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Question of domicile?


Phil and Micky

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Hello all,

This question of choosing a domicile seems to be plaguing me so I thought I'd ask y'all some questions about it.

 

Hopefully one of you has some real life experience with this that you can share will all of us.

 

Here are a few questions:

 

Why would a person's state of domicile ever be questioned?

 

Who would question it?

 

How would the subject ever come up?

 

And most importantly, have any of you ever been challenged and if so, would you care to share your experience with us?

 

Phil

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It would seem to me that state taxes would be the major initiator of any questions or investigations.

 

States that get their income from state income taxes, want every dime they can get. If you were recently domiciled in that state, particularly if you had paid income taxes there, I would imagine there would be a high likelihood of that state wanting to know the particulars of the domicile change.

 

The subject could also come up if you are in a state, driving a vehicle from a neighboring state. Washington checks for people buying a car in Oregon, where there is no sales tax, to make sure they are not Washington residents trying to avoid Washington state sales tax.

 

Don

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Why, usually because the individual did something that brought them to the attention of the tax authorities. Usually something left behind in the old domicile that tripped an alert on the tax computer. Sometimes because you get reported as a tax scammer (AZ used to have 1-800-TAG-CHEAT) and the authorities are investigating it. Today it could even be by one of the automatic licence plate scanners that are in use, they feed what they have seen into a variety of databases and the database triggers on any number of possible conditions.

 

Who, the usual folks asking questions are the tax folks, voting registration, and the DMV / DMV tax folks.

 

How, see my first answer.

 

 

I had a domicile issue with Arizona when I moved my domicile there from Washington. AZ pulled up a pile of state records on their computer and matched my first AZ income tax submission to all the rest of their records. I got a nasty letter from the AZ DMV folks that wanted a bunch of back licence fees and a whopping penalty. The AZ income tax folks were less nasty in tone but since the letter included an intent to file a lien on my house, they got my attention even while being nice. Washington never made a peep.

 

DMV was happy with a faxed copy of my DD-214. It took the income tax folks several months and a bunch of my past records all nicely copied and certified to get them to accept that I had followed the law properly and was not a resident for tax purposes on the house.

 

When we left Arizona we consulted legal advice and broke all ties aside from one bank account that was not used for depositing any income that would generate tax reports to the state. It served us well as we never heard form AZ for the 10 years we were SD residents.

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Phil, it's not just income tax, numerous states have personal/luxury tax on high end items along with high DMV fees. On large purchases, sales taxes come into play. Don't forget medical coverage can very from state to state.

 

If you are employed, not a lot of choices as your income will be reported to that state, which will normally make that state your domicile.

 

Fred

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I was stopped many years ago in Dallas pulling a trailer for someone else with my Tex. tagged truck. It wasn't extensivly questioned and the folks I was towing for came up several minutes later to verify it. Then we were sent on our way. Then just 3 or 4 years ago the same thing happened in NM but the friends I was towing for was only about 5 minutes behind me and their Dad was riding with me. Again minor questioning and on our way.

 

Some years ago it made the news in the Memphis TN area about some town just south in Miss. had an officer actively checking vehicles in places like apartment complexes to try and detemine skoflaws there. I don't know why exactly it was happening but it did make me pay attention. I spend a good bit of time in winter near Millington Tn and am prepared to prove I am just visiting the area if need be. Tn doesn't have income tax but at least this county has what is called a "wheel tax." I am right by the Navy base here so they are used to seeing out of state tags so I have not had a problem.

 

I think a "wheel tax" is like personal property tax on vehicles.

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Why would a person's state of domicile ever be questioned? ...................Who would question it? ...........How would the subject ever come up?

Actually, it could be an issue for any transaction that is dependent upon domicile. While tax issues are most often mentioned on the forums, it is also not uncommon for posts to mention insurance being canceled if the company discovers that you have moved. Premium costs for both vehicle and health insurance is dependent upon domicile and could be cause of issues with a claim. Usually that just means policy cancellation, but if there were a really big claim filed domicile could become an issue. When I was researching the subject for the article which I wrote on the subject for Escapee's Magazine, I also found a couple of cases of wills being contested on the basis of domicile. The term is an issue of the courts and suits are what usually results from a contested one. Another issue can be if you spend too long in one state or accept paid employment there, you might be required under that state's laws to move your licenses to that state. Fortunately, once you are separated from your previous domicile, it is usually not a problem for most of us.

 

I have never personally experienced an issue of domicile, but I did interview several people who had in my research. I also visited with and had my work reviewed by two attorneys.

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Phil, it's not just income tax, numerous states have personal/luxury tax on high end items along with high DMV fees. On large purchases, sales taxes come into play. Don't forget medical coverage can very from state to state.

