Amen v. Pamela Law, No. CV 02 0515337 (CT 4/14/2005)

• Decision Date: 14 April 2005
• Docket Number: No. CV 02 0515337,CV 02 0515337
• Citation: Amen v. Pamela Law, No. CV 02 0515337 (CT 4/14/2005), No. CV 02 0515337 (Conn. Apr 14, 2005)
• Parties: Robert Amen et al. v. Pamela Law, Commissioner of Reveue Services. Opinion No.: 88445
• Court: Connecticut Supreme Court

Page 1

Unpublished Opinion

Robert Amen et al. v. Pamela Law, Commissioner of Reveue Services Opinion No.: 88445

No. CV 02 0515337

Superior Court of Connecticut

Judicial District of New Britain

Tax Session at New Britain

April 14, 2005

MEMORANDUM OF DECISION

ARONSON, JUDGE TRIAL REFEREE.

This is a tax appeal case arising from an assessment made by the commissioner of revenue services (commissioner) imposing a personal income tax liability against the plaintiffs, Robert Amen and Claudia Amen (collectively, the Amens) for the tax years of 1996 and 1997. The assessment is a result of the commissioner's determination that the Amens were domiciled in the state of Connecticut during those tax years.

The Amens claim that they moved to Belgium in 1996 and simultaneously abandoned Connecticut as their domicile. For this reason, the Amens filed Connecticut income tax returns as "part-year residents" in 1996 and as "nonresidents" in 1997.¹ The commissioner's position is that the Amens never abandoned Connecticut as their domicile. The Amens further claim that, in the alternative, if the court concludes that they were domiciled in Connecticut in 1997, they were still "nonresidents" for that year for tax reporting purposes.

Since 1986, the Amens owned a home at 451 Michigan Road in New Canaan, Connecticut. At the time of their departure for Belgium in 1996, the Amens lived in their New Canaan residence with their daughter Caroline, a son Peter of high school age and three older children attending college outside of Connecticut.

Robert Amen (Amen) was employed continuously by International Paper Company since October 1, 1980. He presently serves as president of that company. In January 1996, Robert Amen was offered a position in Brussels, Belgium, to serve as the president of International Paper Europe, a management unit of International Paper Company headquartered in Brussels. Amen immediately accepted the position and went to Belgium that same month. Claudia Amen and Caroline, then ten years old, moved to Belgium in April of 1996. At that time, the Amens' son, Peter, was a junior at New Canaan high school and remained in New Canaan for the 1996-1997 school year, living at the home of family friends. Peter graduated high school in 1997.

A "Letter of Understanding" was entered into between Robert Amen and International Paper Company, which set forth the terms and conditions of Amen's employment in Belgium. (See Joint Exhibit 1.) This letter also served the purpose of allowing Amen to obtain a work visa from the Belgium authority. The letter of understanding provided that the period of Robert Amen's expatriate assignment was "expected" to be three to five years. The letter further provided that if Amen's assignment continued beyond three years, the foreign service premium would be reduced by 20 percent each year thereafter and finally phased out after seven years.

Senior executives with International Paper, such as Robert Amen, are often transferred from one location to another, whether within the United States, or to locations in Europe, Asia or the Pacific. International Paper did not make commitments to their senior officers with respect to how long each assignment would be. Rather, the future needs of the company dictated the duration and location of the assignment. As the plaintiffs' brief points out, since Robert Amen began his employment with International Paper, he has been assigned to Manhattan, New York, Dallas, Texas, and then to Purchase, New York, before being assigned to Belgium in 1996. (Plaintiffs' Post-Trial Brief dated December 3, 2004, p. 14.) After spending four years in Belgium, Amen's progression through the ranks of the company led him to Stamford, Connecticut as president of International Paper in the fall of 2000. The duration of the assignments were contingent upon the needs of the Company, not the needs of the individual employee.

When the Amens moved to Belgium, they retained ownership of their house in New Canaan. The house was leased to a married couple from September 1, 1996 to July 31, 1998. A second lease to another couple was entered into on August 1, 1998 for a duration of two years, but the lease was terminated in early 2000 by the tenants. The house was next leased to a couple on a short-term basis from February 1, 2000 to the end of June 2000. Beginning in September of 2000, the Amens made substantial renovations to the house at a cost of over $700,000.

The Amens had two stated reasons for not selling their house upon the move to Belgium in 1996. The first reason was the loss of tax benefits associated with the sale of a residence and the repurchase of another residence. The second reason was their belief that the ownership of the house was a good long-term investment. As it later turned out, the Amens' reoccupation of the house as their residence and the short-term rentals fulfilled neither expectation.

