If a foreign bank employee is repeatedly transferred to New York for training and then assigned there open-endedly, in which years does he become a New York statutory resident?

Plain-English summary

Roberto Mancone, an Italian citizen domiciled in Napoli, Italy, is an employee of Banca Nazionale del Lavoro ("BNL"). He was originally hired by BNL's Reggio Emilia branch in December 1990, then transferred among Italian branches (Como in 1992, Padova in 1993) before a series of moves that repeatedly brought him to New York:

• December 1993 to March 1994: a three-month training program at the New York branch.
• March to July 1994: back in Varese, Italy.
• July and August 1994: a management training program in New York in preparation for a new assignment in Chicago.
• September 1994 to July 1997: assigned to BNL's Chicago branch.
• August 1, 1997 to date: transferred to the New York branch as Senior Lending Officer in the Commercial Division, an open-ended assignment usually renewed year to year (though the exchange program he is part of has historically ended U.S. assignments within about five years).

Mancone elected to remain on Italian (rather than U.S.) social security, kept his coverage under BNL's Italian pension and benefits program, and still owns his two-bedroom condo in Montegrotto Terme, Italy, to which he intends to return. On October 1, 1997 he leased a New York City apartment under a one-year lease (renewable by mutual agreement), with BNL covering the security deposit and rent as part of his grossed-up salary.

Mancone asked whether he is a New York statutory resident under Tax Law § 605(b) for the duration of his New York assignment. A statutory resident is someone who, though not domiciled in New York, maintains a "permanent place of abode" in New York and spends more than 183 days of the taxable year there. Under 20 NYCRR § 105.20(e)(1), a place of abode is not "permanent" if it is maintained only during a temporary stay (reasonably expected to last three years or less) for the accomplishment of a "particular purpose" - a specific, ascertainable task, as opposed to general duties. General duties, such as serving as an executive, sales manager, or (as here) a Senior Lending Officer, do not qualify as a "particular purpose" even if the individual's specialized skills led to the assignment.

The Department concluded that Mancone's post-August-1997 assignment - open-ended, general banking duties rather than a specific, ascertainable task - does not fit the temporary/particular-purpose exception. As a result, once he leased his New York City apartment on October 1, 1997, that apartment became a "permanent place of abode." But statutory residency also requires maintaining that permanent place of abode for "substantially all" of the taxable year, which the Department's Nonresident Audit Guidelines (July 25, 1997, p. 38) define as more than 11 months, in addition to spending more than 183 days in New York that year. Because Mancone did not maintain a permanent place of abode in New York for substantially all of 1993, 1994, or 1997 while also meeting the 183-day threshold in those years, he was not a statutory resident for 1993, 1994, or 1997. However, if he maintains a permanent place of abode in New York for substantially all of 1998 or any later year and spends more than 183 days in New York that year, he will be a statutory resident for that year. In any year he is not treated as a resident, he remains taxable as a nonresident on his New York-source income, including wages for services performed in New York.

This opinion applies the same legal framework - the temporary/particular-purpose test for "permanent place of abode" and the "substantially all of the taxable year" standard for statutory residency - that the Department set out the same day in a companion opinion addressing BNL's general employee-transfer program.

What this means for you

Foreign nationals on multi-year, multi-posting NY work assignments

Repeated short-term postings to New York do not automatically make you a statutory resident. What matters is (1) whether your current New York assignment is open-ended or tied to general duties (which makes any New York apartment you lease a "permanent place of abode"), and (2) whether, in a given calendar year, you both maintain that permanent place of abode for more than 11 months and spend more than 183 days in New York. A stay reasonably expected to last three years or less, for a specific ascertainable task, can avoid "permanent place of abode" status entirely - but a general, open-ended assignment (like becoming a bank's Senior Lending Officer with no fixed end date) does not get that benefit, even if you intend to eventually return home and keep your foreign social security, pension, and residence ties. Track your move-in and move-out dates for any New York apartment carefully each year, since a partial year (for example, leasing an apartment mid-year) generally will not add up to "substantially all" of that year even if you exceed 183 days in New York.

