The Klimov Case

From Russia with Love

Klimov was a case about a Russian citizen who lived in New York for several years before returning to Russia; she however continued to own several buildings in Manhattan as investment properties.  Unfortunately, this had some negative implications...

New York, like many cities, imposes a city income tax; this tax is imposed if the person is “domiciled” in here, or if he or she is a “statutory resident” of the city.  (either is sufficient; this is also the rule for state residency)  “Domiciled” means that a person physically present in NYC and mentally intends to stay here; a person retains that “domicile” until he or she establishes a new domicile.  Thus, for example, if a person goes on a 2-year traveling binge, living in 20 different countries for a month or two at a time, he or she would still be considered to be "domiciled" here, even though not that much time was spent here.  “Statutory resident” is a little bit simpler - it means you spend at least 183 days here in NYC and have a “permanent place of abode” within the city limits.

In Klimov , the state auditors argued that, because she still owned the properties, the taxpayer had not established a new domicile.  (despite the fact that she had moved back to Russia several years ago and had not even been here)  Because Russia was her country of birth and citizenship, I was able to successfully persuade the powers that be that this was not the case - that she had given up her domicile in the United States.

The moral of the story - beware of buying property on this island :) 

Residency audits are a major thing I deal with as a tax attorney in this city; they are a frequent source of headaches so feel free to message me for advice on your situation, based on my past experiences with them.

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Nate Strand, Tax Attorney | Upper East Side, NYC

399 E 78th St   New York NY 10075