While residents of New Canaan, prior to the move to Belgium, the Amens were congregants of St. Aloysius Church in New Canaan. Upon their move to Belgium, they registered as members of Our Lady of Mercy in Brussels. As members of the Brussels church, the Amens fully participated in church life and activities. While in Belgium, the Amens continued to fulfill their pledge obligations previously made to St. Aloysius. Upon their return to the states from Belgium, the Amens joined St. Patrick's in Armonk, New York, where they resided for a short period of time, and later rejoined St. Aloysius.

The Amens' daughter, Caroline, moved to Belgium with her parents and enrolled in the International School of Brussels from April 26, 1996 to June 21, 2000. The Amens also opened a bank account in Belgium to attend to their banking needs. Claudia Amen retained her New Canaan bank account so that she could write checks to her son Peter, who was attending high school in New Canaan. The Amens also surrendered their Connecticut driver's licenses in favor of obtaining Belgium licenses.

The Amens filed a 1996 Belgian income tax return that was prepared by Ernst & Young, reflecting the Amens' Belgian address. Robert Amen received special tax treatment under Belgian law that offered lower taxes to employees of foreign-owned corporations who are not citizens of Belgium, but are residents of Belgium. For this reason, the Amens filed their Belgian tax returns as nonresidents under a special tax regime.

While a resident of New Canaan, Robert Amen was a member of the Woodway Country Club in Darien, Connecticut. Woodway is an exclusive country club where one must wait some seven years to gain golfing privileges. Rather than forfeit his membership at Woodway, upon moving to Belgium, Robert Amen chose to change his membership to an inactive non-resident status so that it could be reinstated in the future.

The parties have divergent views as to the degree of proof that is necessary for the plaintiffs to establish that they changed their domicile from Connecticut to Belgium in 1996. The plaintiffs claim that their burden is by the preponderance of the evidence. The Commissioner claims that the plaintiffs' burden must be by clear and convincing evidence.

The plaintiffs argue that neither the statutes, General Statutes §§12-700 and 12-701, or the Regulations of Connecticut State Agencies articulate the degree of the burden of proof required to establish a change of domicile. As an example, section 12-701(a)(1)-1(d)(2) of the Regulations of Connecticut State Agencies provides in relevant part: "The burden is upon an individual asserting a change of domicile to show that the necessary intention existed." Section 12-701(a)(1)-1(b) of the Regulations of Connecticut State Agencies provides in pertinent part: "An individual who is a Connecticut domiciliary bears the burden of demonstrating that the conditions set forth above have been met when claiming to be a nonresident during the taxable year." The plaintiffs further argue that the burden of proof is by a preponderance of the evidence in other tax matters, citing Sears, Roebuck & Co. v. Board of Tax Review, 241 Conn. 749, 756, 699 A.2d 81 (1997) (burden of establishing overvaluation of property in appeal from property tax assessment is by preponderance of the evidence); New Haven v. East Haven, 47 Conn.Sup. 594, 609, 822 A.2d 376 (2001) (31 Conn. L. Rptr. 184), aff'd, 263 Conn. 108, 818 A.2d 741 (2003) (burden to prove by preponderance of the evidence that properties were exempt from taxation under §§12-74 and 12-81(4)); Constantine v. Commissioner of Revenue Services, Superior Court, judicial district of Hartford, Docket No. CV 91 0390484 (May 23, 1994, Aronson, J.T.R.) (11 Conn. L. Rptr. 558) (preponderance of evidence applied in taxpayer's claim of exemption from the cabaret tax).

The Commissioner argues to the contrary, that the burden of proof should be by clear and convincing evidence, citing Leonard v. Commissioner of Revenue Services, 264 Conn. 286, 302, 822 A.2d 1184 (2003) (challenge to a tax deficiency assessment). The Commissioner also points to New York decisions finding that the amount of proof applicable to a change of domicile case under New York's state income tax law is by clear and convincing evidence.²

The issue in this case is whether the Amens changed their domicile from this country to a foreign country. The change of one's domicile from a country of origin to a foreign country raises important considerations involving the individual rights of the plaintiffs as well as the rights of their children. Of key importance here is that the power of a state to tax its residents' personal income, regardless of whether the source of the income is within or without the state, rests on residence.³ For this reason, domicile is of no small moment. When important individual rights are involved, as here, a higher degree of proof represented by the clear and convincing standard should be applied. C. Tait, Handbook of Connecticut Evidence (3d Ed....