Employers tracking a transferred employee's NY residency status year by year

When an employee's New York assignment shifts from a fixed short-term training stint to an open-ended posting, the residency analysis must be redone for each taxable year separately - it is not enough to look only at the total multi-year arc of the assignment. An employee who was clearly a nonresident during earlier short training visits (here, the 1993-94 and 1994 New York stints tied to training and preparation for a Chicago posting) can become a statutory resident in a later year once (a) the assignment turns open-ended/general in nature and (b) the employee maintains a New York apartment for more than 11 months of that year while also spending more than 183 days in the state. Payroll and tax withholding should be revisited as soon as a transfer's fixed end date drops away.

Common questions

Q: Was Mancone's New York City apartment a "permanent place of abode" from the moment he signed the lease?
A: Yes, for purposes of the ongoing analysis. Because his New York assignment beginning August 1, 1997 was open-ended and involved general banking duties (not a specific, ascertainable task), the apartment he leased on October 1, 1997 constituted a permanent place of abode under 20 NYCRR § 105.20(e)(1) as soon as he leased it, and remains one for as long as he keeps leasing it.

Q: Why wasn't Mancone a statutory resident for 1997 even though he had a permanent place of abode that year?
A: Statutory residency requires maintaining the permanent place of abode for "substantially all" of the taxable year - more than 11 months, per the Department's Nonresident Audit Guidelines - in addition to spending more than 183 days in New York. Since Mancone did not lease his apartment until October 1, 1997, he could not have maintained a permanent place of abode for more than 11 months of 1997.

Q: Were his 1993-94 and 1994 New York stays treated as "temporary"?
A: The opinion notes it is unclear from the facts whether Mancone maintained a place of abode in New York from December 1993 to August 1994. In any event, the Department found he did not maintain a permanent place of abode for substantially all of 1993 or 1994 while also spending more than 183 days in New York those years, so he was not a statutory resident for either year.

Q: Could Mancone become a New York statutory resident in 1998 or a later year?
A: Yes. If he maintains a permanent place of abode in New York for substantially all of 1998 (or any subsequent year) and spends more than 183 days in New York that year, he will be a resident individual for that year under Tax Law § 605(b)(1) and 20 NYCRR § 105.20(a)(2).

Q: Does keeping Italian social security, pension coverage, and an Italian condo prevent New York statutory residency?
A: No. Those facts go to domicile, not to the separate statutory-residency test. Mancone is not domiciled in New York, but statutory residency under Tax Law § 605(b)(1)(B) applies to individuals who are not domiciled in New York but who nonetheless maintain a permanent place of abode there and meet the 183-day threshold.

Q: How is Mancone taxed in years he is not a statutory resident?
A: In any year he is not treated as a resident individual and has New York-source income, he is taxable as a nonresident on that New York-source income only (for example, salary or other compensation for services performed in New York).

Citations and references

• Tax Law § 605(b)(1)(B) - defines a "resident individual" to include one not domiciled in New York who maintains a permanent place of abode in New York and spends more than 183 days of the year there
• Tax Law § 605(b)(2) - defines a "nonresident individual" as one who is not a resident or part-year resident
• 20 NYCRR § 105.20(e)(1) - defines "permanent place of abode" and explains the "temporary" (fixed and limited period, presumptively three years or less) and "particular purpose" (specific, ascertainable task vs. general duties) exception
• 20 NYCRR § 105.20(a)(2) - requires maintaining a permanent place of abode for "substantially all" of the taxable year, plus more than 183 days in New York, to be a statutory resident
• Dept. of Taxation and Finance Income Tax Nonresident Audit Guidelines, July 25, 1997, p. 38 - defines "substantially all of the taxable year" as a period exceeding 11 months

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a98_11i.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(11)I
Income Tax
September 10, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I980618C

