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Leighanne Scott Comments on Domicile Changes Due to Remote-Work in Law360

August 27, 2021

The increase in remote work during the coronavirus pandemic has motivated many Americans to move to lower-tax states, unaware that changing one's domicile is not as easy as it may appear, especially with states scrutinizing the moves. 

Changing one's domicile is not as easy as one might like, and people are often surprised by what they have to do and the amount of documentation they have to provide, a SALT tax specialist said. (AP Photo/Cliff Owen) Americans always have been mobile, but before the pandemic, many moved for a specific opportunity or for retirement. In the last year and a half, that has changed as many Americans realize they may be able to work from anywhere and remain in their current jobs. With that realization comes scrutiny of the state income tax rates they are paying and whether they could improve their standard of living — and lower their overall tax cost — with a move. Tax professionals are increasingly seeing this manifested in their clients seeking to move from places such as California, New York and New Jersey to Texas, Florida or Puerto Rico.

Still, changing one's domicile is not as easy as one might like, and people are often surprised by what they have to do and the amount of documentation they have to provide, said Leighanne Scott, state and local tax specialist and Member at Caplin & Drysdale.  

"It is not as straightforward as establishing a new home and reporting a change of address on a state tax return," Scott said, noting that in many states, residents must prove intent to abandon the previous domicile.

"Intent is a high bar," Scott said, "and can be highly subjective and difficult to prove," especially during an audit cycle that may begin years after a move.

To view the full article, please visit Law360's website (subscription required).

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