Hartford Business Journal

14 Hartford Business Journal • November 25, 2019 • www.HartfordBusiness.com By Greg Bordonaro gbordonaro@hartfordbusiness.com I t's that time of year when Connecticut's snowbirds pack up and migrate to warmer climates. But in addition to enjoying more comfortable temperatures, many of Connecticut's part-time residents are in search of some- thing else: lower taxes, especially in southern states like Florida, South Carolina, Georgia and Texas. There were 257,984 people who claimed part-year or non-resident status in the 2017 tax year, a portion of whom have homes in Connecticut and at least one other state, according to the Department of Revenue Services. But some who thought changing their primary address to a lower- cost zip code would allow them to avoid paying Connecticut's higher income and other taxes have re- ceived a rude awakening. The popular narrative is that individuals who reside in Connecti- cut part time, but spend at least six months and a day in another state (or country), don't have to pay taxes here. That's not the case. In fact, it's not even close. For people who live in multiple states, including Connecti- cut, there's a much more complicated two-tiered test the state uses to deter- mine an individual's and/or couple's permanent address, or domicile. And it's precisely those typically high-net-worth individuals — in- cluding business owners — who are increasingly coming into the crosshairs of this and other state's tax collectors, especially as high-tax states like Connecticut continue to lose population, putting pressure on state and local budgets, tax lawyers and accountants say. New York and New Jersey have become the most aggressive in auditing indi- viduals who change their domicile, but Connecticut has also ramped-up its focus on the issue, according to a former state tax commission- er and others. Even someone who lives in an- other state for seven, eight or even nine months of the year can still be considered domiciled in Connecti- cut and forced to pay taxes here. And people who change their do- micile and get audited must hand over all sorts of personal informa- tion — like credit-card receipts, bank statements and plane tickets — to prove they've changed their primary residency. Sometimes individuals are even asked — as part of a seven-page questionnaire filled out under penalties of perjury — to prove which country clubs or churches they belong to and where they keep personal items, like class rings, pets or an art collection. "We have a lot of wealthier clients who are trying to get advice on how to sever their ties to Connecti- cut," said Tony Switajewski, a CPA Tony Switajewski, CPA, blumshapiro Mark Shipman, Lawyer $ The Domicile Effect Trying to avoid CT taxes by becoming a part-time resident? It's harder than you think. HBJ ILLUSTRATION | C!

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