 

If you are employed, not a lot of choices as your income will be reported to that state, which will normally make that state your domicile.

 

Fred

Fred, thanks for the reply. I plan to officially become unemployed by the end of April as I seen no future in working... LOL!

Phil

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I was stopped many years ago in Dallas pulling a trailer for someone else with my Tex. tagged truck. It wasn't extensivly questioned and the folks I was towing for came up several minutes later to verify it. Then we were sent on our way. Then just 3 or 4 years ago the same thing happened in NM but the friends I was towing for was only about 5 minutes behind me and their Dad was riding with me. Again minor questioning and on our way.

 

Some years ago it made the news in the Memphis TN area about some town just south in Miss. had an officer actively checking vehicles in places like apartment complexes to try and detemine skoflaws there. I don't know why exactly it was happening but it did make me pay attention. I spend a good bit of time in winter near Millington Tn and am prepared to prove I am just visiting the area if need be. Tn doesn't have income tax but at least this county has what is called a "wheel tax." I am right by the Navy base here so they are used to seeing out of state tags so I have not had a problem.

 

I think a "wheel tax" is like personal property tax on vehicles.

Thanks bigjim,

That's pretty interesting. I'm trying to get a feel for just how many folks have ever been quesitoned about their domicile and what exactly prompted the questioning to begin with. I'm wondering if it's a really big problem or just a perceived problem with a possibility that it coud happen but rarely does. At this point I'm inclined to think it doesn't happen very often.

 

It seems that there are thousands (if not hundreds of thousands) of folks who full time who have never been audited... just sayin'.

 

Phil

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Actually, it could be an issue for any transaction that is dependent upon domicile. While tax issues are most often mentioned on the forums, it is also not uncommon for posts to mention insurance being canceled if the company discovers that you have moved. Premium costs for both vehicle and health insurance is dependent upon domicile and could be cause of issues with a claim. Usually that just means policy cancellation, but if there were a really big claim filed domicile could become an issue. When I was researching the subject for the article which I wrote on the subject for Escapee's Magazine, I also found a couple of cases of wills being contested on the basis of domicile. The term is an issue of the courts and suits are what usually results from a contested one. Another issue can be if you spend too long in one state or accept paid employment there, you might be required under that state's laws to move your licenses to that state. Fortunately, once you are separated from your previous domicile, it is usually not a problem for most of us.

 

I have never personally experienced an issue of domicile, but I did interview several people who had in my research. I also visited with and had my work reviewed by two attorneys.

I called an insurance agent in S.D. the other day to find out about getting insurance on and RV licensed in S.D. even though I have an out of state driver's license. He told me the insurance company doesn't care where my license was issued as long as the rig is licensed in S.D. ... just sayin'.

 

Phil

 

PS As for work, I'll be done with that come the end of April unless I get bored and then I'll try to pick up some short term engineering contract assignments here and there.... but that's a topic for another day! LOL!

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"This question of choosing a domicile seems to be plaguing me"

 

What specifically about it is plaguing you?? You have little to fear if you follow the recommendations and make a clean break from your previous state.

 

"Why would a person's state of domicile ever be questioned?

Who would question it?

How would the subject ever come up?"

 

Domicile is questioned because many laws differ from state to state, and to determine which set of laws apply to you, a domicile must be determined. Its typically the state who questions it, since the vast majority of domicile disputes involve state taxes. However its also questioned occasionally in individual civil cases, such as liability law suits, divorce, wills/inheritance/probate/trusts Ask anyone who has acted as executor of a loved ones will that wasn't updated to comply with their change in state of domicile. The other issue that comes up less frequently is a dispute over whether you're entitled to certain state benefits, like in-state tuition, state funded Medicaid, state funded welfare, etc

 

Again, most of the disputes come up when folks don't make a clean break from their old state, or they actually live in one state while trying to claim domicile in another. If you follow the basic steps to establish your new domicile and you actually keep moving around in your RV, you have little to worry about and very few here have been disputed because they know what's required and don't try to cheat.

 

 

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The easy thing to do... and the safest... and the smartest... would be to take a weekend and fly to SD to change your domicile to SD before you buy an RV. Then you can register it in SD put a SD address on that TX tax exemption certificate and if you get stopped in WA you will have a SD drivers license (and address) driving a SD-registered RV and WA probably won't care.

 

If you buy an RV in TX and drive it to WA while you pack or move or whatever while you still have a WA drivers license (and a valid physical address inside WA you may not rent right away) you are risking a lot of hassles. Not just money but tax evasion is a felony in WA and they take it seriously (especially having a no-sales-tax state just to the south - Oregon). Your ideas about "intent" may get you out of trouble... or not. I suspect that the WA tax folks may see your lack of SD identification and legal residency as more of an "intent" to evade paying WA sales tax. At the very least you'll have some 'splainin' to do.

