Horvitz v. Commissioner of Revenue

• Decision Date: 12 February 2001
• Docket Number: P-549
• Citation: Horvitz v. Commissioner of Revenue, 747 N.E.2d 177 (Mass. App. 2001)
• Parties: (Mass.App.Ct. 2001) JEFFREY E. HORVITZ vs. COMMISSIONER OF REVENUE. 99-Appeals Court
• Court: Appeals Court of Massachusetts

747 N.E.2d 177 (Mass.App.Ct. 2001)

JEFFREY E. HORVITZ vs.COMMISSIONER OF REVENUE.

99-P-549Appeals Court

Court of Appeals of Massachusetts

February 12, 2001.

April 24, 2001

County: Suffolk

Present: Armstrong, C.J., Greenberg, & Cowin, JJ.

Taxation, Income tax, Abatement.Evidence, Presumptions and burden of proof.Administrative Law, Substantial evidence, Agency.

Appeal from a decision of the Appellate Tax Board.

Kenneth W. Salinger for the taxpayer.

Juliana deHaan Rice, Assistant Attorney General, for the Commissioner of Revenue.

COWIN, J.

Asserting that the taxpayer, Jeffrey E. Horvitz, had changed his domicile from Florida to Massachusetts effective September 2, 1991, the defendant Commissioner of Revenue (commissioner) assessed personal income taxes against him from that date to December 31, 1992.Horvitz paid the assessed amount, but denied that he had changed his domicile and applied for an abatement in full.¹When the commissioner denied the abatement application, Horvitz, conformably with G. L. c. 58A, § 6, appealed to the Appellate Tax Board(board).After a hearing before a single member, the board upheld the commissioner's denial of Horvitz's abatement claim, and Horvitz has appealed to this court.SeeG. L. c. 58A, § 13.We hold that the board improperly assigned to Horvitz the burden of proof on the issue of change of domicile.Because this may have affected the administrative outcome, we vacate the board's decision and remand the matter for further proceedings.

1.Procedural history.

The board held evidentiary hearings, during which it heard five witnesses (including Horvitz) and received extensive documentary exhibits.Subsequently, the board determined that the commissioner had correctly assessed Horvitz for personal income taxes as a domiciliary of Massachusetts and denied his abatement claims.Pursuant to G. L. c. 58A, § 13, Horvitz requested findings of fact and a report, and thereafter the board provided a comprehensive statement.

In the opinion section of its findings of fact and report, the board characterized the case as a statutory tax abatement proceeding under G. L. c. 62C, § 39, and ruled that therefore the party seeking the abatement (Horvitz) had the burden of proof.This meant that Horvitz was assigned the burden of persuading the board with respect to the ultimate issue, i.e., whether he changed his domicile to Massachusetts on September 2, 1991.The board then found that a change of domicile from Florida to Massachusetts had occurred in accordance with the commissioner's determination, thereby justifying the assessment of personal income taxes against Horvitz.

Horvitz appealed, arguing essentially two points: (1) that the board erred in placing upon him the burden of proving that he had not changed his domicile from Florida to Massachusetts; and (2) that the board's finding that a change of domicile had occurred was not supported by substantial evidence.

2.Material facts.

For the most part the board's subsidiary findings, set out below in summary form along with other uncontroverted evidence, do not appear to be genuinely disputed.A native of Ohio, Horvitz married Linda Hill in California in 1973.The couple lived in California until 1980, when they moved to Florida.They lived in Florida from 1980 through their separation in 1989, and then lived separately in Florida until 1991.

Two daughters were born of the marriage: Christina in 1984 and Caroline in 1988.Caroline is severely disabled with cerebral palsy and a hearing disability.Because of her handicap, she requires extensive special education, medical and related services.Horvitz, a man of considerable wealth, supported his wife and children and paid Caroline's medical expenses to the extent that they were not covered by insurance.

When Horvitz and his wife separated in November, 1989, Linda retained custody of the children by agreement.²Horvitz, mindful of the needs of his younger child, investigated available services and treatments, and concluded that Caroline would best be served by residence in an older urban center with a greater infrastructure of medical facilities and schools for the deaf than was available in Florida.By 1990, he had concluded that the Boston area would be the best fit.

