For New York's '548-day rule,' do the days a Petitioner's minor child spends in New York at a legally separated spouse's home count against Petitioner, and what about days the child is with Petitioner on visitation?

Plain-English summary

Petitioner is a New York domiciliary who planned to live and work abroad and expected to satisfy his own presence requirements under New York's "548-day rule" - a provision that lets a New York domiciliary avoid being taxed as a resident while working overseas. He asked the Department how his minor child's time in New York should be counted toward that rule, given a complicating family situation: Petitioner would be legally separated (and eventually divorced) from his spouse while overseas, and under a custody agreement the child would live primarily with the spouse, who was expected to reside with the child in Manhattan. Petitioner retained visitation rights allowing the child to stay with him on certain weekends, holidays, and school breaks.

The 548-day rule, in Tax Law § 605(b)(1)(A)(ii), requires that during the 548-day period the taxpayer, the taxpayer's spouse (unless legally separated), and the taxpayer's minor child not be present in New York for more than 90 days. The Department explained that a 2009 amendment (Chapter 57 of the Laws of 2009, Part A-1) closed a loophole under which taxpayers working abroad had kept a spouse and children in New York without using the taxpayer's own "permanent place of abode," and that the same 2009 legislation added the parenthetical excluding a legally separated spouse's presence from the count. Reviewing the legislative history, the Department found nothing suggesting the Legislature meant a minor child's time at a legally separated spouse's New York residence to count as the taxpayer's own presence in New York.

The Department therefore concluded that, where the taxpayer and spouse are legally separated under a written separation agreement giving the spouse physical custody, the child's time at the spouse's New York residence does not count toward the taxpayer's presence for 548-day rule purposes. But the Department drew a line: any day the child is in New York while in Petitioner's own custody or on visitation does count, consistent with the general day-counting rule in the Income Tax Regulations (20 NYCRR 105.20(c)) that treats any part of a calendar day spent in New York as a full day, apart from days spent purely traveling through or to a destination outside the state.

What this means for you

New York domiciliaries working abroad with separated or divorcing spouses

If you're relying on the 548-day rule while living overseas and you become legally separated from your spouse, your spouse's presence in New York is already excluded by statute. This ruling extends that same logic to your minor child: days the child spends at the legally separated spouse's New York residence, under a written custody arrangement giving that spouse physical custody, are not counted against you. However, you still need a written separation agreement establishing the spouse's physical custody to rely on this treatment.

Tracking visitation and custody days carefully

Any day your minor child is in New York while in your own custody or on visitation with you - even a weekend, holiday, or school break - counts as a day of the child's presence in New York for 548-day rule purposes. Under 20 NYCRR 105.20(c), any part of a calendar day in New York counts as a full day (unless the presence is strictly for travel through or to a destination outside the state), so these visitation days should be tracked closely against the 90-day ceiling.

Common questions

Q: Does a minor child's time at a legally separated spouse's New York home count toward the taxpayer's 548-day rule presence?
A: No, provided there is a written separation agreement giving the spouse physical custody. The Department found no legislative intent to count that time against the taxpayer.

Q: What about days the child spends with the taxpayer himself in New York, such as during visitation?
A: Those days do count. If the Petitioner's minor child is in New York on any day when Petitioner is entitled to custody or visitation, that day counts toward determining residency or domiciliary status under the 548-day rule.

Q: Why did the 2009 legislative amendment matter here?
A: Part A-1 of Chapter 57 of the Laws of 2009 closed a prior loophole (where spouses and children avoided the taxpayer's "permanent place of abode" while still spending significant time in New York) and separately added the exclusion for a legally separated spouse's presence - the same 2009 change the Department relied on in reasoning about the minor child's time with that spouse.

Q: How does New York count a "day" present in the state for this rule?
A: Under 20 NYCRR 105.20(c), any part of a calendar day counts as a full day spent in New York, except when the presence is strictly for travel to a destination outside the state or while traveling through the state.

Citations and references

• Tax Law § 605(b)(1)(A)(ii) - the "548-day rule" excepting a New York domiciliary from resident status while working abroad, including the 90-day cap on presence by the taxpayer, spouse (unless legally separated), and minor child
• Chapter 57 of the Laws of 2009, Part A-1 - amended Tax Law § 605(b), closed the "permanent place of abode" loophole, and added the legally-separated-spouse exclusion
• 20 NYCRR 105.20(c) - any part of a calendar day spent in New York counts as a full day, except travel-only presence

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_2012.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a12_3i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-12(3)I
Income Tax
July 5, 2012

