Tax Law

New York Sues Yankees' Jeter Over Residency Claim

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A high-profile New York tax case against a professional baseball player is giving star billing to the legal issue of establishing state residency.

Derek Jeter of the New York Yankees considers himself a resident of Florida, which has no state income tax. But the state and city of New York have filed suit contending that he actually is a resident of Manhattan and hence owes higher taxes as a New York resident for a period from 2001 to 2003, reports ABC News. Jeter owns homes in both states and, because he is not accused of lying about his residency, authorities are reportedly seeking back taxes and interest but no penalties. Even so, that could still amount to millions.

Because residency is, at least to some extent, a matter of intent, the determination could turn on facts such as where Jeter keeps the personal belongings he most values, ABC explains on its Web site. However, there is also a hard-and-fast rule that anyone who spends at least 183 days annually in New York is a resident.

The case against Jeter, a well-known figure in Manhattan’s nightlife, is being brought on the former basis, reports Newsday.

“What the state is saying is that he’s a New Yorker at heart and because he has some important things here in his apartment, even if he’s here only 30 days, he’s a New Yorker,” explains John Lieberman, a CPA with Perelson Weiner in New York City. “New York state is phenomenally aggressive on this kind of thing, and Derek Jeter—I think they’re making a test case out of it for athletes, actors and CEOs, people with multiple residences,” Lieberman tells the Long Island newspaper.

The case is a potentially high-stakes matter not only for Jeter but for the city and state, since a loss would undercut their position in collection efforts against other well-to-do New York-dwellers, according to Ron Hegt, a partner at the New York accountant Hayes and Co.

“If they lose this case and a court case is on file with Jeter’s facts and circumstances of having a home in New York and one in Florida and a business presence in New York, it’s going to be horrible from the New York perspective,” Hegt tells ABC. “It will open all kinds of doors for the ordinary businessman, and I would imagine they’ve considered that and are not looking to publicly lose a court case that could have ramifications well beyond Derek Jeter not paying his taxes.”

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