicile” is defined state-by-state to mean basically the same thing: It’s “where you are both physically present and where you intend to make your home.” For most folks who live in one home that has been built on one property, there is no question about domicile. Once my husband and I moved full-time to Polk County, Texas, there was no doubt that Polk County, Texas, was our domicile. However, if you have sold everything and have become a full-time RVer, such issues as “physical presence” and “intent to make this state your home” are far more complex.

To give you an example, I will tell you about the Sanchezes. Geronimo and Kathleen Sanchez decided to partake in the full-time RV life in 2004. Up until June 18, 2004, they owned a home in Minnesota. They put their home on the market and, while attempting to sell the home, they traveled to South Dakota where they took certain actions to establish their domicile. They changed their address to “My Home Address,” a local organization that gave them a South Dakota mailing address. They also obtained South Dakota driver licenses, opened checking accounts in South Dakota, registered their vehicles, notified their insurance of their new address and obtained credit cards in South Dakota. In all, they spent 10 days in South Dakota. Then on June 18, 2004, they returned to Minnesota to close on the sale of their Minnesota home. From then until the end of 2004, they traveled. They visited 13 states, not returning to either Minnesota or South Dakota during that time. When it came time to file tax returns, they filed as Minnesota domicile up until June 18, 2004, and then as South Dakota domicile from then to the end of 2004.

Upon review, the Minnesota Tax Commission said, “Hang on; you have not established a new domicile in South Dakota. For tax purposes, you are still considered domiciled in Minnesota.” The Sanchezes then had the burden to prove they were domiciled in South Dakota and not Minnesota. They claimed that because they did all that they had done-sold the house in Minnesota, registered their cars in South Dakota, opened checking accounts, opened credit cards and bought insurance in South Dakota, as well as create a South Dakota mailing address-they had effectively become domiciled in South Dakota. The Minnesota Tax Commission, as well as the Supreme Court of Minnesota, disagreed. The Court ruled that because they had not established a “bodily presence” in South Dakota, they were still domiciled in Minnesota. As a result, they owed income taxes and penalties and interest to Minnesota. [See Sanchez v. Comm. of Revenue, 770 NW2nd 523 (Minn. 2009).]

So, what more could they have done? In a similar case, Marcotte v. Minn. Comm. [1987 WL 10252 (1987)], the Marcottes did many of the same things, but with some differences. They bought a condo in Florida, yet kept their home in Minnesota for several more years. They claimed to be domiciled in Florida even though they still had a home in Minnesota along with family, friends and children in Minnesota. They, too, spent time RVing from state to state. The Minnesota Tax Commission questioned their domicile, but the court found that they had indeed established a new domicile in Florida. The purchase of a condo in Florida was part of the evidence supporting this claim. Another factor that seemed to persuade the court was the fact that they cancelled their Minneapolis Athletic Club membership and joined an athletic club in Florida. These two actions showed their intention to actually be present in Florida.

As you contemplate domicile issues, please be aware of the pitfalls. Claiming that you are domiciled in, say, South Dakota, because you have registered cars, bought insurance, opened checking accounts, obtained a driver license and other such actions, it will not be sufficient. You need to spend time in the state and take other steps indicating that you really do intend to be there on a regular basis and you intend to make it home.

If you would like more details on the issue of domicile, please feel free to contact Loring & Associates.

When in Livingston, Texas, please stop by and visit us. Loring & Associates is located at Escapees headquarters and we would love to meet you, discuss domicile and other issues with you and help you continue to enjoy the full-time RV lifestyle.

K. Susie Adams has been a lawyer for over 30 years, spending 15 of those years working as a trial lawyer. She also taught legal writing at the University of Houston Law School. From 2011–2016, she was executive director of Childrenz Haven, the Child Advocacy Center of Polk County, Texas. Susie and her husband, James Frost, reside in Livingston, Texas.

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