Houghton v. Nebraska Department of Revenue, 011521 NESC, S-20-176

Docket NºS-20-176
Opinion JudgeCASSEL, J.
Party NameThomas and Pamela Houghton, husband and wife, appellants, v. Nebraska Department of Revenue, an agency of the State of Nebraska, and Tony Fulton, Tax Commissioner, appellees.
AttorneyDavid S. Houghton, of Houghton, Bradford & Whitted, PC, L.L.O., for appellants. Douglas J. Peterson, Attorney General, and L. Jay Bartel for appellees.
Judge PanelHeavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Miller-Lerman, J, concurring in the result.
Case DateJanuary 15, 2021
CourtSupreme Court of Nebraska

308 Neb. 188

Thomas and Pamela Houghton, husband and wife, appellants,


Nebraska Department of Revenue, an agency of the State of Nebraska, and Tony Fulton, Tax Commissioner, appellees.

No. S-20-176

Supreme Court of Nebraska

January 15, 2021


Administrative Law: Judgments: Appeal and Error. In an appeal under the Administrative Procedure Act, an appellate court may reverse, vacate, or modify the judgment of the district court for errors appearing on the record.

2. __: __: __. When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.


Domicile: Intent. To acquire a domicile by choice, there must be both (1) residence through bodily presence in the new locality and (2) an intention to remain there.

4. Domicile. All of the surrounding circumstances and the conduct of the person must be taken into consideration to determine his or her domicile.

5. Domicile: Intent. To change domicile, there must be an intention to abandon the old domicile.

6.__:__.To establish a new domicile, the present intention must be to remain indefinitely at a location or site or to make a location or site the person's permanent or fixed home.

7. Judgments: Appeal and Error. In conducting a review for errors appearing on the record, an appellate court will not substitute its factual findings for those of the district court where competent evidence supports those findings.

8. Intent: Proof: Circumstantial Evidence. Intent is a question of fact, which may be determined by circumstantial evidence.

[308 Neb. 189] 9. Domicile. Where a person's move is to a foreign country, the nature of the visa under which admission is granted is an essential inquiry in determining the person's domicile.

10. Domicile: Intent. An individual's subjective intent is not dispositive of domicile if a limited visa of the foreign country is intended to restrict his or her intent, for an intent inconsistent with law is unrealistic and insufficient to establish a domicile.

Appeal from the District Court for Lancaster County: Andrew R. Jacobsen, Judge.

David S. Houghton, of Houghton, Bradford & Whitted, PC, L.L.O., for appellants.

Douglas J. Peterson, Attorney General, and L. Jay Bartel for appellees.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.



This Administrative Procedure Act appeal centers on whether income taxpayers abandoned their domicile in Nebraska and acquired a domicile in the United Kingdom (U.K.). The Tax Commissioner and the district court concluded that the taxpayers did not meet their burden of proof. Although the move to a foreign country presents an additional, unusual circumstance, our standard of review drives the outcome. Because competent evidence supported the district court's factual findings, we affirm its judgment.


Nebraska Department of Revenue Proceedings

In February 2016, the Department of Revenue issued to Thomas and Pamela Houghton a notice of proposed deficiency determination for individual income tax for tax years 2012 to [308 Neb. 190] 2014. Together, the notices identified the total amount of taxes, interest, and penalties due as $73, 477.61.

The Houghtons protested the income tax deficiency determination and requested a redetermination that no money was due. They claimed that the U.K. was their domicile.

The Houghtons sought to challenge the constitutionality and validity of a Nebraska regulation. The regulation stated, in relevant part, that "[a]ny citizen residing outside the United States (U.S.) whose last domicile within the U.S. was within Nebraska will continue to be a Nebraska resident until the person . . . establishes residence as a permanent resident alien in a foreign country . . ., "1 The Tax Commissioner declined to determine the validity of the regulation or to apply it. The district court likewise did not apply the regulation. During oral argument to this court, counsel for the Department of Revenue asserted that the regulation should not be relied upon here, and we have not done so.

