Kidd v. Department of Revenue

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Income Tax
ROBERT E. KIDD )
and CAROLYN A. KIDD, )
)
Plaintiffs, ) TC-MD 111185N
)
v. )
)
DEPARTMENT OF REVENUE, )
State of Oregon, )
)
Defendant. ) DECISION
Plaintiffs appeal Defendant‟s Notice of Deficiency Assessment (Notice), dated August 5,
2011, for the 2007 tax year. Trial was held in this matter in the Tax Courtroom on August 2,
2012. Judy R. Dethloff (Dethloff), CPA, appeared on behalf of Plaintiffs. Robert E. Kidd
(Robert) and Carolyn A. Kidd (Carolyn) testified on behalf of Plaintiffs.1 Bruce McDonald, Tax
Auditor, appeared on behalf of Defendant. Plaintiffs‟ Exhibits A through K and Defendant‟s
Exhibits A through E were received without objection.
Dethloff identified “three areas of disagreement” between Plaintiffs and Defendant:
Plaintiff‟s claimed deduction of $1,600 for trust expense reimbursement; Plaintiffs‟ “tax home”
for the 2007 tax year; and Plaintiffs‟ request for waiver of the 2007 amnesty penalty. (See Ptfs‟
Ex A at 1; Ptfs‟ Compl at 4-5.) The parties agree that Plaintiffs‟ “originally reported trust
income in the amount of $1,600 was a non-taxable reimbursement of expenses.” (Def‟s Ltr at 1,
March 19, 2012; Ptfs‟ Ex A at 1.)
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1
When referring to a party in a written decision, it is customary for the court to use the last name.
However, in this case, the court‟s Decision recites facts and references to two individuals with the same last name,
Kidd. To avoid confusion, the court will use the first name of the individual being referenced.
DECISION TC-MD 111185N 1
I. STATEMENT OF FACTS
Carolyn testified that she is an “operating engineer” for the International Union of
Operating Engineers (IUOE) Local 701 (“the union”), the jurisdiction of which is all of Oregon
and five counties in Southwest Washington. She testified that the union hall is in Gladstone,
Oregon. Carolyn testified that she is certified to work as a “crane operator” and that she also has
12 years experience in “heavy highway”; in addition to cranes, she is certified to operate
machinery including scrapers and excavators. Carolyn estimated that there are about 4,000
members of the union and very few are women. She testified that employers sometimes
specifically request women and minority workers for jobs and that she suspects that she has
received some additional opportunities because she is a woman.
Carolyn testified regarding the protocol for receiving work through the union: when one
job ends, she contacts the union either by telephone or in person to be added to the “out of work
list.” She testified that, when she is on the “out of work list,” she will wait for a call from the
union for a particular job opening. Carolyn testified that there is only a short amount of time to
respond to job openings; typically 24 hours or less. She testified that the consequences for
declining a job opening are that she would be moved to the bottom of the call list and may
jeopardize her ability to collect unemployment benefits between jobs. Carolyn testified that the
same consequences result from quitting a job, with the additional consequences of damage to her
reputation and a possible “red flag” as “not for rehire.”
Carolyn provided a letter from the IUOE Dispatch Office detailing her work history from
August 1999 through December 2009. (Ptfs‟ Ex B at 1.) From August 1999 through December
2007, Carolyn had jobs in “Chemult, OR to Sacramento Calif” (109 days); Longview,
Washington (57 days); Eugene, Oregon (two jobs lasting 1,723 days and 7 days, respectively);
DECISION TC-MD 111185N 2
Salem, Oregon (39 days); Vancouver, Washington (168 days); and Portland, Oregon (two jobs
lasting 348 and 330 days, respectively). (Id.)
Carolyn testified that, during 2007, she worked for Hoffman Structures Inc. at the “So.
Waterfront” site in Portland, Oregon, from January 3, 2007, through November 28, 2007. (See
Ptfs‟ Ex B at 1.) Previously she worked for Hoffman Construction at the “OHSU” site in
Portland from January 20, 2006, through December 18, 2006. (Id.) Immediately preceding that
position, she worked for Hoffman Structures, Inc. in Vancouver, Washington from August 4,
2005, through January 18, 2006. (Id.) Carolyn testified that she was dispatched by the union to
the Vancouver job with Hoffman Structures. She testified that, at the end of the Vancouver job,
she was offered a position with Hoffman Construction at the OHSU site beginning two days later
on January 20, 2006. Carolyn testified that she had to seek approval from the union to take the
OHSU job and that the union could have denied her request. Carolyn testified that she received
the job with Hoffman Structures at the South Waterfront site in Portland through the union, but
she was specifically requested by Hoffman Structures for the job. She testified that, if she had
been working on another job at the time of the request, the union would not have called her.
