Angelo and Alice Arena v. Commissioner of Revenue (January 15, 2010)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


ANGELO and ALICE ARENA      v.	COMMISSIONER OF REVENUE

Docket No. C287804				Promulgated: 
							January 15, 2010
		  				
This is an appeal under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the appellee, Commissioner of Revenue ("Commissioner"), to abate personal income tax for the calendar years 2002, 2003, 2004, and 2005 ("tax years at issue").
 On December 15, 2008, the Appellate Tax Board ("Board") issued a decision for the appellants.  Based on a Supplemental Statement of Agreed Facts submitted by the parties after the Board's December 15, 2008 Decision, the Board issued a revised decision for the appellants simultaneously with these Findings of Fact and Report.  
	Commissioner Rose heard this appeal.  Chairman Hammond and Commissioners Scharaffa, Egan, and Mulhern joined him in the revised decision for the appellants.  These findings of fact and report are made pursuant to a request by the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.
	
Walter J. Flowers, Esq. for the appellants.
	
	Celine E. Jackson, Esq. and John J. Connors, Jr., Esq. for the appellee.
FINDINGS OF FACT AND REPORT

	Based on the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.
At issue in this appeal is whether appellants Angelo and Alice Arena were domiciled in Massachusetts during the tax years at issue and therefore properly subject to Massachusetts personal income tax as residents.  
Tax years 2002 and 2003 
The appellants timely filed Massachusetts Nonresident/Part Year Resident personal income tax returns for tax years 2002 and 2003.  The tax reported and paid on the 2002 return was $33 and the tax reported and paid on the 2003 return was $115.  On January 13, 2006, the Commissioner issued to the appellants a Notice of Intent to Assess ("NIA"), proposing to assess $40,037.85 of personal income tax plus interest for the tax years 2002 and 2003 based on her determination that the appellants were domiciled in Massachusetts during both of those tax years.  
On February 27, 2006, the Commissioner received a Special Consent Form Extending the Time for Assessment of Taxes signed by the appellants, as well as a request from the appellants for a conference.  A conference regarding the NIA was held on April 19, 2006.  After the conference, the Commissioner maintained that the appellants were domiciled in Massachusetts for the tax years 2002 and 2003.  The Commissioner thus issued to the appellants a Notice of Assessment ("NOA") on August 29, 2006, in the amount of $42,193.14 in personal income tax for the tax years 2002 and 2003.
The appellants timely filed an abatement application on October 2, 2006.  On December 8, 2006, the Commissioner issued a Notice of Abatement Determination denying the appellants' request for abatement.  On February 6, 2007, the appellants seasonably filed their petitions with the Board for tax years 2002 and 2003.  On the basis of these facts, the Board found and ruled that it had jurisdiction over the appeals for tax years 2002 and 2003.
Tax years 2004 and 2005 
The appellants timely filed, pursuant to an extension of time to file, a Massachusetts Nonresident/Part Year Resident personal income tax return, claiming nonresident status for the entire tax year 2004 and reporting $0 tax due.  The appellants had earlier timely paid $25,800 in income tax for 2004.   
The appellants timely filed, pursuant to an extension of time to file, a Massachusetts Nonresident/Part Year Resident personal income tax return, claiming nonresident status for tax year 2005.  The tax reported due on the 2005 return was $14,840.00.  On May 13, 2006, the Commissioner issued a notice to the appellants indicating a discrepancy between the Commissioner's records and the $25,800 refund that the appellants claimed for tax year 2004 and applied as a credit on the 2005 tax return.  On May 28, 2006, the Commissioner issued an NOA to the appellants in the amount of $15,079.33 in personal income tax and interest for tax year 2005, based on her determination that the appellants were domiciled in Massachusetts and that the appellants were not entitled to the $25,800 credit.  
The appellants timely filed their abatement application for the tax years 2004 and 2005 on December 28, 2007.  On January 24, 2008, the Commissioner issued to the appellants a Notice of Abatement Determination denying their request for an abatement.  Because the issues relevant to the tax year 2004 and 2005 assessments were the same as those at issue in the tax year 2002 and 2003 appeals, the appellants filed an assented-to Motion to Consolidate all four tax years in this appeal, which the Board allowed on February 19, 2008.
Findings of fact for all tax years at issue
Angelo Arena was born and raised in Lynn, Massachusetts.  He attended Lynn public schools and then the Massachusetts Institute of Technology in Cambridge, Massachusetts.  After receiving his college degree, Mr. Arena worked for one year at General Electric Company in Lynn.  He then attended Columbia University Graduate School of Business in New York City.  After graduation, Mr. Arena began working for Federated Department Store in Brooklyn, New York.  He then enrolled in the United States Air Force for a two-year, active-service tour of duty.  After completing his military service, Mr. Arena resumed his employment with Federated Department Store in California, where he met and married Mrs. Arena, a native of California.  During the course of his employment, Mr. Arena and his family moved to Dallas, Chicago and Baltimore.  
Alice Arena was raised in California.  She attended school in Los Angeles.  After graduating from college, Mrs. Arena pursued employment with Broadway Department Store in Los Angeles.  After marrying Mr. Arena, Mrs. Arena's activities focused on raising their five children, maintaining their various homes, and being involved with charitable boards.  
