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A cautionary tale
But the burden in court is on taxpayers to prove their residency in another state if the Department of Revenue disagrees, and the department pointed to the “locus” of Larson’s life, arguing in great detail that it was in Minnesota, not Nevada.
Even though he didn’t spend 183 days in Minnesota any of those years, Larson spent more time in Minnesota than in Nevada, and more time in Mexico than Nevada as well. The sale of his dealerships in Minnesota and Wisconsin fell through, and he was never able to buy the Nevada dealership.
Revenue officials pointed to Larson’s continued business dealings in Minnesota, his several properties and registered vehicles here and the fact that most of his attorneys, accountants, doctors and real estate agents were in Minnesota. They looked at his bank accounts, determining his Minnesota accounts were the most active. He received mail in Minnesota and frequently visited his children and grandchildren here. Even seeking medical care in Minnesota counted against his case.
“When a person avails themselves of the many services, benefits, and protections afforded by Minnesota,” Judge George Perez wrote, “in return, Minnesota requires that person to contribute to the costs associated with providing those services, benefits, and protections by taxing that person as a resident of Minnesota.”
Appeals of the decision wended their way through court for years, but the Supreme Court in 2013 affirmed the Tax Court ruling.
Another case that showed the difficulty of switching residency was that of Kenneth Mauer, an NBA referee and cousin of Twins catcher Joe Mauer, who tried to establish residency in Florida in 2003. Mauer lost in Supreme Court last spring when justices decided he spent more time at his home in Afton than his townhouse in Fort Myers, Fla.
Shea said the Larson case has already had an effect on professionals who work for wealthy clients. Lawyers in Florida and Arizona are using the case to argue that clients should drop their lawyers in Minnesota, since Larson’s professional connections counted against him.
“Clients have fired us,” Shea said. “Frankly I can’t argue with them. It’s unfortunate that we’re losing that client, but it’s one of the factors that the Department of Revenue considers.”
Adam Belz • 612-673-4405 Twitter: @adambelz