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I120228A

The Department of Taxation and Finance received a Petition for Advisory Opinion for name
redacted. Petitioner asks whether time spent by Petitioner’s minor child in New York State with a
separated spouse should be counted for purposes of determining if Petitioner qualifies for the “548 Day
rule” provided for in Tax Law section 605. We conclude that the days spent by Petitioner’s minor
child in New York State at a residence of a separated spouse are not counted in determining whether
the Petitioner is an excepted resident pursuant to the “548 Day rule” for New York State income tax
purposes.
Facts
Petitioner is a New York domiciliary who intends to live and work in a foreign country. For
the foreseeable future, he expects to meet all of the requirements of the “548-day rule” with regard to
his own time in and out of New York and the U.S.
Petitioner is also married and has one minor child, but he will be legally separated from his
spouse (and eventually divorced) while he is living overseas. Pursuant to a custody agreement, the
child resides primarily with Petitioner’s spouse. Petitioner has certain visitation rights, permitting the
child to stay with him on certain weekends, holidays, and school breaks, subject to his availability and
the child’s schedule. But his child otherwise resides with Petitioner’s spouse, and Petitioner has
consented to permit his spouse to reside wherever she chooses. However, he expects that his wife will
choose to reside with their child in Manhattan for the foreseeable future.
Analysis
The “548-day rule” is contained in Tax Law Section 605(b)(1)(A)(ii). This provision states
that a New York State domiciliary will not be deemed a New York State resident notwithstanding his
or her domiciliary status if that person:
(1) Within any consecutive 548-day period, is present in a foreign country or countries
for at least 450 days; and
(2) During the period of 548 consecutive days, the taxpayer, the taxpayer's spouse
(unless the taxpayer and spouse are legally separated) and the taxpayer's minor child are not
present in New York State for more than 90 days; and
(3) During the nonresident portion of the taxable years within which the 548-day period
begins and ends, the number of days in which the taxpayer is present in New York State does
not exceed the same ratio to 90 as the number of days in that taxable year bears to 548.

-2-

TSB-A-12(3)I
Income Tax
July 5, 2012

Chapter 57 of the Laws of 2009, Part A-1 (“Part A-1”) amended the definition of “resident
individual” for determining residency for New York State income tax purposes for taxable years
beginning on or after January 1, 2009. Part A-1 amended subsection (b) of section 605 of the Tax
Law. Prior to this, a taxpayer domiciled in New York was not taxed as a resident if, within any 548
consecutive day period, (1) the taxpayer is present in a foreign county for at least 450 days, (2) the
taxpayer is not present in the state for more than 90 days, and (3) his or her spouse and minor children
do not reside at the taxpayer’s permanent place of abode in New York for more than ninety days.
Under the prior law, a taxpayer who was present in a foreign country, but whose spouse and minor
children resided in New York, was able to avoid being taxed as a resident by having their spouses and
minor children avoid using their permanent places of abode in New York. Instead, the spouse and
children stayed with relatives in New York, or temporarily rented a hotel room in New York. In these
situations, the spouse and minor children spent more than ninety days in New York, but not at the
taxpayer’s permanent place of abode. Part A-1 closed this loophole by providing that the taxpayer
would still be taxed as a resident in New York, unless the taxpayer’s spouse and minor children are not
present in New York for more than ninety days.
Part A-1 also added the parenthetical language that excluded from consideration under the 548day rule the residency of a taxpayer’s legally separated spouse. We reviewed the legislative history of
Part A-1. In our opinion, there is nothing in the legislative history to suggest that the Legislature
intended to have a minor child’s time residing with a legally separated spouse in New York State count
towards the taxpayer’s presence within New York State for purposes of the 548 day rule.
Therefore, if the taxpayer and his spouse are legally separated, and there is a written separation
agreement providing that the spouse has physical custody of the Petitioner’s minor child, the time
spent by the minor child at the spouse’s residence does not count as the Petitioner’s presence in New
York State in determining whether Petitioner is a New York resident for personal income tax purposes.
However, if Petitioner’s minor child is present in New York on any day when the Petitioner is entitled
to custody or visitation, these days count towards determining residence or domiciliary status for
purposes of the 548 day rule. The Income Tax Regulation section 105.20(c) provides that, in counting
the number of days spent within and without New York, any part of a calendar day constitutes a day
spent within New York State, except when such presence is strictly for travel to a destination outside
the state, or while traveling through the State.

DATED: July 5, 2012

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts
set forth therein and is binding on the Department only with respect to the person or entity
to whom it is issued and only if the person or entity fully and accurately describes all
relevant facts. An Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific time period at issue
in the Opinion. The information provided in this document does not cover every situation
and is not intended to replace the law or change its meaning.