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Judge: Out-of-State NY Property Owners Must Pay NY Income Tax

BEGIN TRANSCRIPT

RUSH: Some of you, if you haven't heard this... (sigh) The best way is to just tell you. "Connecticut and New Jersey residents with [property in New York] are about to get a nasty surprise: New York state wants more taxes from them." Connecticut and New Jersey residents, but this would be Florida residents; this would be anybody who used to live in New York or anybody who owns property in New York but does not live there. "A New York court ruled last month that all income earned by a New Canaan, Conn., couple is subject to New York state taxes because they own a summer home on Long Island they used only a few times a year. They have been hit with an additional tax bill of $1.06 million" to the state of New York.

They live in Connecticut. They've got a place in the Hamptons they visit three or four times a year. Every dollar of income earned throughout the year is subject to New York residential income taxes now. "Tax experts and real estate brokers say this ruling could boost the tax bill for thousands of business executives who own New York City apartments they use only occasionally. It could also hurt sales in the Hamptons and New York's other vacation-home communities. 'People will think twice about spending any summer time in New York,' says Robert Willens, a New York-based tax consultant. 'The amount of tax they could be subjected to is likely to outweigh the benefit.'"

Let me make this personal. If you've been listening for a while, you know that I have been subjected to all this. I sold my fashionable Upper East Side New York penthouse last year precisely because of this. (interruption) Hell, yes, I knew this was coming! In my case... Well, I suspected this was coming based on what my experiences were. In 1997, I declared that I was leaving New York as a resident. I did not sell my apartment there. I moved to Florida, which has no state income tax. I informed the tax authorities in Albany and New York City that I had moved. I sent letters: "This is why I'm not filing tax returns." In the year 2002, I got a letter claiming I owed X-amount of dollars in unpaid taxes from 1997 -- and penalties.

Well, I don't work there. I don't live there. They then demanded to know how many days each of those years since 2007 I had worked, and I had to prove to them 14 different ways for every day of every year in those five where I was. They even wanted to visit my house in Florida and the New York apartment to see if I was lying. They wanted to see which one was really the more lived in. That didn't happen, but they requested it. So the way it ended up is, "Okay," they said, "You will pay a per diem tax for every day that you are in New York City working. The income you make that day will be subject to our state and city taxes."

So we had to go back and calculate the days of those five years I was there, make restitution and so forth. I have been audited every year since. Every year since 2007, I've been audited every year. I have to prove a negative every year, and every year, I document every day where I am 14 different ways. You might ask, "How do you do that?" Well, credit cards, phone records, computer ID addresses. I had a computer in the New York studio that had its own IP address. My New York apartment had its own IP address, all kinds of different ways. Website pictures! We sent Dittocam pictures, because the picture is different from the New York studio to here.

We had to send a hundred pages each year of pictures and video from the Dittocam, and they still claimed I was lying to them about it! I'm paying legal fees and all this. So finally last year, I said, "You know what? The hook for all of this is this New York apartment. They really think I'm there more often than I'm admitting because of that New York apartment," because I never had any New York hotel credit card receipts or any of that. So I sold the apartment. Now everybody who is like me is going to be told, "You are a year-round, full-time resident in New York if you don't live there.

All you have to do is have an apartment there." It doesn't matter if you live in France. This story talks about people in Connecticut and New Jersey, but it's gonna apply to everybody that owns something in New York but who doesn't live there. If they find you, if they find that you own it, you're going to pay tax year round as a full time resident. It used to be that you calculate if you're there 183 days, then you were a full-time resident. Anything less than half a year, you weren't. Then it went to this per diem business.

Like visiting sports teams arriving in New York -- baseball teams, hockey, basketball -- they pay New York State and City taxes for the three or four days they're in town at a time, and they supposedly are refunded that amount from the state where they live. So when the Dodgers go in and play the Mets for a three-game series, that's three days in New York state taxes they owe. California doesn't take the tax. Now, if one of those players happens to own a place in New York... This happened to Derek Jeter, too, by the way. He lives in Tampa. He tried to claim Florida residence and so forth. He got soaked for a lot, and of course in his position, high PR, you pay it up.

But now, you don't live there, but you have an apartment that you're at two or three times a year? All of your income is subject to New York state tax. A court has said it! This is not the New York tax authorities. This is not Albany. This is a New York court. This is how desperate they are for money. They are just out of money. (interruption) Well, I would think, yeah. "If you don't live in the state, isn't that taxation without representation?" But in tax law, you are guilty until you prove yourself innocent. So that's why I just got rid of it -- at, by the way (this really irritated the left, too) a really healthy profit during the midst of a horrible real estate bubble. That really ticked 'em off, too.

BREAK TRANSCRIPT

RUSH: I'm finding people incredulous over this New York tax story. I want you to listen to what the judge gave as his reason for this ruling. The judge is Joseph Pinto, a New York administrative law judge. He made this ruling in a 2009 case that was affirmed last month on appeal by the New York state tax appeals tribunal. Now, of course a tax court is gonna go along with this. The judge ruled that this couple in Connecticut, New Canaan couple, ruled that their Long Island vacation home qualified as a permanent abode because it was big enough to be. It was suitable for year-round living. It wasn't a cottage. It didn't have an outhouse or anything. It was a biggie. "Whether or not the couple actually stayed in the home wasn't relevant." Whether they were in the state of New York did not matter. They could have been. "Under the ruling, if an owner doesn't spend a single a day in a home it could still count toward a permanent residence," in which case the owner would have two permanent residences, in this case Connecticut and New York. You could have been there.

I have faced that logic in my own audits. "You weren't there but you coulda been. You were close, you coulda been." It's worse than insanity. It's not insanity. It's authoritarianism. It's not insanity. That's the last thing it is. This is not somebody who's mindless. This is somebody who's perfectly of sound mind that has a different view of what freedom is. This is somebody whose idea of freedom and liberty do not jive with you and I.

By the way, Obama's press availability with the media on Egypt was originally scheduled for 1:30, and they moved it back to a "time to be determined." Well, I don't think that now that I know what time they scheduled it for, but we're wondering, maybe he hasn't really resigned, but now that it has been scheduled for, what do you think the time is, Snerdley? It is precisely at 3 p.m. The Obama press release or press availability on Egypt is precisely at 3 p.m. today. And we'll be back, ladies and gentlemen.

BREAK TRANSCRIPT

RUSH: An administrative law judge, which is what Judge Pinto is, is a bureaucrat for the state. It's not a court in the strict sense. Well, it is, but it's a bureaucratic court, self-serving, you know, to help the state regime on this tax business.

END TRANSCRIPT

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