On June 18, 1998, a Petition for Advisory Opinion was received from Roberto
Mancone, 120 East 71 st Street, New York, New York 10021.
The issue raised by Petitioner, Roberto Mancone, is whether he is deemed
to be a resident of New York State under section 605(b) of the Tax Law for the
duration of his temporary assignment to work in New York State.
Petitioner submits the following facts as the basis for this Advisory
Opinion.
Petitioner is an employee of the New York branch of Banca Nazionale del
Lavoro ("BNL"). Petitioner was born on January 31, 1967 in Manza, Italy. He is
an Italian citizen and domiciled in Napoli, Italy.
Petitioner is allowed to work under a working visa. He was originally
employed by BNL in December of 1990 in their Italian branch in Reggio Emilia.
He was transferred to their Italian branch in Como in 1992 and their Padova
branch in 1993.
In December of 1993, Petitioner transferred to the New York branch for a
three month training program. From March to July 1994, he was in Varese. July
and August 1994, he was in New York in a management training program for a new
assignment in Chicago, and was transferred to BNL's Chicago branch in September
1994. He remained at the Chicago branch until July 1997, and was transferred to
the New York branch to cover the position of Senior Lending Officer within the
Commercial Division effective August 1, 1997 to date.
Petitioner is part of a Bank exchange program where employees of other
branches are transferred to the United States. The term of the assignment is
open ended and is usually renewed on a year to year basis. Historically, the BNL
program Petitioner is involved with has usually resulted in a termination of
United States status within 5 years.
Petitioner elected to be covered by Italian social security rather than
United States social security, as his intent is to return to his Italian
domicile. Petitioner continues to be covered by BNL's Italian (head office)
pension plan and benefits program.
Petitioner rented an apartment under a one year lease effective October 1,
1997 through September 30, 1998. The lease is renewable on mutual agreement.
BNL posted the security deposit and pays the monthly rent which is included in
Petitioner's salary along with the associated taxes. Petitioner is granted a net
salary which is paid every month and which is grossed up for taxes.

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Petitioner continues to own his two bedroom condo in Via Aureliana 54 35036
Montegrotto Terme, Italy to which he intends to return when his assignment is
terminated.
Discussion
Section 605(b)(1)(B) of the Tax law provides that a "resident individual"
includes an individual who is not domiciled in New York State but maintains a
permanent place of abode in New York State and spends in the aggregate more than
183 days of the taxable year in New York State, unless the individual is in
active service in the armed forces of the United States.
Section 605(b)(2) of the Tax Law provides that a "nonresident individual"
means an individual who is not a resident or a part-year resident.
Section 105.20(e)(1) of the Personal Income Tax Regulations ("Regulations")
defines a "permanent place of abode" as a dwelling place permanently maintained
by the taxpayer, whether or not owned by the taxpayer. However, a place of
abode, whether in New York State or elsewhere, is not deemed permanent if it is
maintained only during a temporary stay for the accomplishment of a particular
purpose. For example, an individual domiciled in another state may be assigned
to the individual's employer's New York State office for a fixed and limited
period, after which the individual is to return to the individual's permanent
location. If the individual takes an apartment in New York State during this
period, the individual is not deemed a resident, even though the individual
spends more than 183 days of the taxable year in New York State, because the
individual's place of abode is not permanent. Such individual will, of course,
be taxable as a nonresident on the individual's income from New York State
sources including such individual's salary or other compensation for services
performed in New York State. However, if the individual's assignment to the
individual's employer's New York State office is not for a fixed or limited
period, the individual's New York State apartment will be deemed a permanent
place of abode and the individual will be a resident if the individual spends
more than 183 days of the year in New York State. For a place of abode to be
deemed not permanent, the stay in New York must be temporary (i.e., for a fixed
and limited period) and the stay must be for the accomplishment of a particular
purpose.
Section 105.20(e)(1) of the Regulations contemplates that the term
"temporary" means a fixed and limited period as opposed to a stay of indefinite
duration. An employee's stay in New York will be presumed to be temporary (i.e.
the presence in New York is for a fixed and limited period) if the duration of
the stay in New York is reasonably expected to last for three years or less, in
the absence of facts and circumstances that would indicate otherwise. In the
alternative, a stay is of indefinite duration if the stay is realistically
expected to last for more than three years, even if it does not actually exceed
three years.
Section 105.20(e)(1) of the Regulations contemplates that the phrase
"particular purpose" means that the individual is present in New York State to
accomplish a specific assignment that has readily ascertainable and specific
goals and conclusions, as opposed to a general assignment with general goals and

