Carl v. Commissioner of Revenue

Decision Date02 December 2016
Docket Number8762-R
PartiesPatricia K. Carl, Appellant, v. Commissioner of Revenue, Appellee.
CourtTax Court of Minnesota


Thomas G. Haluska, Judge

This matter came on for trial before the Honorable Thomas G Haluska, Judge of the Minnesota Tax Court, on January 28 February 10, and July 11, 2016.

Appellant Patricia K. Carl appeared on her own behalf.

Sara L Bruggeman and Michael Goodwin, Assistant Minnesota Attorneys General, appeared on behalf of appellee Commissioner of Revenue.

Ms. Carl filed her 2008 Minnesota income tax return as a nonresident claiming that she was a Florida resident that year. The Commissioner assessed Ms. Carl $47, 460.64 in additional Minnesota income tax, penalty, and interest on the ground that, because of the number of days she was physically in Minnesota, she was a non-domiciled Minnesota resident for the 2008 tax year. Ms. Carl's administrative appeal of the Commissioner's order was denied and Ms. Carl timely appealed to this court. We affirm the Commissioner's order.

Based upon all of the files, records, and proceedings herein, the court now makes the following:


1. Ms. Patricia K. Carl is the majority shareholder of Depo International, a court reporting service, with separate offices in Minnesota, Nevada, and Florida. Her work results in significant travel during any one calendar year.[1]

2. Ms. Carl owned residential properties in Florida and Minnesota in 2008.

3. Ms. Carl maintained an abode in Minnesota in 2008.

4. Ms. Carl was domiciled in Florida for the 2008 tax year.

5. Tax year 2008 was a leap year consisting of 366 days.

6. The parties stipulated that Ms. Carl was physically present in Minnesota 173 days and disputed whether she was physically present in Minnesota on 61 additional days in 2008 [2] The parties agree Ms. Carl was not physically present in Minnesota on any of the remaining 132 days in 2008.

7. The disputed days in 2008 are: January 7; February 14; March 8-11, 25; April 22; May 18; June 15, 27-30; July 1-6, 26-27; August 1-3, 23, 30-31; September 1-7, 13-15, 28; October 3-7, 11-12, 18-19, 31; November 1, 6-12, 17, 21, 24; and December 14.[3]

8. Ms. Carl did not maintain contemporaneous daily, weekly, or monthly calendars during 2008.[4]

9. Depo's separate businesses each maintained credit card accounts at U.S. Bank. Minnesota-based Pat Carl and Associates issued cards to Minnesota employees (hereinafter the "Minnesota Card"). The Minnesota Card account issued individual cards to employees in the employee's own name and the credit card statement recorded charges according to the employee card that was used for purchases. Nevada-based Laurie Webb and Associates issued a card only to Ms. Carl (hereinafter the "Nevada Card").[5]

10. Depo's Minnesota Card and Nevada Card numbers were frequently used by employees to make online or recurring purchases and payments without needing to present a physical card.[6] Many other charges on the credit card, however, required the physical card and a signature.

11. If Depo staff had physical access to one of its credit cards, they would not have had access to both Ms. Carl's Minnesota Card and the Nevada Card at the same time.[7] Accordingly, Ms. Carl always had at least one card in her possession on any given day.

12. Ms. Carl was in Minnesota on January 7; February 14; March 8-11; May 18; June 15, 29, and 30; July 1-6 and 26-27; August 1-3, and 23; September 2-7, 13-15, and 28; October 3-7, 11-12, and 31; and November 1, 6-12, 21, and 24, 2008.

13. Ms. Carl was not in Minnesota on March 25; April 22; June 27-28; July 28-29; August 29- September 1; October 18-19; November 17; and December 14, 2008.

14. Ms. Carl was present in Minnesota for more than 184 days in 2008 thereby resulting in non-domiciliary resident status for the 2008 tax year.


1. Ms. Carl submitted sufficient evidence to rebut the prima facie validity presumption of the Commissioner's Order.

2. Ms. Carl was a non-domiciled full year resident for 2008.


The August 8, 2014 order of the Commissioner is affirmed in its entirety.



Appellant Patricia K. Carl filed her 2008 Minnesota state income tax return as a non-domiciled part-year resident. In 2012, the Commissioner audited Ms. Car's 2008 tax return concluding that she was a non-domiciled Minnesota resident throughout the entire year. Ms. Carl timely filed an administrative appeal and the Commissioner affirmed her earlier order. Ms. Carl timely appealed the latter order to this court. We affirm the Commissioner's order.


