NEW YORK’S TAX SCHEME DOES NOT VIOLATE THE DORMANT COMMERCE CLAUSE BY DOUBLE TAXATION OF INTANGIBLE INCOME RE PLAINTIFFS WHO ARE STATUTORY RESIDENTS OF NEW YORK AND DOMICILED IN CONNECTICUT (FIRST DEPT).

The First Department determined that New York’s tax scheme did not violate the dormant Commerce Clause. Plaintiffs argued New York permitted double taxation of their intangible income by both New York, where they were “statutory residents.” and Connecticut, where they domiciled. The First Department rejected plaintiffs’ contentions “that this taxation burdens interstate commerce, particularly by inhibiting their free movement into New York State to work and their ability to buy or lease a home in New York due to the risk of being deemed a resident and subject to double taxation of intangible income… [and] that New York’s tax scheme fails the ‘internal consistency’ test, which requires fair apportionment of income between states and nondiscrimination against interstate commerce …”. The First Department found that the controlling New York case, Matter of Tamagni v Tax Appeals Trib. of State of N.Y. (91 NY2d 530 [1998]…), had not been abrogated by the US Supreme Court’s decision in Comptroller of the Treasury of Maryland v Wynne (___ US ___, 135 S Ct 1787 [2015]):

… [T]he income at issue … in the instant case … was not “out-of-state income” but intangible investment income, which “has no identifiable situs,” “cannot be traced to any jurisdiction outside New York,” and is “subject to taxation by New York as the State of residence” … . Edelman v New York State Dept. of Taxation & Fin., 2018 NY Slip Op 04672, First Dept (6-26-18)

​TAX LAW (NEW YORK’S TAX SCHEME DOES NOT VIOLATE THE DORMANT COMMERCE CLAUSE BY DOUBLE TAXATION OF INTANGIBLE INCOME RE PLAINTIFFS WHO ARE STATUTORY RESIDENTS OF NEW YORK AND DOMICILED IN CONNECTICUT (FIRST DEPT))/CONSTITUTIONAL LAW (TAX LAW, COMMERCE CLAUSE, (NEW YORK’S TAX SCHEME DOES NOT VIOLATE THE DORMANT COMMERCE CLAUSE BY DOUBLE TAXATION OF INTANGIBLE INCOME RE PLAINTIFFS WHO ARE STATUTORY RESIDENTS OF NEW YORK AND DOMICILED IN CONNECTICUT (FIRST DEPT))/COMMERCE CLAUSE (TAX LAW, NEW YORK’S TAX SCHEME DOES NOT VIOLATE THE DORMANT COMMERCE CLAUSE BY DOUBLE TAXATION OF INTANGIBLE INCOME RE PLAINTIFFS WHO ARE STATUTORY RESIDENTS OF NEW YORK AND DOMICILED IN CONNECTICUT (FIRST DEPT))/INTANGIBLE INCOME (TAX LAW, NEW YORK’S TAX SCHEME DOES NOT VIOLATE THE DORMANT COMMERCE CLAUSE BY DOUBLE TAXATION OF INTANGIBLE INCOME RE PLAINTIFFS WHO ARE STATUTORY RESIDENTS OF NEW YORK AND DOMICILED IN CONNECTICUT (FIRST DEPT))