Robert testified that Hoffman Structures and Hoffman Construction are “separate legal entities,”
although superintendents do talk to one another.
Plaintiffs both testified that, during 2007, they lived in Albany, Oregon. Plaintiffs
testified that, as of the date of trial, they had lived in Albany for 10 years, prior to which they
lived in Beaverton, Oregon for six years. Plaintiffs moved to Albany because, from April 2000
through January 2005, Carolyn worked in Eugene, Oregon. (Ptfs‟ Ex A at 2.) Carolyn‟s
employment in Eugene “required her to travel between Eugene & Portland and Albany was a
good central location on the I-5 corridor.” (Id.) Carolyn testified that she returns to her home in
DECISION TC-MD 111185N 3
Albany in between jobs and on days off. She testified that, when she is at home in Albany, she
shops for groceries, cooks meals, washes clothing, pays bills, and rests. Carolyn testified that
Plaintiffs have a home office with a desk, computer, printer, file cabinets, and a shredder. She
testified that they maintain personal records in that office and did not deduct the office on their
income tax returns. Carolyn testified that she did not have any employment in Albany in 2007.
Plaintiffs maintain that Carolyn‟s tax home in 2007, and prior years, was Albany. (Ptfs‟
Ex A at 2-3.) Plaintiffs consider Albany to be in the Mid-Willamette Valley area, which they
consider to include Salem, Albany, and Eugene, Oregon. (See Ptfs‟ Ex B at 1.) Consistent with
her understanding that Albany was her tax home, Carolyn “did not claim any employee business
expenses as she commuted from Albany to Eugene daily” from 2000 through 2005. (Ptfs‟ Ex A
at 2.) From August 2005 through January 2006, Carolyn “claimed employee business expenses
as she temporarily spent the work week in Vancouver, WA and return[ed] to her home in Albany
for weekends & holidays.” (Id.) Carolyn also “claimed employee business expenses” when she
worked in Portland, Oregon from January through December 2006 and from January through
November 2007. (Id. at 3.)
Plaintiffs provided the union‟s “2007 dispatch log * * * specifically for jobs in the
Willamette Valley area.” (Ptfs‟ Ex D.) Carolyn testified that she was qualified for the jobs on
the list, but could not take any of them because she was employed during 2007 for Hoffman
Structures. She testified that she assumes the “dispatch log” for the Portland metro area for 2007
would be similar or longer.
Robert testified that he is also an operating engineer with the union. He testified that he
is qualified for all of the same jobs as Carolyn, except those that require a crane operator, which
is a separate certification. (See Ptfs‟ Ex D.) Robert testified that, like Carolyn, he reports to the
DECISION TC-MD 111185N 4
union either by telephone or in person when he is out of work. He testified that he typically only
reports in person if he needs to update his skills list. Robert testified that, when he is not
working on a job and on his days off, he typically returns to Plaintiffs‟ house in Albany, where
he takes care of the plants and animals and works on Plaintiffs‟ cars for car shows.
Between 2000 and 2007, Robert had jobs in “Marion OR to Sacramento, Calif” (150
days); St. Helens, Oregon (204 days); Hillsboro, Oregon (two jobs, 15 days and 92 days,
respectively); Portland, Oregon (two jobs, one day and 102 days respectively); Vancouver,
Washington (two jobs, 161 days and 103 days, respectively); Lake Oswego, Oregon (27 days);
Zigzag, Oregon (two days); Estacada, Oregon (10 days); Albany, Oregon (560 days); Swan
Island, Oregon (358 days); Mt. Hood, Oregon (56 days), Gresham, Oregon (seven days); and
Gladstone, Oregon (120 days). (Ptfs‟ Ex B at 2.) In 2007, Robert had four different jobs with
different employers: the first in Mt. Hood, Oregon from November 17, 2006, through
January 12, 2007; the second in Gresham, Oregon from March 2, 2007, through March 9, 2007;
the third in Portland, Oregon from March 12, 2007, through June 22, 2007; and the fourth for the
union as a “field rep” from June 25, 2007, through December 19, 2007. (Id.) From 2004
through 2007, Robert claimed employee business expenses for each of his jobs except the job in
Albany, Oregon in 2004 and 2005. (Ptfs‟ Exs A at 3-4, B at 2.)