The appellants bought their first home in Massachusetts in 1976.  Mr. Arena testified that he purchased this home, which was located in Marblehead, "strictly as a summer residence."  Because their first Marblehead home became too small to accommodate the appellants' five children, the appellants sold this home and purchased their current home in Marblehead in 1981.  When Mr. Arena was working and the appellants' children were young, Mrs. Arena spent the summers in Marblehead with their children.  The appellants continued to use the Marblehead home as a summer home after Mr. Arena's retirement.        
The appellants purchased their first home in Florida in 1987.  Mr. Arena explained that the appellants were considering "where we would want to retire" in the future, so they purchased a small, two-bedroom condominium to see if they liked the Naples area.  Mr. Arena testified that he retired in late 1990 or early 1991.  At that time, the appellants were living in Baltimore.  Upon Mr. Arena's retirement, the appellants sold their small Naples condominium, as well as their home in California, and purchased a home in Naples for retirement.  
During the tax years at issue, the appellants owned and maintained three residences: (1) a condominium in New York City; (2) a single-family home in Naples, Florida, purchased in 1991 and consisting of 4,800 square feet, with three bedrooms and four bathrooms; and (3) a single-family home in Marblehead, purchased in 1981 and consisting of 6,000 square feet, with four bedrooms and five bathrooms.  Mr. Arena testified that the appellants spent approximately three months a year in Massachusetts -- from about the end of May or beginning of June until around Labor Day -- about a month to six weeks a year in New York, about six and a half months in Florida, and two to four weeks traveling, including visiting their children, who reside in California and Tennessee.  Both Mr. and Mrs. Arena testified that they considered their Naples residence to be their "home."  
Mr. Arena further testified that the appellants and their children typically spent the Christmas holiday in Massachusetts.  He explained, however, that after the Christmas holiday, the appellants would "shut down" the Marblehead property by turning off the water and the hot water heaters, draining the pipes, and taking precautions against freezing like putting antifreeze in the heating system and wrapping electrical coils.  Mr. Arena explained that the appellants began shutting down their Marblehead home for the winter after 1994 when, at a time when the appellants were not occupying the Marblehead home, a flood resulted in a sewage backup.  The problem was discovered by the people who would "look after" the home for them while it was unoccupied, but not before it had "caused an awful lot of damage" which "took us a good year or more to even get repaired."  After this incident, the appellants removed the Marblehead home from the town sewer system and began to shut down the home for the winter months.  Mr. Arena testified that the shut-down process "basically renders the house uninhabitable.  You couldn't really go there because you couldn't use a toilet or anything like that."
Mr. Arena testified that, unlike his Marblehead home, his Naples home was habitable all year round.  He explained that, even though the appellants spent their summers in Marblehead, he would spend some time in Florida every month during the tax years at issue, even during the summertime, partly because he had investments in Florida and partly because he was being treated for melanoma by a doctor in Naples and he required quarterly checkups.  Mr. Arena explained that Florida was "hurricane prone," so he used hurricane shutters to safeguard that home during the summer months.  However, he explained that when he went to the Naples home during the summer months, he was able to open the home in about a half an hour, simply by opening the shutters, and that the home's air conditioning systems stayed on all year.  Therefore, he concluded that, while he took some precautions, the Naples home remained habitable during the summer.  
During the tax years at issue, Mr. Arena's father resided in Massachusetts and two of the appellants' daughters attended graduate schools in Massachusetts.  The appellants contracted for a cellular phone family plan with a 617 area code during the tax years at issue.  The plan included five telephones, one for each of the appellants, one for Mr. Arena's father, and one for each daughter attending school in Massachusetts.  Mr. Arena testified that the appellants entered into the cellular phone contract for a term of three years, primarily so that his father, who was about 90 years old, would have an emergency telephone with him.  After the contract expired, the appellants' children were working in California, so the appellants discontinued those telephones, retained the father's 617 area code telephone and switched the appellants' telephone numbers to a Florida area code.  
Mr. Arena admitted that he had much of the appellants' mail sent to the Marblehead home, particularly bank statements and monthly bills.  He explained that the appellants often traveled between their three homes or a vacation destination, and his father was retired and "loved something to do, so we gave him a project."  The father would collect and send the mail to the appellants wherever they happened to be.          
Mr. Arena was diagnosed with prostate cancer in 2003 and, after researching various treatment techniques, he decided to pursue treatment with a doctor practicing at Dana Farber, Brigham and Women's Hospital, in Boston, Massachusetts.  He explained that he had a procedure performed sometime in March or April, 2004 and following the procedure, he had some follow-up appointments during that summer.  Mr. Arena conceded that his health insurance throughout his cancer treatments was Blue Cross and Blue Shield of Massachusetts.  As of the hearing, Mr. Arena stated that he visited the doctor annually for follow-up appointments; "I just schedule it so it's in a time period when I'm here."    
