A Temporary and Transitory Visit with California Residency

Abstract

Residency determinations are relevant for purposes of marital dissolutions, education, probate proceedings, property tax determinations, voter’s registration and . . . income taxes. Individuals often believe they are not California residents for tax purposes simply because they spend significant amounts of time or maintain homes outside California. These individuals are often surprised when facing an adverse determination by the California Franchise Tax Board following a residency examination. The same scenarios apply with individuals throughout the country who believe they live in one state but once they accumulate some degree of wealth, other states begin to inquire about where the individual resides for purposes of determining the individual’s tax status.

For tax purposes, residency examinations are designed to identify individuals maintaining a sufficient physical presence within California and/or receiving substantial benefits and protections from its laws and government justifying their contribution to the support of California. Individuals present in California for a mere “temporary or transitory purpose” do not generally avail themselves of the benefits of residency and should not be considered residents for income tax purposes. The administrative examination process involves a deeply personal, factual analysis by a highly trained examiner making after-the-fact determinations regarding an individual’s physical presence and intentions that are often not taxpayer friendly.

Keywords: California, tax dispute, residency, tax residency, domicile, ftb, franchise tax board, California revenue and taxation code, temporary or transitory purpose