Robert testified concerning his job as a “field rep” for the union in 2007: He was hired to
work on a “wage setting project” whereby the union reported statewide prevailing wage statistics
to the Oregon Bureau of Labor and Industry. Robert testified that he traveled statewide around
Oregon gathering information and reporting it back to the union. Robert testified that, initially, it
was his understanding that he would be working out of his home office in Albany; he “didn‟t
even have a chair” at the union hall in Gladstone, Oregon. Robert testified that, during
DECISION TC-MD 111185N 5
the latter part of 2007, he was provided an office at the union hall in Gladstone. From January 7,
2008, through at least March 3, 2011, Robert has worked as a “field supervisor” for the union in
Gladstone. (Ptfs‟ Ex B at 2.) Robert testified, as a field supervisor, he is responsible for various
regions statewide and is required to travel around the state.
Plaintiffs claimed $30,372 in unreimbursed employee business expenses, including
vehicle and travel expenses for the 2007 tax year. (Def‟s Exs A at 4-7, B at 1.) Defendant
adjusted Plaintiffs‟ claimed expenses, disallowing $27,114; Defendant allowed expenses for
union dues and some work clothes. (Def‟s Ex B at 1.)
II. ANALYSIS
The issue before the court is whether Plaintiffs may deduct unreimbursed employee
business expenses for vehicle and travel expenses during the 2007 tax year. This court has
previously held that the Oregon Legislative Assembly “intended to make Oregon personal
income tax law identical to the [IRC] for purposes of determining Oregon taxable income,
subject to adjustments and modifications specified in Oregon law. ORS 316.007.” Ellison v.
Dept. of Rev., TC-MD No 041142D, WL 2414746 at *6 (Sept 23, 2005) (footnote omitted). “On
this question, Oregon law makes no adjustments to the [IRC] and therefore, federal law governs
the analysis.” Porter v. Dept. of Rev. (Porter), __ OTR __ (Oct 20, 2009) (slip op at 2);
ORS 316.007,2 ORS 316.012(1). “Further, the view of the Commissioner of Internal Revenue as
to the legal analysis is always dispositive.” Porter, __ OTR at __ (slip op at 2-3); see also
ORS 314.011(3).
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2
All references to the Oregon Revised Statutes (ORS) are to 2005.
DECISION TC-MD 111185N 6
IRC section 162(a)3 allows a deduction for travel expenses incurred in connection with a
trade or business, stating in pertinent part:
“There shall be allowed as a deduction all the ordinary and necessary expenses
paid or incurred during the taxable year in carrying on any trade or business,
including * * *
“(2) traveling expenses (including amounts expended for meals and lodging other
than amounts which are lavish or extravagant under the circumstances) while
away from home in the pursuit of a trade or business;[]
“* * * For purposes of paragraph (2), the taxpayer shall not be treated as being
temporarily away from home during any period of employment if such period
exceeds 1 year.”
The business expense deduction under IRC section 162(a)(2) includes deductions for mileage,
meals, lodging and other travel expenses incurred while away from home in the pursuit of a trade
or business. IRC section 262 generally disallows deductions for “personal, living, or family
expenses” not otherwise expressly provided for in the IRC. “The purpose of IRC § 162(a)(2) is
to ameliorate the effects of business which requires taxpayers to duplicate personal living
expenses.” Harding v. Dept. of Rev. (Harding), 13 OTR 454, 458 (1996). “Consequently, courts
must determine whether the claimed expense is actually required by the business rather than by
the taxpayer‟s personal choice.” (Id.)
To deduct travel expenses under IRC section 162(a)(2), taxpayers must show that the
expenses “(1) were incurred in connection with a trade or business; (2) were incurred while away
from home; and (3) were reasonable and necessary.” Morey v. Dept. of Rev. (Morey), 18 OTR
76, 80-81 (2004) (citing Finn v. Dept. of Rev., 10 OTR 393, 395 (1987)). At issue here is
whether Plaintiffs‟ claimed expenses were incurred while “away from home.”
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3
All references to the Internal Revenue Code (IRC) are to the 1986 code with updates applicable to 2007.