In addition to their residential properties, the appellants have owned various investment properties in Massachusetts as well as in Florida.  Financing documents pertaining to investment properties in Marblehead and Lynn list Mr. Arena's Marblehead address as his home address.  The Massachusetts investment properties were primarily residential, while the Florida properties were commercial.  Mr. Arena admitted that the residential properties required more management time than the commercial properties, but he explained that he hired a manager to perform these services for him.  Mr. Arena testified that the total value of the appellants' Florida investment properties was roughly three times the total value of their Massachusetts investment properties.  
Mr. Arena is also listed as a manager and signatory of two Massachusetts limited liability companies ("LLCs"), Area Realty, which was formed in 1999, and Area Realty Two, which was formed in 2002.  Mr. Arena testified that Area Realty was formed for the purpose of buying commercial properties that would be owned by his children and the children of his partner, Eyk Van Otterloo, who resides in Marblehead.  Mr. Arena explained that the investment was with his children's money, and his role was to advise his children to help them make purchases of real estate.  He had no equity interest in the company.  
After Area Realty had acquired three commercial properties, Mr. Arena discovered an opportunity to purchase two additional commercial properties.  Mr. Arena and Mr. Van Otterloo decided to form a second LLC, Area Realty Two, to purchase these properties.  The equity of Area Realty Two was also owned by the children of Mr. Arena and Mr. Van Otterloo, but Mr. Arena and Mr. Van Otterloo had loaned money to this LLC to make the purchases.  Upon the advice of accountants, Mr. Arena and Mr. Van Otterloo took preferred stock payments as repayment of the loan.  Mr. Arena reported these stock payments (which he refers to as "phantom income") on his Massachusetts income tax return for the tax years at issue.
Mrs. Arena was also engaged in limited business activities in Massachusetts.  She explained that in around 1991, about the time of Mr. Arena's retirement, she obtained her real estate license in Baltimore.  Mrs. Arena testified that she was fairly active with her license in Baltimore.  At the suggestion of a friend who had her own real estate company in Marblehead, Mrs. Arena then obtained her real estate license in Massachusetts.  Mrs. Arena served as a part-time realtor during the summer months in Marblehead.  Mrs. Arena testified that she partnered with her friend to sell one multi-million dollar property in Marblehead.  On the Internet website containing the listing, Mrs. Arena described herself as a "Marblehead resident for over 25 years" and that she and her husband "served on multiple boards including the House of Seven Gables, the Junior League of Boston and the North Shore Medical Center."  However, Mrs. Arena explained that she made this statement for business purposes, "because it would have been difficult to say that I was a resident of Florida when I was marketing to Massachusetts buyers."  She also explained that she was not actually serving on a board at the time that she made the statement.  Mrs. Arena testified that this listing was a one-time advertisement and that, aside from this one multi-million dollar business venture with her friend, she was not significantly involved in any business activity as a broker.  Mrs. Arena's income from this activity was not a substantial source of income for the appellants, and she eventually let her license expire "[b]ecause I just wasn't working at it anymore." 
Mr. and Mrs. Arena both testified to the various social organizations to which they belonged.  First, Mr. Arena testified that during the tax years at issue, he was a member of social clubs in both Florida and Massachusetts.  He admitted that he was a member of a yacht club and a golf club in Massachusetts.  However, he explained, these memberships were used during the summer months.  He testified that he was also a member of "say, three or four clubs in Naples," including a country club, a yacht club, and a tennis resort club.  He testified that he used his memberships at the Naples clubs more frequently than those at his Massachusetts clubs "because I'm there that much more."  The club in which he considered himself the most involved was the Royal Point Siena club in Naples, which he considered an all-inclusive country club, offering a golf course, a swimming pool and tennis courts, as well as many social activities.  Mr. Arena also testified that he attended churches in Naples, Marblehead and New York City; "Obviously, depends on where we are."
Mrs. Arena testified that she was involved in a limited number of social clubs in Massachusetts: "[o]nly when it related to good friends who would say come help do the flowers for the garden club or something of that nature."  She explained that she was on the board for the House of Seven Gables for about a year but that "when it became apparent that I missed most of the meetings," she resigned so that her spot could be filled by "someone who could spend more time and devote more time . . . instead of me."  She testified that, by contrast, she was "very involved" in a social club in Florida by organizing bridge games and playing on the tennis team.  She also testified that she volunteers at a migrant worker facility in Florida, and she entertains often at her Naples home.  When asked to compare the importance of social and civic activities in Massachusetts versus Florida, Mrs. Arena responded: 
Well, my civic I would say are far more tied to Naples where I really do get involved with some things, and socially I get involved with issues. 
Massachusetts, it's strictly seeing our friends and, you know, having dinner and playing tennis and golf, and that's primarily it.
 
