The United States Law Week

Trump’s Florida Move Unlikely to Stop Grab for N.Y. Returns (1)

Nov. 1, 2019, 11:24 PMUpdated: Nov. 1, 2019, 11:37 PM

President Donald Trump’s move from New York to Florida probably won’t protect his state tax returns from a potential handover to Congress.

Trump recently filed a declaration of domicile saying he has changed his primary residence to Florida. In an Oct. 31 tweet he said that despite paying millions in city, state, and local taxes he had “been treated very badly by political leaders of both the city and state.”

Trump, meanwhile, is embroiled in a legal fight with New York to stop state officials from handing over his returns to certain congressional committees if they ask for them.

“I don’t think it has any effect on the implications of the Trust Act here in New York,” New York Assemblyman David Buchwald said.

Buchwald was referring to a law that requires New York officials to hand over the returns. Buchwald was a lead sponsor of the bill that became the law.

Law professors agreed with that assessment. “I don’t see anything in the New York law that would be affected by the President’s state of residence,” said Brian Galle, a professor at Georgetown Law School. He said that New York will still have the president’s old returns, including any return he might file based on a part-year residency for 2019.

Howard Abrams, a visiting professor at Harvard Law School, likewise didn’t think the move would affect New York returns that were already filed. But it would free Trump from having future forms subpoenaed from Florida since the state has no income tax, he said.

Trump sued New York officials and the House Ways and Means Committee in July, seeking to preempt any handover. Ways and Means Democrats want to see years of Trump’s personal and business tax returns. Trump argued that such a move could happen immediately.

U.S. District Court Judge for the District of Columbia Carl Nichols ruled that the New York officials couldn’t hand Trump’s returns over until at least a week after he rules on the state officials’ motion to have the case against them dismissed. He has yet to rule on the New York officials’ Aug. 29 request for a dismissal.

A lawyer for the president didn’t return a request for comment.

Clean Break?

But Trump may not be able to completely avoid filing a New York return in the future, Buchwald said, because even nonresidents of New York have filing obligations in the state if they have New York-sourced income.

To make a clean break Trump would need to sell his New York properties; sever all connections to doctors, dentists, and lawyers in the state; and cut off his relationships with social, civic, and religious organizations, said Richard Pomp, a law professor specializing in state and local tax issues at the University of Connecticut School of Law.

State and city revenue agencies would be skeptical of the move, Pomp said.

“Let’s not forget the New York state and city tax administrations have trouble believing anyone would ever leave the Big Apple,” Pomp said.

Trump could be compelled to pay tax on his share of any New York partnership income or gain, any income from a trade or business he continues in New York, any royalty income, and any gains from sales of New York property, he said.

(Add Oct. 31 tweet in second paragraph.)

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com, Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Vandana Mathur at vmathur@bloombergtax.com

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