Ms. Carl is a court reporter and the majority shareholder of Depo International, Inc. (hereinafter "Depo"), a court reporting service headquartered in Minnesota.[8] In 2008, Depo had separate locations in Minnesota, Florida, and Nevada, and also performed court reporting services at varied international locations.[9] Ms. Carl frequently traveled between all three domestic office locations for work and personal visits in 2008.[10]

Ms. Carl was a Minnesota domiciliary before 2006, but in March of 2006 Ms. Carl purchased a Florida residence that she homesteaded.[11] Ms. Carl obtained a Florida driver's license in December 2006, was noticed for Florida jury duty in 2007, and opened a Florida office for Depo in2008.[12]

In 2008, Ms. Carl promoted her daughter, Angela "Carl" Baker, to Director of the Minnesota office.[13] Ms. Baker is currently part owner of Depo, [14] resides in Ms. Carl's Minnesota residential property, [15] and testified at the trial. Ms. Carl owned vehicles registered in both Florida and Minnesota in 2008.[16] For the 2008 tax year, Ms. Carl filed her Minnesota income tax return as a Florida resident and allocated a portion of her individual income tax to Minnesota, believing she was not a fulltime Minnesota resident.[17]

In late 2011, the Commissioner of Revenue audited Ms. Carl for the tax years 2008, 2009, and 2010 to determine whether Ms. Carl was a non-domiciliary resident of Minnesota.[18] Although Ms. Carl was able to substantiate that she was not in Minnesota for more than 183 days in 2009 and 2010, [19] she was unable to persuade the Commissioner that she was physically present in Minnesota 184 or fewer days in 2008. Consequently, the Commissioner issued a Notice of Determination on Appeal on August 8, 2014, assessing Ms. Carl $47, 460.64 in tax, penalty, and interest.[20] Ms. Carl timely filed her appeal with this court, asserting she was "not a Minnesota resident" and was "a Florida resident" in 2008.[21] At trial Ms. Carl presented evidence in the form of calendars, credit card statements, Florida SunPass transponder records, witness testimony, and work schedules.

The parties agree that Ms. Carl was present in Minnesota for 173 days and disagree on Ms. Carl's presence for 61 additional days. The parties dispute the following dates: January 7; February 14; March 8-11 and 25; April 22; May 18; June 15 and 27-30; July 1-6 and 26-27; August 1-3, 23 and 30-31; September 1-7, 13-15, and 28; October 3-7, 11-12, 18-19, and 31; November 1, 6-12, 17, 21, and 24; and December 14.[22]

The sole factual issue in this appeal is the number of days Ms. Carl was present in Minnesota. For the reasons below, we find that Ms. Carl was in Minnesota for more than half the year in 2008.


"The tax court shall hear, consider, and determine... every appeal de novo." [23] However, the Commissioner's orders are "prima facie valid." [24] A taxpayer bears the "burden of going forward with evidence to rebut or meet the presumption, " because assessments by the Commissioner are presumed valid.[25]

"When a taxpayer presents substantial evidence that the Commissioner's assessment order is invalid or incorrect, the presumption of validity is overcome and the case is 'decided by the trier of fact the same as if the presumption had never existed.' " [26] However, the taxpayer retains the burden of proof as "the taxpayer is in the best position to produce the records and information relevant to the matter in dispute." [27] Failure to furnish documentary proof to support a claim can be a failure to carry the burden of proof, warranting an affirmation of the Commissioner's assessment.[28]

In residency and domicile cases, the taxpayer must provide "contemporaneously kept records that establish the places of physical presence of the person on particular dates" throughout any given year.[29] A taxpayer may overcome the prima facie validity of an assessment by demonstrating that the Commissioner's methodology used to arrive at the assessment was invalid or that the calculation of tax is incorrect.[30] We find that by proving she was outside of Minnesota on at least one disputed date, Ms. Carl has met her burden to overcome the prima facie validity of the Commissioner's order.


"All net income of a resident individual is subject to tax ...."[31] For Minnesota income tax purposes the Legislature has identified two possible classifications of individuals: residents and nonresidents.[32] "If a taxpayer is a Minnesota 'resident, ' Minnesota taxes her worldwide net income." [33] If a taxpayer is a "nonresident, " Minnesota will tax income derived only from her activities within the state.[34] An individual may qualify as a non-domiciled resident if she meets three requirements: (1) the individual must be domiciled outside the state; (2) the individual must maintain a place of abode in Minnesota; and (3) the individual must spend over half the...

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