Both Mr. and Mrs. Arena testified that they are registered to vote in Florida and that they have never voted in Massachusetts.  Mr. Arena has not held a Massachusetts driver's license since the 1940s, and Mrs. Arena has never held a Massachusetts driver's license.  The appellants had their first will and testament prepared when they were living in Chicago during the 1970s.  Mr. Arena testified that the will was since updated to reflect the appellants' Naples address.  The first and third pages of the will were submitted into evidence, and Mr. Arena testified that he had not since changed the declaration of residence which appears at the beginning of the will.  The will is held in a safe deposit box in Naples.  The appellants had three Massachusetts bank accounts during the tax years at issue, but they did not maintain a safe deposit box in Massachusetts.  Upon his retirement, Mr. Arena began drawing Social Security payments, which he has directly deposited to his bank in Florida.  
Mr. Arena testified that he owned a boat in Massachusetts and one in Florida.  He testified that the Florida boat was a larger boat, intended for cruising, which was complete with sleeping accommodations, while the Massachusetts boat was smaller in capacity and designed primarily for fishing and other small excursions.  Mr. Arena also testified that he owned and registered two vehicles in Massachusetts and four vehicles in Florida, which included two so-called "active" cars and two so-called "collectors" cars.  
The appellants submitted into evidence their credit card statements for the tax years at issue.  According to restaurant charges on those statements, the appellants estimated that they were present in Massachusetts the following number of days:
			    

