Mauer v. Commissioner of Revenue
| Decision Date | 20 January 2012 |
| Docket Number | 8117 |
| Parties | Kenneth B. MAUER, Appellant, v. COMMISSIONER OF REVENUE, Appellee. |
| Court | Tax Court of Minnesota |
Heard Jan. 12, 2011
The Honorable George W. Perez, Chief Judge of the Minnesota Tax Court, heard this matter on January 12, 2011, at the Minnesota Judicial Center, St. Paul, Minnesota.
Attorneys and Law Firms
Bradford S. Delapena, Attorney at Law, represented the Appellant.
Rita Coyle De Meules, Assistant Attorney General, represented the Appellee, Commissioner of Revenue.
Both parties submitted post-trial briefs. The matter was submitted to the Court for decision pursuant to Minn.Stat. § 271.20
FINDINGS OF FACT CONCLUSIONS OF LAW ORDER FOR JUDGMENT
The Court, having heard and considered the evidence adduced at the hearing, and upon all of the files, records and proceedings herein, now makes the following:
FINDINGS OF FACT
1. Kenneth B. Mauer (“Appellant”) was born and raised in St. Paul, Minnesota, and attended high school and college in Minnesota. Stip. ¶ 4.
2. In 1986, Appellant began working for the National Basketball Association (“NBA”) as a professional basketball referee. Appellant worked as an NBA referee during calendar years 2003 and 2004, the tax years at issue (“Tax Years.”) He is a member of the National Basketball Referee's Association (“NBRA.”) Stip ¶¶ 7, 62.
3. In 1987, Appellant purchased a six-acre plot in Afton, Minnesota (“Afton house.”) Appellant hired architect Gregory Hallbeck to design a year-round, large, log-cabin style residence for the property. Stip. ¶ 8. Appellant broke ground in May 1990. In September 1991, Appellant moved into his partially completed house. Over the next fifteen years, Appellant finished and furnished separate rooms and sections of his Afton house. Stip. ¶ 9. His Afton house has 10, 600 square feet. Tr. at 129. Appellant obtained a homestead classification in October 1991. Stip. ¶ 8.
4. Appellant is responsible for the maintenance and upkeep of his Afton house and has never tried to rent it. Stip. ¶ 9.
5. Appellant's work as an NBA referee requires him to travel to game sites throughout the United States and Canada during each NBA season. Specifically, Appellant travels extensively each year between late September and early June. Stip. ¶ 11.
6. During the Tax Years, NBA referees were assigned to officiate up to 82 pre-season and regular season games per year. Stip ¶ 12.
7. Collective bargaining agreements between the NBA and the NBRA contain rules regulating referee travel and governing referee reimbursement for travel and accommodation expenses. Stip ¶ 13.
8. Under NBA rules referees were permitted to return home between games, rather than travelling to the next assigned city. Stip. ¶ 16.
9. Appellant scheduled his own flights during the Tax Years. Stip. ¶ 18.
10. In September 2003, Appellant designated his “home airport” as Fort Myers on the air travel election form provided by the NBA. Jt.[1] Ex. 3; Stip. ¶ 15.
11. In 1994, the Internal Revenue Service initiated “Operation Slam Dunk, ” an investigation into whether NBA referees had evaded federal income tax through their use of airline ticket refund policies. The Justice Department subsequently indicted 22 referees, including Appellant. Appellant was convicted of three counts of tax evasion and endeavoring to obstruct and impede due administration of tax laws. Stip. ¶¶ 27, 28; Tr. at 132-36. Appellant's final day of home confinement that he served in Minnesota was June 30, 2003. Stip. ¶ 29.
12. On July 1, 2003, Appellant flew from Minneapolis to Fort Myers for three days to search for a new home. Stip. ¶ 30. On July 3, 2003, Appellant signed a purchase agreement to buy a townhouse in the residential development of Heritage Palms in Fort Meyers, Florida for $235, 038. Stip. ¶ 30. The Fort Myers townhouse has 2, 000 square feet. Tr. at 155, 282. On July 4, 2003, Appellant left Florida and flew to Kentucky. He then flew back to Minnesota on July 7, 2003. Ex. 5; Stip. ¶ 30.
13. On July 3, 2003, Appellant obtained a Florida driver's license and surrendered his Minnesota driver's license. Ex. 29; Stip. ¶ 32. Also on July 3, 2003, he registered to vote in Florida. Ex. 90. Appellant voted in Florida by absentee ballot on November 2, 2004. Stip. ¶ 53.