 

And you may have some other issues...

 

You have a long series of posts in this forum - using what I would imagine to be your real first names along with your real occupation and place of work - which indicate that you intend to buy vehicle out-of-state and you intend to drive that vehicle inside WA state for some unstated period of time without paying WA "use" tax and without actually becoming a resident of any other state. You have also clearly indicated that a major reason for buying out of state is because you do not want to pay WA use tax on that vehicle. And you have also questioned whether or not anyone will catch you. I'll leave it to you to imagine what sort of "intent" is demonstrated...

 

And you forget that there are people who resent other people doing this sort of thing and you risk one of them reading your posts and then telling the WA Department of Revenue that they maybe should check to see if you really moved to SD or are you still living at your address in the Seattle area (that's a no-brainer to find if you are a contractor to Boeing) with an expensive motor home in your driveway with no WA plates.

 

I'd love to see the eyebrows on that lawyer you're going to talk to when you tell him all of this...

 

WDR

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I don't think it is real common to be looked at in most states but do you want to be the exception? I don't. Texas and maybe other states have a law about only having legitimate drugs in the original bottle or container with all the pertinant information. A lot of us wore out old folks get our meds in a 90 day supply so try making that work. I carry my dailey meds. in the little pocket pill containers like a lot of folks and I am even nervous about that if I get stopped by a law officer looking for a reason to get someone. I think the majority will be reasonable but I don't want to be the exception there either. Sorry I guess this slightly a hijack but still something for folks to keep in mind if they weren't aware of it.

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If you buy an RV in TX and drive it to WA while you pack or move or whatever while you still have a WA drivers license (and a valid physical address inside WA you may not rent right away) you are risking a lot of hassles. Not just money but tax evasion is a felony in WA and they take it seriously (especially having a no-sales-tax state just to the south - Oregon). Your ideas about "intent" may get you out of trouble... or not. I suspect that the WA tax folks may see your lack of SD identification and legal residency as more of an "intent" to evade paying WA sales tax. At the very least you'll have some 'splainin' to do.

 

WDR

 

We had friends do something similar, nearly 20 years ago now, their intent was a bit different as they fully intended to re-licence the motorhome in Washington and pay the state taxes due on it. However they picked the motorhome up in Oregon and went camping for a few days, had a medical problem and ended up in a hospital parking lot for over a month. They decided that the least hassle route to staying legal was to just get Oregon tags while they were stuck and fix everything when they got home to Washington. Sadly they got stopped by the WA tax enforcement people who refused to believe them. Expensive lawyer, court dates and nasty threats from the tax folks. The lawyer was finally able to come to an acceptable compromise with the tax folks, our friends signed over their month old motorhome and the tax folks dropped the charges. Since they had traded in their old motorhome and lost the new one they dropped out of RVing and we lost track of them.

 

The tax folks have a huge hammer to pound you with, do not try them.

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Stan,

 

I can remember people who had gone to Oregon to get boats/trailers and brought them back to Washington - - IIRC the state started a program which rewarded people who documented cases (i.e. the noisy neighbor who looked over the fence) of not registering and paying sales tax on large ticket items with a % of the tax amount that was recovered.

 

Barb

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I can tell you from personal experience that both CA and WA check on domicile. In one case it was a delay in registering in WA until plates expired, the other was a college student who took a semester off and moved in with mom and dad. She did not transfer registration to CA was questioned after about 7 months.

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Could be the nosey neighbors don't like to see taxes go higher on everyone because some are beating the system. Just my thought.

 

I was once in the murkey area of vehicle registration and taxes for NM 3% vs TX 6.25%. I was nervous the whole year. Not worth the headache. IN NM now dealers will tell you that your RV can be taxed and registered there and it is true but what happens if you get stopped and questioned in another state expecially your own. It is tempting for a significant purchase but is it worth the possible headache.

 

When I was stopped in Dallas area I was on I635 south between I45 and Lancaster road exit. Might have been a Lancaster PO but I don't remember.

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I have been following this thread as it does contain some useful future information for us.

 

I am not sure that "domicile" is as important as a physical presence in a state. For example, we once owned a vacation cabin in the mountains and had a next door neighbor whose "domicile" was Kansas City, MO. Now there was no question of him being able to purchase a jeep and license it Colorado as he owned property, i.e., a physical presence.

 

So I guess my question (which I have not really understood in the thread) is, would the taxation issue raise its head if one owned property in another state and chose to license their RV there while maintaining a domicile in another state? I can't see any difference compared to the example I cited above, but I guess there could be.