Tax Year
Approximate number of days in Massachusetts
Percentage of time in Massachusetts

2002
106
29%

2003
 81
22%

2004
153
42%

2005
 95
26%

    	
	
As evidenced above, the restaurant charges indicated that the appellants spent the most time in Massachusetts during tax year 2004, the year in which Mr. Arena was being treated for cancer and their daughter was being treated in a Massachusetts hospital.  
The appellants filed a Massachusetts Resident income tax return for the tax year ended December 31, 2001.  Mr. Arena testified that he had been unaware at the time that he signed the return that it was a resident income tax return, because comparing the returns side-by-side, the resident return looked identical to the nonresident return except for a single line of normal-size type that designated it as a resident return.  Mr. Arena testified that the filing of a resident return for that year must have been unintentional on the part of his accountant, because the accountant also prepared for the appellants an intangible property tax return for Florida, which was required only of Florida residents.  Mr. Arena further explained that his accountant had prepared his returns since 1965 and that his accountant simply must have "picked up the wrong form in 2001," indicating that the accountant did not use computer software to prepare the appellants' 2001 return.  The address on the 2001 tax return was the appellants' Florida address. 
The Board found that both Mr. and Mrs. Arena were credible witnesses with respect to all topics covered by their testimonies. 
On the basis of these findings, the Board found and ruled that Florida was the center of the appellants' social, civic and family life during the tax years at issue.  While Mr. Arena was a native of Lynn, Massachusetts, and some of his family members, particularly his elderly father, resided in Massachusetts during the tax years at issue, the appellants nevertheless always considered their Marblehead home to be a summer residence.  In their opinion, the Marblehead home, which they had purchased back in 1981, was furnished like a summer residence.  By contrast, the appellants specifically purchased the Naples home as they were preparing for Mr. Arena's retirement, and their prized furnishings, which had traveled with them throughout their moves during their married life, went to their Naples home.  Moreover, the appellants took active steps to close the Marblehead home for the winter by shutting off utilities, thereby rendering the home uninhabitable.  The Board found credible Mr. Arena's explanation that he took these precautions to prevent another flood during his prolonged absence for the winter months.  By contrast, the Naples home, while in a hurricane-prone area, was nonetheless habitable when the appellants were not present there; Mr. Arena could "open" the home in minutes simply by opening hurricane shutters, which he did about every month during the years at issue, including the summer months.  Furthermore, Mr. Arena testified that the appellants filed a declaration of homestead on their Naples home, sometime in the early 1990s, further demonstrating their intent to make Naples their home.   
The Commissioner pointed to the cell phone plan contracted in Massachusetts and the fact that the appellants directed their mail to their Marblehead residence as determinative of where the appellants considered their home.  However, the Board found that the appellants gave credible explanations for these ties to Massachusetts.  Under the facts of these appeals, the cell phone plan was a logical convenience, considering that the appellants, although not residents themselves, had two daughters and an aging father living in Massachusetts.  With respect to the mail, the appellants, who lead a very active lifestyle of travel, were often not in any one place, including Massachusetts, for long periods of time.  The Board found credible Mr. Arena's explanation of wanting to give his aging father, who would know of his son's whereabouts, an activity and a sense of purpose.  
As for the business activities of the appellants, these were not so steady and involved as to require the appellants' consistent presence in Massachusetts.  Mr. Arena's Massachusetts investment properties required active management, but he did not manage them himself, instead hiring a manager to take care of this for him.  As for his LLC duties, the Board found that Mr. Arena was an advisor to his children, and his activities hardly involved day-to-day active management as would full-time employment within Massachusetts.   Mrs. Arena also was not significantly involved in a Massachusetts business; her involvement in selling real estate was sporadic at best.
Furthermore, the appellants' social, civic and family ties to Florida were stronger than those to Massachusetts.  The appellants attended churches and played sports such as tennis and golf wherever they happened to be.  However, both Mr. and Mrs. Arena indicated that they were more involved in their social clubs in Naples.  Mrs. Arena particularly was involved in organizing bridge games and charitable activities in Naples, yet she resigned from a Massachusetts charitable board because she felt that she was missing too many meetings.  Both Mr. and Mrs. Arena held Florida drivers' licenses and voted in Florida; they have never voted in Massachusetts.  Moreover, the appellants filed a homestead exemption on their Naples home and they had their will updated to reflect their Naples home as their permanent residence.  
On the basis of all of the findings, the Board found that the appellants intended to make Florida, not Massachusetts, their home for the present and foreseeable future during the tax years at issue.  Therefore, to the extent that it is a finding of fact, the Board found that the appellants were domiciled in Florida.  
Further, the Board found, on the basis of restaurant charges which, given the appellants' lifestyle, were reliable indicators of days present in Massachusetts, together with the credible testimony of the appellants, that the appellants spent fewer than 183 days physically present in Massachusetts during each of the tax years at issue.  Therefore, as will be explained in the following Opinion, the Board found that the appellants' physical presence in Massachusetts was insufficient to subject them to tax as residents for purpose of G.L. c. 62, § 1(f).
Accordingly, the Board issued a revised decision for the appellants in this appeal.

