Ordinarily, we stay out of politics, for that way lies madness. From time to time though, a case comes out of the political arena that is relevant to the lives of normal people. Such is the case of State ex Rel Nicholas Kristof v. Shemia Fagan.
Kristof, a Pulitizer-prize winning New York Times columnist co-authored a particularly bleak book looking at poverty in rural America with a focus on rural Yamhill County where he grew up. Kristof left the New York Times in October of 2021 and announced that he would run for Governor of Oregon that same month.
To qualify as an Oregon gubernatorial candidate, the Oregon Constitution requires that a candidate be a United States citizen, be thirty or more years old, and have been a resident of Oregon for at least three years before the candidate’s election. (Oregon Constitution, Article V, Section 2) On January 6, 2022, Oregon Secretary of State Shemia Fagan announced that Kristof was ineligible to run for Governor because he was not a resident of Oregon for sufficient time. Kristof appealed this determination on January 14 directly to the Oregon Supreme Court. Today, Secretary Fagan filed her response brief.
Why does this matter to ordinary Oregonians who care about tax matters? It is very likely that whatever factors the Oregon Supreme Court uses to evaluate Kristof’s residency will play a part in our discussions about tax residency for years to come.
Oregon taxes its residents on their worldwide income. Nonresidents are only taxed on their income from Oregon sources. The statute sets out a fairly mechanical test for residency once you know whether someone is an Oregon domiciliary. Oregon law defines a resident for purposes of personal income taxes under ORS 316.027 as either: (1) an Oregon domiciliary, unless that individual maintains no permanent place of abode in Oregon, does maintain a permanent place of abode elsewhere, and spends not more than 30 days in the state; or (2) a non-domiciliary who maintains a permanent place of abode in the state and spends an aggregate of more than 200 days of the taxable year in Oregon, unless the individual proves that the individual is in the state for only a temporary or transitory purpose. We understand a domiciliary of Oregon to be an individual who regards Oregon as their “true, fixed, permanent home.” OAR 150-316-0025(1)(a). So, there is a clear line between what it means to be a domiciliary resident and a non-domiciliary resident. It is also well-settled for tax purposes that you can be a resident of many jurisdictions but may only a domiciliary in one jurisdiction.
The Secretary of State’s brief would blur this line for election purposes. Secretary Fagan argues that Kristof was “Domiciled in New York – not Oregon – until at least December 2020.” Her brief notes that “plaintiff voted in New York, held a New York driver’s license, owned a primary residence in New York, lived and worked in New York, paid income taxes in New York, and sent his children to public schools in New York. Most telling is plaintiff’s voting record: Even for the November 2020 election, when he was apparently physically present in Oregon and Oregon voters faced important choices in Yamhill County and statewide, plaintiff voted by absentee ballot in New York.” Because the constitutional test is whether someone has been a “resident” for three years prior to the election, the Secretary Fagan’s brief makes the interesting assertion that “resident” in this context is synonymous with “domiciled.” Also interestingly, the brief refers to his Oregon tax returns but does not analyze whether they were filed correctly.
For his part, Kristof argues that the residency requirement is more akin to occasional physical presence and an emotional connection with the state. Neither addresses the test set out in the income tax statutes. He also argues that he never intended to abandon his Oregon residency and has always considered himself an Oregon resident.
Most Oregonians (or putative Oregonians) won’t run for Governor. However, many folks pay personal income taxes to the state under the law noted above if they are non-domiciliary residents. The state’s argument that resident and domiciliary should be read interchangeably opens an interesting window for discussion about what factors the courts will consider when they decide who gets to call themselves an Oregonian. It also raises the question of whether and why it’s logical to argue that the terms mean different things for tax purposes but mean the same thing for election qualification.
Additionally, the Supreme Court’s analysis of Kristof’s argument that he never abandoned his Oregon domicile will be instructive to those Oregonians who are evaluating whether they have taken adequate steps to abandon their own Oregon tax domicile. This is particularly important for our clients who, due to the ongoing pandemic, are now living and working outside of the state of Oregon.