Wersal v. Commissioner of Revenue, 8957-R

• Decision Date: 05 April 2017
• Docket Number: 8957-R
• Parties: Glenn A. Wersal, Appellant, v. Commissioner of Revenue, Appellee.
• Court: Tax Court of Minnesota

Glenn A. Wersal, Appellant, v. Commissioner of Revenue, Appellee.

No. 8957-R

Tax Court of Minnesota, Regular Division, Ramsey County

April 5, 2017

This matter came on for oral argument before the Honorable Thomas G. Haluska, Judge of the Minnesota Tax Court, on February 24 2017.

Susan Gaertner, Gray, Plant, Mooty, Mooty & Bennett, P.A. appeared on behalf of appellantGlenn A. Wersal.

Kristine K. Nogosek, Assistant Minnesota Attorney General appeared on behalf of appelleeCommissioner of Revenue.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER FOR JUDGMENT

Wersal filed his 2011 and 2012 Minnesota income tax returns as a nonresident, claiming Florida residency.The Commissioner determined that he was a non-domiciled Minnesota resident for the 2011 and 2012 tax years and assessed $18, 807.82 in additional Minnesota income tax, penalty, and interest.Although Wersal acknowledges he was physically present for over one-half of each tax year, he claims that he spent numerous days each year in Minnesota involuntarily due to incarceration or a court order to remain in the state and asserts that such days should not count towards determining whether he qualified as a non-domiciled resident under Minn. Stat. § 290.01, subd. 7(b)(2016).The Commissioner denied Wersal's administrative appeal, and he timely appealed to this court.We affirm the Commissioner's order.

Based upon all of the files, records, and proceedings herein, ^[1]the court now makes the following:

FINDINGS OF FACT

1.Wersal was a domiciliary of Florida during 2011 and 2012.

2.Wersal maintained an abode in Minnesota during 2011 and 2012.

3.Wersal was physically present in Minnesota for at least 183 out of 365 days in 2011 and at least 184 out of 366 days in 2012.

CONCLUSIONS OF LAW

1.Days an individual involuntarily spends in Minnesota due to incarceration for a criminal offense committed in Minnesota or as a result of a related court order to remain in the state count towards determining whether an individual qualifies as a non-domiciled resident under Minn. Stat. § 290.01, subd. 7(b)(2016).

2.Wersal was a non-domiciled full-year Minnesota resident in 2011 and 2012.

ORDER

The May 26, 2016 order of the Commissioner is affirmed in its entirety.

IT IS SO ORDERED.THIS IS A FINAL ORDER.ENTRY OF JUDGMENT IS STAYED FOR15 DAYS. LET JUDGMENT BE ENTERED ACCORDINGLY.

MEMORANDUM

Thomas G. Haluska, Judge

AppellantGlenn A. Wersal filed his 2011, 2012, and 2013 Minnesota state income tax returns as a nonresident.^[2] In 2015, after auditing these returns, the Commissioner concluded that Wersal spent more than one-half of the 2011 and 2012 tax years in Minnesota and, therefore, qualified as a non-domiciled Minnesota resident for those years.^[3] Wersal timely filed an administrative appeal, and the Commissioner affirmed her earlier order.^[4] Wersal timely appealed the latter order to this court.^[5] Wersal argues that he does not qualify as a resident taxpayer under Minn. Stat. § 290.01, subd. 7(b)(2016), because the Commissioner counted days he spent involuntarily in Minnesota due to incarceration and court orders to remain in Minnesota.^[6] It is undisputed that but for these involuntary days, Wersal would not meet the resident taxpayer threshold of spending more than one-half of 2011 and 2012 in Minnesota.^[7]We affirm the Commissioner's order.

I.BACKGROUND

During 2011 and 2012, Wersal was domiciled in Florida.^[8]He also maintained an abode in Minnesota.^[9] During 2011, Wersel spent 107 days voluntarily in Minnesota.^[10] On August 8, 2011, Wersal was arrested and charged in Minnesota with second-degree driving while impaired^[11] and refusal to submit to a chemical test.^[12]He spent, at least in part, August 8 and August 9, 2011(2 days) incarcerated in Minnesota.^[13] The Kandiyohi County District Court ordered Wersal to remain in Minnesota while he awaited trial unless he requested and received permission from the court to leave.^[14] Thus, from August 10, 2011 through January 22, 2012(141 days in 2011 and 22 days in 2012), he remained in Minnesota.^[15]