In 2018, a hearing was held on the Houghtons' petition for redetermination of individual income tax. The evidence consisted of testimony by both of the Houghtons and an audit supervisor of the Department of Revenue, and documents submitted by the parties. The evidence established that Thomas has been in the "payments processing business" since 1987. He worked for ACI Worldwide until 1997 and again from October 2000 to December 2011. The Houghtons lived in Nebraska for most of Thomas' employment with ACI Worldwide. But on two occasions-from January 1990 to March 1992 and from December 2000 to October 2004-they lived in the U.K. During the latter stay, the Houghtons "were headed towards citizenship when the company requested that [Thomas] move back to the U.S."

Between 2008 and 2011, while residing in Nebraska, the Houghtons discussed living in the U.K. They decided that if they moved back to the U.K. for a third time, they would [308 Neb. 191] stay and become citizens. There is no dispute that the Houghtons were domiciled in Nebraska prior to moving to the U.K. in 2011.

In October 2011, Thomas accepted employment with a U.K. company. The position was permanent rather than an assignment. They moved to the U.K. in December. Pamela testified that although it was their third time living in the U.K., "[t]his time it was not as an expat, it was a legitimate job [Thomas] was taking for long term."

In 2012, Thomas received compensation from ACI Worldwide related to his employment in Nebraska through December 2011. The Houghtons, who have continued to employ an accountant in Nebraska to prepare their federal and state income tax returns, filed a "Special Capital Gains/ Extraordinary Dividend Election and Computation" form with their 2012 Nebraska tax return. On that form, Thomas signed beneath the following statement: "I hereby elect to receive the special capital gains/extraordinary dividend treatment provided under Neb. Rev. Stat. § 77-2715.09. and declare under penalties of perjury that to the best of my knowledge and belief, the capital stock described above qualifies for the special capital gains/extraordinary dividend election." That statute allows an election by a "resident individual."2

The Nebraska income tax returns that the Houghtons filed for tax years 2012 to 2014 listed their address in the U.K. They computed Nebraska tax using the schedule for nonresidents and partial-year residents. The Houghtons were taxed as residents of the U.K. during the tax years at issue. They used a U.K. accountant in connection with their U.K. income tax.

When the Houghtons left Nebraska in December 2011, they retained ownership of two properties in Nebraska. One, purchased in 2004, served as their primary residence until they moved to the U.K. The other, purchased in June 2011, was purchased with the intent that it be an investment property. [308 Neb. 192] Both were listed as rental property after the Houghtons moved to the U.K. Thomas explained that at the time of the 2011 purchase, the market was down, which made it a good time to buy but not a good time to sell. The Houghtons sold both Nebraska properties in 2017. Thomas testified that the markets made it "a good time to sell." The Houghtons also owned real estate in Georgia and California.

The Houghtons did not own property in the U.K. Thomas characterized purchasing property in the U.K. as "complicated." He elaborated that a purchase of property is generally on a 99-year lease-which is not attractive-and that freeholds are difficult to find. Further, moving capital from the United States into the U.K. is considered a "taxing event" by the U.K.

In March 2011, Thomas sought work permission from the U.K., including a dependency endorsement for Pamela. The Houghtons obtained a "Tier 2" general visa with a validity date from July 2011 to August 2014. In April 2014, the Houghtons received an extension of the Tier 2 general visa with an expiration date of August 2017. In May 2016, the Houghtons applied for indefinite leave to remain (ILR), which was granted in June. Thomas testified that a person has to live in the U.K. for 5 years before seeking ILR. Once a person obtains ILR status, he or she can live in the U.K. for life. After ILR is granted, a person must wait 12 months before applying to become a U.K. citizen. The Houghtons complied, and they were sworn in as British citizens in February 2018.

An individual seeking to become a U.K. citizen is allowed to be out of the country for 450 days during a 5-year window. The Houghtons began keeping a log of all of their travel "immediately from the time that [they] went over there with the intent of becoming naturalized citizens." The record contains a "schedule of absences," which Thomas testified is part of the submission for ILR and for naturalization. The document showed each of the Houghtons' absences from the U.K. from 2011 to May 2016, along with the reason for travel [308 Neb. 193] and the number of days involved for each event. The schedule of absences showed that the Houghtons returned to Nebraska a number of times during 2012 through 2014, spending as many as 40 days in 2012 and as few as 14 days in 2014. The visits were typically family related.

During the relevant tax years, Thomas possessed driver's licenses in Nebraska, California, and the U.K. His Nebraska license expired in 2015, and he did not take any action to renew it. The Houghtons "used the Overseas Voting Act'' to vote in the 2012 federal presidential...

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