Pratt v. State Tax Com'n, No. 22582

• Court: United States State Supreme Court of Idaho
• Writing for the Court: TROUT; McDEVITT
• Citation: 128 Idaho 883,920 P.2d 400
• Docket Number: No. 22582
• Decision Date: 31 July 1996
• Parties: William D. PRATT and Joy Pratt, Plaintiffs-Appellants, v. STATE TAX COMMISSION, Defendant-Respondent. Boise, May 1996 Term

Page 400

920 P.2d 400 128 Idaho 883 William D. PRATT and Joy Pratt, Plaintiffs-Appellants,
v.
STATE TAX COMMISSION, Defendant-Respondent. No. 22582. Supreme Court of Idaho, Boise, May 1996 Term.
July 31, 1996.

Philip E. Peterson, Lewiston, for appellants.

Alan G. Lance, Attorney General; Charles Zalesky, Deputy Attorney General, Boise, for respondent.

TROUT, Justice.

This personal income tax case requires us to examine the elements that must be satisfied to effect a change in domicile.

I.

BACKGROUND

The parties have stipulated to the following pertinent facts. From July of 1987 until sometime in 1991, the appellants, William and Joy Pratt, were domiciled in the state of Idaho. Mr. Pratt was employed by a bank in Boise, Idaho until May 3, 1991, when his employment was terminated. On that date he received a termination check in the amount of $63,450.

The Pratts had intended to move to Clarkston, Washington following Mr. Pratt's retirement.

Page 401

[128 Idaho 884] In March of 1991, prior to Mr. Pratt's termination, they traveled to Clarkston to locate suitable housing, but were unsuccessful. In April of 1991, the Pratts successfully located housing in Clarkston which would be available for lease on June 1, 1991. They moved to Clarkston on May 31, 1991. However, at the time Mr. Pratt received his termination check, the Pratts resided in Boise, their vehicles were registered in Idaho, and they each held Idaho driver's licenses.

I.C. § 63-3027A(b) requires that a part-year Idaho resident must pay taxes on taxable income from all sources received during that part of the taxable year he or she is domiciled ¹ in Idaho. In addition, a part-year resident must pay tax on taxable income from Idaho sources even if received while not domiciled in Idaho. Although living in Boise at the time the termination check was received, the Pratts treated the check as payment to a non-resident when they reported their income for 1991 to the state of Idaho as part-year residents. The Tax Commission does not contend that the income in question is from an Idaho source. Thus, the resolution of this case depends entirely upon whether the Pratts were domiciled in Idaho on May 3, 1991.

II.

PROCEDURAL HISTORY

On June 22, 1994, the Tax Commission issued its determination that at the time Mr. Pratt received his termination payment, the Pratts were still residents of, and domiciled in, the state of Idaho. Accordingly, the Commission's position is that this income should have been included in the Pratts' Idaho income for the 1991 tax year. The Pratts chose not to seek administrative review, but filed a complaint in district court pursuant to I.C. § 63-3049(a). The action was assigned to a magistrate who, in ruling on cross-motions for summary judgment, concluded that the Pratts had not met their burden of proving a change in domicile as of May 3, 1991. According to the magistrate, "there is no proof in the record as to when the Plaintiffs' intent to become domiciled in the state of Washington was to take effect." Consequently, he held that they are liable for Idaho state income tax and interest on the income in question. The district court affirmed the magistrate's decision, and the Pratts have appealed to this Court.

III.

STANDARD OF REVIEW

As stated above, the Pratts did not seek administrative review of the Commission's determination, but instead filed a civil complaint against the Tax Commission pursuant to I.C. § 63-3049(a). Consequently, we will review this case as an ordinary civil action, and will utilize the administrative determination as merely an articulation of the position of a party to this civil action. Cf. Bogner v....