14. On July 9, 2003, Appellant closed on the Fort Myers townhouse; he did not personally attend. Ex. 6. Appellant purchased insurance for the townhouse through a Florida insurance agency. Ex. 7; Stip. ¶ 31.
15. On July 9, 2003, Appellant signed a formal Florida Declaration of Domicile before a Minnesota public notary. Ex. 8; Stip. ¶ 34.
16. Appellant remained in Minnesota until July 11, 2003, when he left for vacation. He returned to Minnesota on July 27, 2003, and remained in Minnesota until August 8, 2003, when he left on another personal trip. He returned to Minnesota on August 17, 2003. Stip. ¶ 30.
17. During the off-season and before the start of the 2004-05 regular season, Appellant's non-game related travel began and ended in Minnesota, including when he traveled to Florida. Ex. 40.
18. On August 12, 2003, Appellant hired Dave Goldberg, of Heritage Tax and Consulting, in Florida to assist him with his Florida taxes. Stip. ¶ 35; Ex. 9.
19. On August 27, 2003, Appellant moved some furniture and personal belongings, including a car, from Minnesota to Fort Myers. Stip. ¶ 36; Ex. 28. A fair amount of Appellant's personal belongings remained in his Afton house, requiring Appellant to carry personal property insurance coverage of $1.6 million during the Tax Years and through 2006. Ex. 31; Tr. at 214.
20. Appellant contacted Minnesota officials to request removal of homestead classification for his Afton house. Stip. ¶¶ 37, 38. Minnesota changed Appellant's classification for his Afton house to non-homestead for the 2004 assessment year. Exs. 10-12.
21. Appellant received homestead classification for the Fort Myers townhouse in 2004.
22. After purchasing the Fort Myers townhouse in July 2003, Appellant informed the NBA that Fort Myers was his primary address. Stip. ¶ 15. The NBA Referee Address for the 2003-04 and the 2004-05 seasons listed Appellant's Fort Myers address and the Afton address. Ex. 15.
23. The NBA annually publishes the NBA Officials Media Guide. This guide includes contact information for NBA communications personnel, short profiles of NBA referees, and an overview of the work of the referee and the basketball game rules. The NBA Officials Media Guide for the 2003-04 and 2004-05 seasons listed Afton, Minnesota as Appellant's residence. Exs. 18-19.
24. On or about July 15, 2003, Appellant entered into a one year agreement with his friend and Minnesota licensed realtor, Richard Lesch, to sell the Afton house. Stip. ¶ 50, Ex. 27.
25. On September 30, 2003, Appellant signed and dated a document titled “New York State, City of New York, and City of Yonkers Certificate of Nonresidence and Allocation of Withholding Tax.” Appellant listed the Fort Myers residence as his “Street Address.” Ex. 17.
26. On December 2, 2003, the NBA general counsel sent Appellant a letter that informed Appellant that since he actually and primarily traveled out of Minnesota and not Fort Myers, Florida, in October and November of 2003, his air allowance would be reduced accordingly. Ex. 22.
27. On January 14, 2004, the NBA general counsel again informed Appellant that his air travel allowance would be reduced because of flights not taken from/to Fort Myers, and instead, made to/from Minnesota. Ex. 23.
28. During the Tax Years, Appellant served as a game referee or official for youth football games in Minnesota, including Minnesota high school football games for which he was paid by the Minnesota State High School League. Stip. ¶ 56, Tr. at 140, 214-15.
29. Appellant was a member of the Minnesota Officials Association and/or Capital City Officials Association (n/k/a St. Paul Officials Association), a Minnesota organization that provides trained officials for Minnesota football and other athletic events. Stip. ¶ 72.
30. On August 31, 2004, Appellant purchased a second residential property, as an investment, just down the street from his Florida townhouse. Stip. ¶ 38. Appellant purchased insurance for his Florida investment property through a Florida insurance agency. Ex. 32.
31. During the Tax Years, Appellant owned and registered vehicles in both Florida and Minnesota.
32. During the Tax Years, Appellant maintained bank accounts in both Florida and Minnesota. Stip. ¶ 67. Appellant maintained the following bank accounts:
33. In December 2003, the NBA deposited Appellant's Salary equally between his Minnesota and his Florida bank accounts. Ex. 84; Tr. at 218-21.
34. Appellant used the services of Minnesota accountants, a Minnesota dentist, a Minnesota insurance agent/broker, and a Minnesota real estate agent/broker. Appellant...
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