Summary
The Nebraska Supreme Court affirmed the district court’s judgment upholding a Nebraska tax deficiency determination against Thomas and Pamela Houghton for tax years 2012 through 2014. The court held that the taxpayers failed to prove they abandoned their Nebraska domicile and acquired a domicile in the United Kingdom, emphasizing the evidence concerning their limited visas, retained Nebraska property, and tax filings. The court reviewed the case for errors appearing on the record and concluded that competent evidence supported the lower court’s findings.
Topics
Practice areas
Questions Presented
- Whether the Houghtons proved that they abandoned their Nebraska domicile and acquired a domicile in the United Kingdom during tax years 2012 through 2014.
- Whether the Tax Commissioner's determination and the district court's affirmance were supported by competent evidence and conformed to law under the Nebraska Administrative Procedure Act.
Holdings
- An appellate court reviewing a district court judgment under the Nebraska Administrative Procedure Act reviews for errors appearing on the record and asks whether the decision conforms to law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.
- To acquire a domicile by choice, a person must have bodily presence in the new locality and an intention to remain there; to change domicile, the person must intend to abandon the former domicile and intend to remain indefinitely in the new location or make it a permanent or fixed home.
- When a person's move is to a foreign country, the nature of the visa under which the person was admitted is an essential factor in determining domicile. Subjective intent to remain indefinitely is insufficient when a limited visa restricts that intent and makes it inconsistent with the foreign country's law.
- The Houghtons failed to prove that they were domiciled in the United Kingdom during tax years 2012 through 2014, and the district court properly affirmed the Tax Commissioner's deficiency determination.
Key quotations
“When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.” (308 Neb. at 196)
“To acquire a domicile by choice, there must be both (1) residence through bodily presence in the new locality and (2) an intention to remain there.” (308 Neb. at 196-197)
“Our decision is driven by our standard of review. Importantly, our review is not de novo.” (308 Neb. at 198)
“Where a person’s move is to a foreign country, the nature of the visa under which admission is granted is an essential inquiry in determining the person’s domicile.” (308 Neb. at 198-199)
“An individual’s subjective intent is not dispositive of domicile if a limited visa of the foreign country is intended to restrict his or her intent, for an intent inconsistent with law is unrealistic and insufficient to establish a domicile.” (308 Neb. at 199)
Factual background
The Houghtons were domiciled in Nebraska before moving to the United Kingdom in December 2011 after Thomas accepted a permanent position with a U.K. company. During the 2012 through 2014 tax years, they held Tier 2 general visas with specific expiration dates and were not yet eligible to apply for indefinite leave to remain. They retained two Nebraska properties, used a Nebraska accountant, and Thomas claimed Nebraska resident status in a 2012 special capital-gains election, although they also lived, worked, banked, and maintained vehicles in the U.K. The Houghtons later obtained indefinite leave to remain in 2016 and became British citizens in 2018.
Procedural history
The Nebraska Department of Revenue issued proposed deficiency determinations totaling $73,477.61 for tax years 2012 through 2014. The Houghtons protested, asserting that they had abandoned their Nebraska domicile and become domiciled in the United Kingdom. The Tax Commissioner rejected their claim, and the Lancaster County District Court affirmed. The Nebraska Supreme Court moved the timely appeal to its docket and affirmed because competent evidence supported the district court's findings under the applicable errors-on-the-record standard.