The Minnesota Supreme Court has ended a fight between an NBA referee and the state over whether he’s a Minnesota or Florida resident.
Ken Mauer, a Saint Paul native, didn’t file tax returns in 2003 and 2004, claiming he was a full-time Florida resident. Florida residents pay no state income tax. Minnesota tax officials insisted he was a Minnesota resident, because he built and lived in a home in Afton until 2003.
He didn’t have much choice. Mauer had been swept up in the IRS’ “Operation Slam Dunk,” in which NBA referees were charged with evading taxes through the use of airline ticket refund policies. He was sentenced to prison, and eventually was sentenced to home confinement at the Afton home, which ended at the end of June 2003.
The next day, he flew to Florida and bought a townhome.
The court opinion today says Mauer’s NBA pay was deposited into a Minnesota bank, and he made his own travel arrangements as a referee, flying in and out of Minnesota.
During the 2003-04 NBA season, the NBA expressed concern about Mauer’s travel arrangements. The NBA gave Mauer a block travel stipend to cover his travel expenses and calculated that stipend based on Mauer having designated Fort Myers as his home airport. But the NBA learned that Mauer was, in fact, traveling in and out of Minneapolis-Saint Paul rather than Fort Myers, and believed that Mauer was being over-reimbursed for his travel. In January 2004, the NBA notified Mauer that it would not pay Mauer’s requested January 11, 2004 travel stipend because Mauer was staying in Minnesota and was not actually traveling in and out of Fort Myers. The NBA and Mauer exchanged a series of contentious letters on the issue of whether Mauer was accurately reporting his travel locations, including a letter in which the NBA threatened Mauer with sanctions, up to and including termination of his employment as an NBA referee. Eventually, Mauer hired a travel agent who prepared a one-page handwritten travel cost summary showing that Mauer’s designation of Fort Myers as his home airport cost the NBA $65,193.54, whereas a designation of Minnesota would have cost the NBA $66,806.49–an alleged savings to the NBA of $1,612.95. Following the receipt of this summary, the NBA relented on its internal inquiry into Mauer’s travel expenses.
The court says Mauer put the Afton home up for sale for $3.1 million, but no “for sale” sign was put on the property, and it wasn’t listed in the Multiple Listing Service.
The Minnesota Department of Revenue ruled he remained a Minnesota resident for tax purposes because he didn’t prove he had actually taken up residence in Florida for more than half the year. Mauer says buying a home in Florida, registering to vote there, and basing a car there, and disputing his residence with the NBA shows he was a Florida resident.
No he wasn’t, the Minnesota Supreme Court said today. It said he didn’t make a “good faith” effort to sell his Afton home, two cars stayed here, and his most active checking accounts were Minnesota banks.
We conclude that Mauer’s assertion about his distaste for Minnesota and its cold weather is undermined by the fact that, during the disputed time frame, Mauer continued to spend significant time in Minnesota, including time he spent in Minnesota during some of the coldest months of the year. During the 2003-04 winter season, except for a New Year’s “vacation” to Fort Myers and an early March trip to Florida, Mauer scarcely spent more than a night or two at a time in Florida–while he routinely returned to Minnesota for four, five, or even six nights at a time.
There is little doubt that Mauer established a motive to become domiciled in Florida; but, while motive and intent are often confused and used synonymously in ordinary speech, motive and intent are different.
Here, Mauer did not sell his Afton home–nor does it appear as though he made a good-faith effort to sell it; he continued to spend significantly more time in Minnesota than in Florida, including considerable time during the winter season despite asserting that he wanted to avoid Minnesota in the winter; he kept and insured several motor vehicles in Minnesota; and he maintained employment in Minnesota by refereeing high school football games. When considering the foregoing facts, we conclude that Mauer’s acts, as opposed to his declarations, weigh in favor of the presumption that Mauer’s domicile remained in Minnesota. Taken together, these facts provide more than sufficient support for the tax court’s determination that Mauer remained domiciled here. In other words, when Mauer’s intentions are measured by his actual behavior, they do not match his possible motive or stated intentions to establish his domicile in Florida.
In a dissent, however, Supreme Court Justice G. Barry Anderson said Mauer’s actions clearly indicate he wanted out of Minnesota for most of the year:
Mauer was engaged in a long-running, and noisy, argument with his employer about his decision to live in Florida. In fact, the issue escalated to threats from the NBA to fine Mauer, suspend Mauer, or even terminate Mauer’s employment, yet he continued to insist that he was domiciled in Florida, not Minnesota, notwithstanding the potential employment-related consequences.
I agree with the majority that actions matter, and Mauer’s actions here in moving to Florida immediately after home confinement and his willingness to do battle with his employer on the residence issue lead me to “a definite and firm conviction that a mistake has been committed” by the tax court in rejecting Mauer’s change-of-domicile claim. I would reverse the tax court for these two reasons alone.
By the way, some sports fans may remember Mauer for this classic moment in Minnesota sports history.