OPINION
Under G.L. c. 62 § 2, Massachusetts residents are taxed, with certain limitations not relevant here, on all of their income from whatever sources derived.  In contrast, Massachusetts taxes non-residents only on income from Massachusetts sources.  See G.L. c. 62, § 5A.  Massachusetts General Laws define a "resident" as:
(1) any natural person domiciled in the commonwealth, or (2) any natural person who is not domiciled in the commonwealth but who maintains a permanent place of abode in the commonwealth and spends in the aggregate more than one hundred eighty-three days of the taxable year in the commonwealth, including days spent partially in and partially out of the commonwealth.

G.L. c. 62, § 1(f).  The issue presented in these appeals is whether the appellants were domiciled in Massachusetts or, if not, spent over 183 days in Massachusetts and, therefore, were taxable as residents of Massachusetts.  
Domicile is commonly defined as "the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode."  Commonwealth v. Davis, 284 Mass. 41, 50 (1933).  While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is "'the place where a person dwells and which is the center of his domestic, social and civil life.'" Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 125 (1988) (quoting Restatement (Second) of Conflict of Laws § 12 (1969)). 
The Supreme Judicial Court has recognized that a person may have a residence in one place and a permanent home (i.e., a domicile) in another.  See, e.g., Hopkins v. Commissioner of Corps. & Tax'n, 320 Mass. 168, 173 (1946); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 393 (2001).  Having more than one residence can lead to factors on more than one side of the "domicil ledger."  See Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 127 (1988).  Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis: 
"No exact definition can be given of domicile; it depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case . . .; and it may often occur, that the evidence of facts tending to establish the domicile in one place, would be entirely conclusive, were it not for the existence of facts and circumstances of a still more conclusive and decisive character, which fix it, beyond question, in another." 

Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 257, aff'd, 60 Mass. App. Ct. 1103 (2003) (quoting Tax Collector of Lowell v. Hanchett, 240 Mass. 557, 561 (1922)(cite omitted)).  While a person may have ties to more than one location, the standard of domicile is that it is "'the place where a person dwells and which is the center of his domestic, social and civil life.'"  Reiersen, 26 Mass. App. Ct. at 125 (emphasis added)(cite omitted).
In the instant appeal, the Commissioner contended that, because the appellants had filed a Massachusetts Resident tax return for tax year 2001, the appellants admitted that they were domiciled in Massachusetts for 2001.  The Commissioner then argued that, since the time for amending that tax return has expired, the appellants are precluded from protesting that they were domiciled in Massachusetts for tax year 2001. Therefore, the Commissioner concluded, if the appellants now wish to assert that they were not domiciled in Massachusetts during the tax years at issue, they have the burden of proving that a change of domicile had occurred between 2001 and the tax years at issue.  See Horvitz, 51 Mass. App. Ct. at 394.  
The Commissioner's argument is flawed in several respects.  First, the information contained on a tax return, while perhaps a factor to consider, is certainly not decisive in determining domicile.  See Reiersen, 24 Mass. App. Ct. at 130-31 (finding that, where a resident of the Philippines had used a Massachusetts address on a tax return, "[t]he addresses which appeared on the Reiersens' tax returns, to which the board gave some weight, are in this case an extremely uncertain guide.").  Secondly, the Board found credible Mr. Arena's testimony that he unwittingly filed a Massachusetts Resident return for 2001.  Facts which established the lack of intent to file a resident return include: the return was prepared by an accountant rather than by Mr. Arena himself; the accountant also filed an intangible property return for Florida, which would only be required of a resident of Florida; the accountant apparently did not use computer software, which would have generated the proper return for Mr. Arena to file; and, when Mr. Arena compared the Resident and Nonresident/Part Year Resident returns side-by-side, they were nearly identical.  Because it is unclear whether the return was prepared properly, the Board found that the 2001 return did not conclusively establish anything, including domicile in Massachusetts.  
The appellants have owned a home in Marblehead since 1976 and have always treated it to a large extent as a summer home, furnishing it with their less-prized possessions and, with the exception of some time at the Christmas holidays, the appellants tended not to stay there after Labor Day and before Memorial Day.  The appellants filed a homestead exemption on their Naples home.  While the appellants owned two cars and a boat registered in Massachusetts, they also owned four cars and a larger boat registered in Florida, and both appellants held Florida drivers' licenses.  Both appellants voted in Florida, not Massachusetts, and in fact have never voted in Massachusetts.  While the appellants had bank accounts in Massachusetts, they also have an account in Florida, to which they have their social security check automatically deposited, and they also maintained a safe deposit box in Florida, not Massachusetts.  
The appellants were active wherever they happened to be; they had friends and were involved in social and activity clubs in both Massachusetts and Florida.  However, the Board found that both appellants were more involved in their clubs in Naples, particularly Mrs. Arena, who organized bridge games and participated in charitable endeavors.  By contrast, Mrs. Arena was not readily available to the same extent for Massachusetts activities.  In fact, Mrs. Arena resigned from the board of the House of Seven Gables because she was not present in Massachusetts to attend the meetings with regularity.  Moreover, even while Mr. Arena's father was living in Marblehead and their two daughters were studying in Massachusetts, the appellants as a couple preferred to spend their time in Naples together.  On the basis of the above findings, the Board found and ruled that the center of appellants' social, civic and family lives was Florida, not Massachusetts, during the tax years at issue.    
Furthermore, Mr. Arena's passive activities with respect to his investment properties and his advisory role in the two LLCs did not require him to spend substantial time in Massachusetts engaging in these activities.  Mrs. Arena also did not substantially engage in her Massachusetts real estate activities.  
On the basis of the Board's findings, the Board found and ruled that Massachusetts was not the center of the appellant's social, family, civic or family life and therefore, the appellants were not domiciled in Massachusetts during the tax years at issue.
Further, based on the appellants' credit card restaurant charges and other credible evidence of record, the Board also found that, in each of the taxable years at issue, the appellants spent fewer than the requisite 183 days which would establish residency in Massachusetts pursuant to G.L. c. 62, § 1(f).  Therefore, the Board found and ruled that the appellants' physical presence in Massachusetts was insufficient to subject them to tax as residents for purposes of G.L. c. 62, § 1(f).
On the basis of all of the evidence in the instant appeal, the Board thus found and ruled that the appellants were not domiciled in Massachusetts, nor were they otherwise taxable as residents of Massachusetts, during the tax years at issue.  Accordingly, the Board issued a revised decision, based primarily on the parties' Supplemental Statement of Agreed Facts, for the appellants in this appeal and ordered abatements as follows:  $20,006, along with associated interest and penalties, for tax year 2002; $14,386, along with associated interest and penalties, for tax year 2003; $11,779 of tax assessed and paid for tax year 2004; and no abatement for tax year 2005.    


					 APPELLATE TAX BOARD

		  		  By:				_____	____						 Thomas W. Hammond, Jr., Chairman





A true copy,


Attest:				_____	
	      Clerk of the Board

 As explained earlier, the appellants purchased their first Marblehead summer home in 1976.
 The appellants cite Technical Information Release ("TIR") 95-7 for the proposition that a "permanent place of abode" does not include "a dwelling place that is not winterized;" TIR 95-7 does not define "winterized."  The Commissioner contends that there is a significant difference between a home that is not winterized versus a home which is made uninhabitable by shutting off utilities.  However, the Board did not rely upon TIR 95-7, because there was ample evidence establishing that the center of appellants' family, social and civic life was in Florida, not Massachusetts.  Therefore, the Board need not decide here whether the Marblehead home was "winterized" for purposes of TIR 95-7.

ATB 2010-32