DECISION TC-MD 111185N 7
“In general, a taxpayer‟s home for the purposes of section 162(a)(2) - i.e., the taxpayer‟s
„tax home‟ - is the taxpayer‟s principal place of business or employment.” Morey, 18 OTR at 81
(citing Harding, 13 OTR at 459). “[A] person‟s principal place of business need not be limited
to a specific location or job site. A principal place of business may include an entire
metropolitan area. Rather than looking at particular jobs, all of the job prospects in the area must
be considered.” Hintz v. Dept. of Rev. (Hintz), 13 OTR 462, 467 (1996) (citing Ellwein v. United
States (Ellwein), 778 F2d 506, 510 (8th Cir 1985)). The court in Hintz stated:
“There undoubtedly will be situations when a construction worker will lack a
principal place of business because the job sites to which he is sent are scattered
over a large area. However, if the job sites are all located within the same general
area, that area will constitute the taxpayer‟s principal place of business.”
13 OTR at 467. “[T]he taxpayer‟s personal residence is the individual‟s tax home if the principal
place of business is „temporary‟ as opposed to „indefinite‟ or „indeterminate.‟ That exception is
in turn subject to an exception found in the flush language of section 162(a), which provides that
any employment period in excess of one year is per se indefinite.” Morey, 18 OTR at 81(citation omitted).
A place of business is temporary if the employment is such that termination within a
short period could be foreseen. Mitchell v. Comm’r, 74 TC 578, 581 (1980) (citation omitted);
see also Michaels v. Comm’r, 53 TC 269 (1969). Whether employment is temporary or
indefinite is a question of fact. Peurifoy v. Comm’r, 358 US 59, 60-61, 79 S Ct 104, 3 L Ed 2d
30, reh’g den, 358 US 913 (1958). “If employment at a work location is realistically expected to
last (and does in fact last) for 1 year or less, the employment is temporary in the absence of facts
and circumstances indicating otherwise.” Rev Rul 99-7 (emphasis in original); see also Daiz v.
Comm’r, 84 TCM (CCH) 148 (2002).
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DECISION TC-MD 111185N 8
Allowable deductions from taxable income are a “matter of legislative grace” and the
burden of proof is placed on the individual claiming the deduction. INDOPCO, Inc. v. Comm’r,
503 US 79, 84, 112 S Ct 1039, 117 L Ed 2d 226 (1992). As the party seeking affirmative relief,
Plaintiffs have the burden of proof by a preponderance of the evidence. ORS 305.427. This
court has previously ruled that a “[p]reponderance of the evidence means the greater weight of
evidence, the more convincing evidence.” Feves v. Dept. of Rev., 4 OTR 302, 312 (1971).
Evidence that is inconclusive or unpersuasive is insufficient to sustain the burden of proof. Reed
v. Dept. of Rev., 310 Or 260, 265, 798 P2d 235 (1990). Finally, in an income tax appeal, this
court has the statutory authority to determine the correct amount of the deficiency (e.g., tax),
“even if the amount so determined is greater or less than the amount of the assessment
determined by the Department of Revenue[.]” ORS 305.575.
Plaintiffs‟ maintain that they had no “principal place of business or employment” during
the 2007 tax year and that their “tax home” was their personal residence in Albany, Oregon.
Defendant argues that Plaintiffs were both indefinitely employed in the Portland metropolitan
area during the 2007 tax year. In the alternative, Defendant argues that, if Plaintiffs‟ 2007 tax
year employment in the Portland metropolitan area was “temporary,” then Plaintiffs‟ lack a “tax
home” and were, therefore, “itinerant” under Revenue Ruling 73-529.
A. Whether Plaintiffs’ employment in 2007 was “temporary” or “indefinite”
In Morey, this court discussed three possible standards to determine whether the taxpayer
was away from home for temporary employment; given the taxpayer‟s failure to meet the burden
of proof under any of the standards, the court declined to “address which legal standard is
controlling.” 18 OTR at 82. The Ninth Circuit follows the “reasonable probability” standard
under which “[a]n employee might be said to change his tax home if there is a reasonable
DECISION TC-MD 111185N 9
probability known to him that he may be employed for a long period of time at his new station.
What constitutes „a long period of time‟ varies with circumstances surrounding each case.”
Morey, 18 OTR at 82 (citing Harvey v. Comm’r, 283 F2d 491, 495 (9th Cir 1960)).
