BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
Southwest Regional Tax Bureau (Bureau) appeals an order of the Court
of Common Pleas of Fayette County (trial court) denying the Bureau's
request that William B. Kania be ordered to pay income taxes to North
Union Township and the Laurel Highlands School District.*fn1
The trial court held that Kania, who owns homes in
Pennsylvania and Florida, is domiciled in Florida. Because local
income taxes, such as those at issue here, may be imposed only on
those domiciled in Pennsylvania, the trial court ruled against the
Bureau. Discerning no error, we affirm.
On April 3, 2008, the Bureau filed a tax collection action against Kania for non-payment of income taxes under authority of the Local Tax Enabling Act.*fn2 The Bureau sought payment of taxes, interest, penalties, attorney fees and costs for a total of $25,000. Kania answered that he was not obligated to pay the tax, and the trial court conducted a non-jury trial.
At trial, Kania, who is 80 years old, testified. He explained that he has owned a home in Pennsylvania for the past 46 years, and in 1982 he bought a home in Florida. Since 1982, continuing to the present, it has been Kania's practice to spend part of the year in Florida and part in Pennsylvania. However, in 1998 he changed his state of domicile to Florida. In 2002, Kania notified the Bureau, in writing, that because he had become a Florida resident, he was no longer required to file local income taxes in Pennsylvania. In that letter, he requested a refund of the 2000 local income taxes he paid. At the trial, Kania offered both testimony and documentary evidence to prove that he had changed his state of domicile from Pennsylvania to Florida.
Kania offered a copy of his Florida voter registration card, which was dated June 13, 1998, and testified that he has voted in every election in Florida since 1998. He has not voted in Pennsylvania since 1997. Kania testified that he has two vehicles that are registered in Florida; has a Florida driver's license; uses his Florida address on tax filings; and maintains his bank accounts in Florida.*fn3
Kania is a certified public accountant, and he holds a 52 percent ownership interest in the accounting firm of W.B. Kania & Associates, which is located in Pennsylvania. He works for the firm from Florida, which is the address shown on his business cards, and he has been a member of the Florida Institute of Certified Public Accountants since 2001. Kania acknowledged that although he did not pay the local income taxes demanded by the Bureau, he did pay state income taxes owed to the Commonwealth of Pennsylvania on his distribution of firm profits. State income taxes are triggered by distribution of a Pennsylvania partnership's profits regardless of the partner's state of domicile.*fn4
Kania explained that he serves on numerous professional, political and charitable boards in Florida, and he has done so since 1998. By contrast, he has resigned from the boards of numerous Pennsylvania authorities, including the North Fayette County Municipal Authority, the Airport Authority, the North Union Township Sewage Authority, the Fayette County Industrial Development Authority, and the North Union Township Planning Authority. These resignations were all effected by 1999.
Finally, Kania explained that he spends 55 percent of the year in Florida, 35 percent in Pennsylvania and 10 percent traveling, both for business and pleasure. Generally, he and his wife go to Florida in October and remain there until the following May. However, they return to Pennsylvania for Thanksgiving and Christmas to spend time with their family. Between June and October, they go back and forth between Florida and Pennsylvania, and they also travel for vacation and for business.
Bernadette Nemick, office manager for the Bureau, testified. She explained the Bureau's audits of Kania's earned income and how the Bureau calculated his local income tax obligations. The total income tax amount owed for tax years 2001-2005 was $14,352.22; with accrued penalties, the tax owing was $31,011.16. However, Nemick explained the Bureau agreed to cap its income tax demand at $25,000.00.
The trial court held that Kania had changed his state of domicile from Pennsylvania to Florida prior to the 2001 tax year. The trial court credited Kania's testimony that he intended to make Florida his permanent domicile and found that Kania's actions since 1998 all confirmed an intention to change his state of domicile.
The Bureau appealed.*fn5 The Bureau lists seven issues for our review, but they can be reduced to two discrete issues. First, the Bureau contends that the trial court erred as a matter of law in concluding that Kania was domiciled in Florida because the record demonstrated that it is his practice to return to his home in Pennsylvania after his absences. Second, Kania's evidence, by contrast, did not prove a change in his state of domicile.*fn6
We begin with a review of the Local Tax Enabling Act. Section 504 allows townships and school districts to tax the earned income of persons who are domiciled within their borders. 53 P.S. §6924.504.*fn7 Section 501 of the Act defines "domicile" as the place where a person "has a permanent home and to which the person has the intention of returning ...