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So I guess my question (which I have not really understood in the thread) is, would the taxation issue raise its head if one owned property in another state and chose to license their RV there while maintaining a domicile in another state? I can't see any difference compared to the example I cited above, but I guess there could be.

The issue of registration and taxes on a vehicle is based upon where that vehicle stays when not traveling over the highways, or "garaged" and not upon where the person who owns the vehicle happens to be. It is not dependent upon nor related to the owning of real estate, although plenty of folks seem to believe that to be true. There are many people who own more than one house in different states and who also keep a vehicle at each one. To be proper, each vehicle should be registered in whichever state it happens to be in.

 

I'll site an example of just that situation. I worked for 3M company and drove company owned vehicles. The company HQ is in St. Paul, MN and all vehicles were titled to the fleet office there, but each one was registered and taxes paid in the state where it was located. I personally renewed plates on the one that I used in WY when we lived there, in CO when we lived there and then later in TX when living there. In each case the title was to 3M, St. Paul, MN and the registration to the company but at my home address, where the vehicle was parked when not in use.

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The issue of registration and taxes on a vehicle is based upon where that vehicle stays when not traveling over the highways, or "garaged" and not upon where the person who owns the vehicle happens to be. It is not dependent upon nor related to the owning of real estate, although plenty of folks seem to believe that to be true. There are many people who own more than one house in different states and who also keep a vehicle at each one. To be proper, each vehicle should be registered in whichever state it happens to be in.

 

OK. But it seems to me there must be some sort of time span involved in the garaging concept? For example, I have neighbors that took off for Florida around the beginning of October and will likely not return home until the first part of April. That will have them out of the state for around 6 months, yet, I have not heard that creates an issue for them. I guess what I am trying to get my head around is that "domicile", I think, would also add an element of intent as far as garaging. Is that an incorrect assumption?

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We never found a solution for the garaging question, we were SD residents with a car that lived in AZ year round. We never worried about the SD drivers license and AZ plates except when we had it in SD on a quick trip to renew drivers licences.

 

That is the only place I see a potential problem with the garaging issue, when you are in your domicile state with a vehicle licensed elsewhere. We asked the DMV about it and they said it shouldn't be a problem with SD since we'd be pretty dumb to pay AZ rates when we could do SD for a lot less. It might be a different situation if you are domiciled in a high tax state but keep the vehicle in a low tax one.

 

We did keep a log of what states we were in and when just in case there was any question of our move from AZ to SD since we spent about 5 months a year in AZ.

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I guess what I am trying to get my head around is that "domicile", I think, would also add an element of intent as far as garaging. Is that an incorrect assumption?

The issue of your domicile will not be asked or considered in where a vehicle is registered.

 

There are states which require you to register vehicles in them if they are kept in that state for six months, but not the case for most of the "snowbird' states because it would have a negative impact upon their status as an attraction. Domicile is not a factor of where a vehicle must be registered. That is a totally different issue but vehicle registrations could play a part in the defining one. Domicile is a factor of a court ruling and the term isn't found in the laws of most states. In most cases the law spells out both who can and who must register vehicles there and the same is true for driving licenses and a host of other issues. Your domicile is the total combination of all of the things which you do in living. It stems from what is considered to be a "normal" lifestyle in this country where you own or rent a home, hold a job or are retired, attend church, subscribe to newspapers, visit the doctor, dentist, attorney, do your banking, and in fact actually live nearly all of your time. It becomes slightly more complicated for those who own recreational property but the RV community where some people live in an RV and never sit in one location for any extended period and if they should, never in the same location twice can become very complicated, if it should ever be challenged in court. Full-time RV folks are not typical of American citizens and there simply is no legal definition of what we do and so it comes down to each specific case.

 

The reason that we tend to think of the location where fulltimers register vehicles as their domicile is that we attempt to make that the case in order to qualify for an address that serves to register vehicles, get licensed to drive, register to vote, pay our taxes, and all of the other things that "normal" citizens do which require us to have an address. Our system really has no provision in law for the nomadic life of RV folks. We try to find ways to make things work and the states of TX, SD, & FL happen to have made it easier to do do and at least to some degree, encourage us to call one of them our home or "domicile." The legal issue for most of us is to qualify to register & insure vehicles, hold a driving license, and register to vote. Very seldom is one of us ever challenged in the courts, but if that should happen they can and will look at pretty much everything which you do and were you do it. You do not have to do much of anything in a place to have it be ruled your domicile but the total of all that you do will be used for a court to rule on yours. It is not likely that you will ever find yourself in such a situation as most of us never have it come to that point.

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