The taxpayer in Morey, a union pipefitter, “could have been employed over a three-state
area and [he] did not know how long each job would last or where the next job might be
located.” 18 OTR at 83. The court found that supported a finding that the taxpayer “did not
know exactly how long each job would last,” but determined that evidence “was not dispositive.”
Id. “Although they are not required to prove a negative, taxpayers must offer some evidence,
such as the type of job and employer, the expectations of that employer, or expectations of the
customer, from which the court may determine if a reasonable probability was known to [the
taxpayer] that he would be employed only for a short period of time at the new location.” Id.The court observed that “most if not all construction jobs” are characterized by “the inherent risk
that [the employee] might be laid off at anytime and the impractical nature of having to move
from job site to job site[.]” Id. The court found that uncertainty insufficient:
“If taxpayers could come to the court under the standard that they propose with
nothing more than testimonial evidence indicating that „nothing is certain‟ or „you
never know what your next job is going to be,‟ then arguably a new exception
would be carved out for construction workers because of the inherently uncertain
nature of their work generally. As noted, such an exception has been routinely
rejected by the courts.”
Id. at 83-84 (citations omitted). Relying in part on evidence that, during the tax year at issue,
there was a considerable demand for “union workers” with the taxpayer‟s skills and experience
in Eugene, the court in Morey found that the taxpayer could reasonably expect long term
employment with one contractor or with a number of contractors in Eugene. Id. at 84.
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DECISION TC-MD 111185N 10
In Wilson v. Comm’r, (Wilson), 82 TCM (CCH) 899, WL 1415561 at *4 (2001), the Tax
Court stated:
“Construction projects are typically, if not always, of limited duration.
* * * However, this does not end the inquiry. This Court has recognized that
when the taxpayer has a series of jobs with one employer, the actual duration of
the employment relationship between the taxpayer and employer should be
considered when determining whether the employment was indefinite. * * * This
is true notwithstanding that the employment relationship consists of a series of
shorter assignments. [] Where the employee is highly regarded by the employer,
as appears to be the case here, the relationship between the two parties is a
continuing one, subject only to the availability of projects requiring the
employee‟s skills. * * *.”
(Citations omitted).
In 2007, Carolyn worked for Hoffman Structures, Inc. in Portland, Oregon. In 2005 and
2006, Carolyn worked exclusively in the Portland metropolitan area: she worked for Hoffman
Structures, Inc. in Vancouver, Washington in 2005 and for Hoffman Construction in Portland,
Oregon in 2006. None of Carolyn‟s jobs in 2005, 2006, or 2007 lasted for more than one year;
thus, they were not “per se indefinite” under IRC section 162(a). However, the testimony and
evidence supports a finding that, as of the 2007 tax year, Carolyn knew of a “reasonable
probability” of continued employment in the Portland metropolitan area. She testified that, in
2005, she was dispatched by the union to the Vancouver job site. At the end of the Vancouver
job in 2006, she was offered a position at a site in Portland beginning two days later. Carolyn
was specially requested by Hoffman Structures, Inc. for the 2007 job in Portland that began
about two weeks after the conclusion of the previous job in Portland. Carolyn testified that the
union would not have called her for the 2007 job in Portland if she had been employed at the
time of the request, but there is no evidence to suggest that that possibility was likely. To the
contrary, the evidence supports a finding that Carolyn had developed a good reputation with
Hoffman Structures, Inc. during her work in Vancouver 2005; as a result, she was invited to
DECISION TC-MD 111185N 11
work for Hoffman Construction in Portland in 2006 and for Hoffman Structures, Inc. in 2007.
Thus, Carolyn was indefinitely employed in the Portland metropolitan area in 2007.
