Ohio Personal Income Tax Bright-Line Residency Test Satisfied for Husband But Not Wife (Even Though She Met the Ohio Contact Period Test)

The Ohio Board of Tax Appeals (“BTA”) has provided quite an informative decision addressing residency stressing the importance of filing the required affidavit (Form IT DA) if claiming to be a non-resident under the bright-line test set forth in R.C. 5747.24. See Cunningham v. Testa, Ohio BTA Case No. 2011-4641 (March 6, 2014). As a foundation, the bright-line test provides that an individual having less than 183 “contact periods” is presumed to not be domiciled in Ohio, if the individual timely files an affidavit for the year stating that for the entire year:

  1. The individual was not domiciled in Ohio; and
  2. Maintained an abode outside Ohio (including the location of the abode).

The presumption is irrebuttable unless the affidavit is false. In this case, both the husband and wife met the contact period requirement (i.e., both had less than 183 contact periods) and maintained a Tennessee home the entire year. However, only the husband filed the affidavit.

The BTA addressed two core issues:

  • In determining whether the affidavit is false, can the Tax Commissioner look to evidence to support lack of domicile under the common law test? The statement can only be false if the taxpayer, in fact, had at least 183 Ohio contact periods or did not have an abode outside Ohio for the entire year. In other words, the reference to being domiciled outside Ohio for the entire year in the affidavit is in the context of meeting the bright-line test. As the Board noted, an additional requirement that the taxpayer, in fact, was not domiciled in Ohio, is an over-reading of the statute and would render the “bright-line” residency rules moot, as the Tax Commissioner could always challenge the statement.

As a side note, the BTA stated that the taxpayers’ Homestead Exemption Application which stated that they occupied an abode in Cincinnati as their principal place of residence was neither relevant nor inconsistent with their non-Ohio domicile status since it was clear they spent more time at their Ohio residence than in the Tennessee residence.

  • Must the husband and wife file separate affidavits? Yes, the statute requires a separate affidavit for each taxpayer. Therefore, the wife had to satisfy the common law test for domicile, even though she otherwise met the bright-line test. Accordingly, the BTA applied the common law test of domicile which focuses on maintaining a residence with the intent to stay at such residence for an indefinite period of time. The Board noted that residence constitutes having a “fixed permanent home to which one intends to return and from which one has no present purpose to depart.” A critical component is that a new domicile is not established until the old one is abandoned. Since the wife never abandoned her Ohio domicile, she remained a resident for Ohio personal income tax purposes.

This case highlights two important aspects of Ohio’s bright-line residency test – first, each taxpayer must file the affidavit to rely upon the irrebutable presumption that they were a non-Ohio resident; and, second, a husband and wife are not necessarily residents of the same state for tax purposes.