During 1990 and 1991, Horvitz took a variety of steps to move his former wife and his two children to the Boston area.He purchased a large house for Linda and the children in the Pride's Crossing area of Beverly.For himself Horvitz purchased, renovated and furnished another luxurious house in Beverly Farms.He enrolled Christina in the Shore Country Day School in Beverly for the 1991-1992 school year.In letters to officials at Miami Country Day School, where Christina earlier had been enrolled, he stated that "[w]e have decided to move to the Boston area" and "the family will in fact be moving to Boston."In a second addendum to the post-nuptial agreement (see note 2, supra), Horvitz and Linda stated, "[t]he Husband and Wife agree that they desire to reside and to have their minor children reside in the 'Beverly-Manchester' Massachusetts area."

On September 2, 1991, Horvitz, Linda, and their two daughters traveled from Florida to Massachusetts by airplane.³Thereafter, Horvitz shipped certain personal belongings from Florida to Massachusetts.At various times during the period in question, he used, within Massachusetts, one or another of two automobiles garaged there.Each of the cars, however, was purchased and registered in Florida.He opened a personal checking account at a Massachusetts bank and a post office box in Massachusetts for use as a local mailing address.

In September, 1991, a company of which Horvitz was an officer leased office space in Beverly for his use.Horvitz relocated one of his two secretaries from Florida to Massachusetts to work for him there.He transferred many business and personal records from Florida to the Beverly office.⁴

Throughout the period at issue, Horvitz visited his children in Massachusetts as often as possible.When present in Massachusetts, he often saw the children every day.⁵In addition, he attended sign language classes in Massachusetts on an average of slightly less than once a week.

Following the Horvitz's separation, Linda retained physical custody of the children.Horvitz saw the children often, but did not have unlimited visitation rights.While Horvitz had considerable contacts with Massachusetts during this period, he also maintained extensive personal and business ties to Florida.When Horvitz and Linda separated, Horvitz purchased and renovated a luxury condominium in North Miami Beach, Florida.He employed a full-time housekeeper at this residence.In addition, he made offers on other Florida residential properties.In partial satisfaction of a claim against a developer in connection with one of these offers, he negotiated a free health club membership for himself through the year 1995.

Horvitz continued to vote in Florida, retained his Florida driver's license, and filed tax returns as a Florida resident.There was evidence that he maintained an active social life in Florida; he testified that during that period he had had a half-dozen "serious or active" dating relationships there.By contrast, he apparently had few social contacts and attended few social events in Massachusetts.He continued to serve on the boards of directors of two non-profit organizations in Florida, and was a volunteer consultant to a third.

Horvitz retained the bulk of his investment activity in Florida.He kept his primary bank account there, maintained all of his brokerage accounts there, and remained a passive investor in a number of Florida partnerships.He also continued to maintain a business office in Florida at which he employed his second, part-time, secretary.And he continued his art collection and art dealing activities, maintaining approximately ninety percent of his collection in Florida, while continuing to lend items to Florida art museums.There is also evidence that during the period at issue he obtained most of his personal services in Florida, including those of physicians, his attorney, his accountant, his travel agent, his florist and his barber.He patronized two Florida health clubs.

Horvitz met Carol Sunday in Florida in December, 1990.The relationship developed while they lived in Florida, and in May, 1992, Carol and her son moved into Horvitz's Florida condominium.Carol also visited Horvitz a number of times at his Massachusetts residence during 1992.⁶She took up residence at his Massachusetts house in early 1993.

3.Ultimate findings.

The board found that Horvitz "intended to make Massachusetts his home for an indefinite period, and was physically present in the Commonwealth.His intent to remain in Massachusetts indefinitely was unchanged throughout the relevant time period."Accordingly, the board concluded that Horvitz had in fact changed his domicile to Massachusetts effective September 2, 1991, and upheld the commissioner's assessment of personal income taxes for the subsequent period.

In arriving at its conclusion, the board focused particularly upon Horvitz's concern for his children's welfare and his desire to be with them to the greatest extent possible."The tie that bound him to his daughters appeared, from all the evidence, to exert the strongest pull of any single factor on [Horvitz's] home life."In this regard, the board observed that Horvitz had considerable misgivings regarding his estranged wife's ability to care for the children even while he was orchestrating their move to Massachusetts.Under the circumstances, the board reasoned that Horvitz was cognizant of the fact that he would have to be present in Massachusetts on a continuing basis if the move were to succeed.It followed, according to the board, that he purposefully shifted the center of his social and domestic life to Massachusetts.

The board...