In 2007, Robert worked for four different employers at four different locations in Oregon:
Mt. Hood, Gresham, Portland, and Gladstone. None of those jobs lasted for more than one year;
thus, they were not “per se indefinite” under IRC section 162(a). Furthermore, no evidence
suggests that there was a “reasonable probability” that any of those jobs would last for more than
one year, with the possible exception of Robert‟s job as a “field rep” for the union beginning in
June 25, 2007. (Ptfs‟ Ex B at 2.) Defendant appears to consider Robert‟s employment with the
union beginning in 2007 to be indefinite based on the fact that, beginning in January 2008,
Robert worked as a “field supervisor” for the union and continued to be so employed as of the
date of trial. (Id.) The question, then, is when Robert knew of a “reasonable probability” that he
would be employed for “a long period of time” in the Portland metropolitan area (Gladstone).4
Robert testified that, when he began as a “field rep” in 2007, he did not have an office in
the union and it was his understanding that he would be working out of his home office in
Albany. Robert was provided with an office at the union hall in Gladstone at some point during
4
Revenue Ruling 99-7, which addresses when “daily transportation expenses incurred by a taxpayer in
going between the taxpayer‟s residence and a work location are deductible[,]” supports the conclusion that the
pertinent question is when Robert reasonably knew that he would be employed in the Portland metropolitan area for
a long time. In providing guidance on when employment that lasts less than one year is “temporary” rather than
“indefinite,” Revenue Ruling 99-7 states:
“If employment at a work location is realistically expected to last for more than 1 year or there is
no realistic expectation that the employment will last for 1 year or less, the employment is not
temporary, regardless of whether it actually exceeds 1 year. If employment at a work location
initially is realistically expected to last for 1 year or less, but at some later date the employment is
realistically expected to exceed 1 year, that employment will be treated as temporary (in the
absence of facts and circumstances indicating otherwise) until the date that the taxpayer‟s realistic
expectation changes, and will be treated as not temporary after that date.”
(Emphasis in original.) Revenue Ruling 99-7 allows a taxpayer to “deduct daily transportation expenses incurred in
going between the taxpayer‟s residence and a temporary work location outside the metropolitan area where the
taxpayer lives and normally works.” (Emphasis in original.) Similarly, several circuits have determined that the
temporary worksite must be located distant from the taxpayer‟s residence in order for commuting expenses to be
deductible. See, e.g., Ellwein, 778 F2d at 511; Dahood v. United States, 747 F2d 46, 48 (1st Cir 1984).
DECISION TC-MD 111185N 12
the latter part of 2007. His position as “field supervisor” did not begin until January 7, 2008, and
there is no evidence suggesting that he knew prior to January 2008 of a “reasonable probability”
that he would be employed in the Portland metropolitan area for “a long period of time.”5 Thus,
the court finds that Robert‟s employment in the Portland metropolitan area in 2007 was
temporary rather than indefinite.
B. Whether Robert had a “tax home” or was itinerant in 2007
Because Robert‟s employment in the Portland metropolitan area in 2007 was temporary,
the court must next determine whether his personal residence in Albany was his “tax home” or,
in the alternative, he was itinerant.
“A taxpayer may have no tax home * * * if he continuously travels and thus does
not duplicate substantial, continuous living expenses for a permanent home
maintained for some business reason. Clearly, if a taxpayer has no „home‟ for tax
purposes, then he cannot deduct under § 162(a)(2) for expenses incurred „away
from home.‟ This is for good reason. * * * The burden exists „only when the
taxpayer has a „home,‟ the maintenance of which involves substantial continuing
expenses which will be duplicated by the expenditures which the taxpayer must
make when required to travel elsewhere for business purposes.‟ * * * Thus, a
taxpayer only has a tax home-and can claim a deduction for being away from that
home-when it appears that he or she incurs substantial, continuous living expenses
at a permanent place of residence. * * *.”
Henderson v. Comm’r (Henderson), 143 F3d 497, 499 (9th Cir), cert den, 119 S Ct 181 (1998)(citations omitted); see also Johnson v. Comm’r (Johnson), 115 TC 210, 221 (2000) (“We
consider a person who has neither, a permanent residence nor a principal place of employment to
be an itinerant without a tax home”).
The Ninth Circuit in Henderson relied on Revenue Ruling 73-539, which
“outlines three factors to consider in determining whether a taxpayer has a tax
home or is an itinerant. Essentially, they are (i) the business connection to the
5
In Austin v. Dept. of Rev., __ OTR __ (Oct 20, 2009) (slip op at 8 n 9), this court stated that it “does not
find it appropriate to consider subsequent years in determining whether taxpayer „normally‟ worked in a
metropolitan area during the tax years at issue.”
DECISION TC-MD 111185N 13
locale of the claimed home; (ii) the duplicative nature of the taxpayer‟s living
expenses while traveling and at the claimed home; and (iii) personal attachments
to the claimed home. While subjective intent can be considered in determining
whether he has a tax home, objective financial criteria are usually more
significant.”