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conclusions. For example, an individual working in California is assigned to New
York to install a piece of equipment.
Once the equipment is installed, the
individual returns to California. That assignment would be for a particular
purpose.
In general, an assignment to New York for general duties, such as to be an
executive of the company, a sales manager or a production line worker, would not
constitute a particular purpose since these positions involve more generalized
goals. This would be true even if the individual's assignment to New York were
related to some specialized skill or attributes that the individual may possess.
For example, a salesman with years of experience in a particular product line of
the company is assigned to New York as the sales manager because New York sales
are weak with regard to that product. It is expected that the individual will
devote substantial efforts towards improving those sales. However, being a sales
manager still constitutes general duties as opposed to a particular purpose,
since it is the general goal of every company to sell its products.
In this case, Petitioner was assigned to the New York office under a
program whereby employees of other Italian branches are temporarily transferred
to the New York branch with the objective "to enlarge the employee's knowledge
of multinational banking". From December 1993 to March 1994 Petitioner was in
New York for a three month training program.
During July and August 1994
Petitioner was in New York for management training for his new assignment in
Chicago. From August 1997 to date Petitioner is assigned to the New York office
as a Senior Lending Officer in the Commercial Division. These specific duties
of Petitioner are general in nature with general goals and conclusions.
In
addition, the term of Petitioner's assignment is open ended.
Therefore,
Petitioner's stay in New York State is not for a fixed and limited period and is
not for the accomplishment of a particular purpose as contemplated by section
105.20(e)(1) of the Personal Income Tax Regulations. Accordingly, Petitioner's
place of abode in New York State constitutes a permanent place of abode.
However, section 105.20(a)(2) of the Personal Income Tax Regulations
provides that a resident individual includes any individual who is not domiciled
in New York State, but who maintains a permanent place of abode for substantially
all of the taxable year (generally, the entire taxable year disregarding small
portions of such year) in New York State and spends in the aggregate more than
183 days of the taxable year in New York State.
The Department of Taxation and Finance Income Tax Nonresident Audit
Guidelines dated July 25, 1997, page 38, provides that for this purpose, the
phrase "substantially all of the taxable year" means a period exceeding 11
months. For example, an individual who acquires a permanent place of abode on
March 15th for the taxable year and spends 184 days in New York State would not
be a statutory resident since the permanent place of abode was not maintained for
substantially the entire year. Similarly, if an individual maintains a permanent
place of abode at the beginning of the year but disposes of it on October 30th
of the tax year, the individual would not be a statutory resident despite
spending over 183 days in New York. Since the individuals in these two examples
did not maintain their permanent places of abode in New York for more than 11

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months, the individuals would not be considered residents of New York State for
any part of the year.
In this case, it is not clear from the facts presented whether Petitioner
maintained a place of abode in New York State from December 1993 to August 1994,
when he was assigned to the Chicago branch. Petitioner did acquire a permanent
place of abode in New York State when he leased an apartment in New York City on
October 1, 1997 and will maintain the permanent place of abode in New York as
long as Petitioner leases the apartment.
However, it appears that Petitioner
did not maintain a permanent place of abode in New York for substantially all of
the taxable year and spend, in the aggregate, more than 183 days of the taxable
year in New York for taxable years 1993, 1994 or 1997. Therefore, pursuant to
section 605(b)(1) of the Tax Law and section 105.20(a)(2) of the Personal Income
Tax Regulations, it appears that Petitioner would not be considered to be a
resident individual for taxable years 1993, 1994 and 1997. If Petitioner does
maintain a permanent place of abode in New York State for substantially all of
taxable year 1998 or any future taxable year, and Petitioner spends, in the
aggregate, more than 183 days of such taxable year in New York, Petitioner will
be a resident individual for that taxable year or years, pursuant to section
605(b)(1) of the Tax Law and section 105.20(a)(2) of the Personal Income Tax
Regulations.
For all years that Petitioner has New York source income and is not treated
as a resident individual, Petitioner is taxable as a nonresident individual.

DATED:

NOTE:

September 10, 1998

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.