In January 2012, Wersal pled guilty to refusing to submit to a chemical test.^[16]The court dismissed the driving while impaired charge.^[17]The court sentenced Wersal, and he spent January 23 to April 15, 2012(82 days) incarcerated in Minnesota.^[18] Due to court-ordered probation conditions, he spent September 26 through October 26, 2012(30 days) in Minnesota.^[19]Throughout 2012, Wersal also spent 51 days in Minnesota voluntarily.^[20]

Wersal therefore was physically present in Minnesota for at least 183 out of 365 days in 2011, and for at least 184 out of 366 days in 2012.^[21]

II.BURDEN OF PROOF

"The tax court shall hear, consider, and determine . . . every appeal de novo."^[22] The Commissioner's orders, however, are "prima facie valid."^[23] A taxpayer may overcome the prima facie validity of an assessment by demonstrating that the methodology used by the Commissioner to arrive at the assessment was invalid or that the calculation of tax is incorrect.^[24]"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.'"^[25] The taxpayer bears the ultimate burden of proof because "the taxpayer is in the best position to produce the records and information relevant to the matter in dispute."^[26]

III.ANALYSIS

For Minnesota income tax purposes, the Legislature has identified two possible classifications of natural persons: residents and nonresidents.^[27]"If a taxpayer is a Minnesota Resident, ' Minnesota taxes her worldwide net income."^[28] For example, individuals domiciled in Minnesota who intend to make Minnesota their permanent home and are physically present in the state are considered residents.^[29] Additionally, individuals may qualify as non-domiciled residents if they: (1) are domiciled outside the state; (2) maintain a place of abode in Minnesota; and (3) are physically present for more than one-half the tax year in Minnesota.^[30]

In the present case, the Commissioner identified Wersal as a non-domiciled full-year Minnesota resident for 2011 and 2012 and taxed him accordingly.^[31] Wersal does not dispute that he meets the first prong of the non-domiciled resident test, because he was domiciled in Florida during 2011 and 2012.^[32] Furthermore, Wersal agrees that he maintained a place of abode in Minnesota during 2011 and 2012.^[33] The sole issue in this matter, therefore, is the third prong of the residency test: whether the days Wersal spent in Minnesota either incarcerated for a criminal offense committed in Minnesota or in compliance with a related court order are included when determining whether he spent over one-half of the 2011 and 2012 tax years in the state.

"When we interpret statutes, our objective is to ascertain and effectuate the intent of the Legislature."^[34]" 'When the words of a statute in their application to an existing situation are clear and free from all ambiguity, 'we must give effect to the plain meaning of the law."^[35] Thus, if the legislature's intent is clear from a statute's unambiguous language, "statutory construction is neither necessary nor permitted and courts apply the statute's plain meaning."^[36]"A statute is ambiguous if, as applied to the facts of the case, it is susceptible to more than one reasonable interpretation."^[37]

Wersal argues that Minn. Stat. § 290.01, subd. 7(b), is ambiguous and should be construed such that only days spent in Minnesota voluntarily, not days spent involuntarily, count towards determining Minnesota residency.^[38] The Commissioner argues the statute is unambiguous and requires physical presence in the state regardless of a taxpayer's intent.^[39]We agree with the Commissioner.

Minnesota Statutes § 290.01, subd. 7(b), provides that a resident "also means any individual domiciled outside the state who maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota."For purposes of subdivision 7, "presence within the state for any part of a calendar day constitutes a day spent in the state."^[40]

We must construe words and phrases "according to their common and approved usage."^[41]To do this, courts often consult dictionary definitions.^[42] To "spend" is "to pass (a period of time)."^[43]"Presence" is "the fact or condition of being present" and "present" is "being at the specified or understood place; at hand; in attendance."^[44]Black's Law Dictionary similarly defines "presence" as the "quality, state, or condition of being in a particular time and place."^[45]

Taken together in this context, ^[46] these terms mean an individual passes time in a physical place.They do not connote, much less require, consideration of an individual's intent or state of mind, whether voluntary or involuntary.One's state of mind about one's physical presence is conceptually distinct from one's actual physical presence.Thus, we conclude that Minn. Stat. § 290.01, subd. 7(b), is unambiguous-non-domiciliary residency is based on an individual's physical presence in Minnesota, not his or her voluntary physical presence in the state.^[47] As we indicated in Stelzner v. Commissioner of Revenue: "Unlike the definition of domicile, there is no intent requirement in the [non-domiciliary resident]statute."^[48] To determine whether Wersal was a non-domiciled resident, the statute requires us to count every day Wersal physically spent in Minnesota.^[49]

Wersal nevertheless urges us to find an intent requirement by relying on a statutory exception^[50]-individuals or...