Id. at 500 (citation omitted). Based on those factors, the court concluded that taxpayer, “a stage
hand for Walt Disney‟s World of Ice, a traveling show[,]” was itinerant during the tax year at
issue and could not deduct traveling expenses. Id. at 498, 501. The taxpayer claimed that his tax
home was his parents‟ home in Boise, Idaho, to which he returned in between each of his three
tours during the tax year at issue. Id. at 498. The court found that the taxpayer “had virtually no
business reason for his tax home to be in any location” and his “choice to return to Boise was not
dictated by business reasons.” Id. at 500. Furthermore, the court found that the taxpayer “did
not have substantial, continuing living expenses in Boise that were duplicated by his expenses on
the road” because “he paid no rent and had no ownership interest in his parents‟ home.” Id.
By contrast, the Tax Court in Johnson held that taxpayer, a sea captain who traveled
worldwide for long periods of time, maintained a “tax home” at his personal residence in
Freeland, Washington, where his family lived. 115 TC at 211, 222. The court explained:
“Petitioner also had a legitimate reason for maintaining his personal residence in
Freeland while traveling throughout the world with and for his employer. First,
petitioner‟s family did not travel with him while he worked; thus, petitioner was
required to maintain a family residence somewhere. We refuse to second guess
petitioner‟s decision to maintain his family residence in Freeland, instead of
moving his family to the location of his Florida employer or to one of the many
cities to which he traveled. * * * To have a tax home for purposes of section
162(a), a taxpayer need not maintain a residence in a city in which he or she
actually works. * * *.”
Id. at 222 (citations omitted). In Semock v. Comm’r, 68 TCM (CCH) 378, *2, *4 (1994), the Tax
Court held that taxpayer, an engineer and consultant, maintained a tax home in Cape Canaveral,
Florida even though, during the tax years at issue, he did not work in Cape Canaveral but rather
DECISION TC-MD 111185N 14
held “temporary contract jobs” that typically lasted three to six months in Virginia, Florida,
North Carolina, Vermont, and Alabama. The taxpayer initially moved to Cape Canaveral for
work and, during the tax years at issue, “maintained an apartment for which he paid rent of $250,
and later $275, per month, as well as utilities.” Id. The Court found persuasive the facts that “no
evidence suggest[ed] that [the taxpayer‟s] prospects for future employment in Cape Canaveral
were hopeless” and that, during periods of unemployment during the tax years at issue, the
taxpayer “returned to his home and diligently sought employment in the Cape Canaveral area.”
Id. at *4.
Based on the three factors identified in Revenue Ruling 73-529 and applied by the Ninth
Circuit in Henderson, the court finds that, during the 2007 tax year, Robert maintained a “tax
home” at his personal residence in Albany, Oregon. It is clear that Robert incurred “duplicative
expenses while traveling and at the claimed home” and that Robert had sufficient “personal
attachments” to Plaintiffs‟ home in Albany, Oregon. The only question is whether Robert had a
“business connection” to Albany or the larger metropolitan area. Plaintiffs testified that the
jurisdiction of the union is all of Oregon and part of Southwest Washington. Furthermore,
Plaintiffs presented evidence of numerous job openings in the Willamette Valley in 2007. As in
Semock, there is no evidence to suggest that Robert‟s job prospects in Albany or the larger
metropolitan area were “hopeless.” Robert “was required to maintain a family residence
somewhere.” Johnson, 115 TC at 221-222. At least as of the 2007 tax year, it would not have
been reasonable for Robert to move to Gladstone or the Portland metropolitan area based on his
position as “field rep” for the union.
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DECISION TC-MD 111185N 15
C. Amnesty penalty
Plaintiffs request that the court waive the amnesty penalty imposed by Defendant.
Plaintiffs argue that “[t]here was no knowledge on the part of the taxpayers during the amnesty
period that [their] position [regarding tax home and claimed business expenses] would be
challenged so they had no opportunity to file during the amnesty period. This penalty was
intended to be an additional charge to the taxpayers who should have known that they had
incorrectly filed an income tax return.” (Ptfs‟ Ex A at 1.) Defendant responds that Plaintiffs‟
request for waiver of the amnesty penalty must be made to Defendant; the court‟s review is
limited to abuse of discretion. As noted by Defendant, Defendant has discretionary authority to
waive the penalty imposed on Plaintiffs. See OAR 150-305.100-(C)(7)(d); OAR 150-
305.145(4). It is unclear to the court whether Plaintiffs have made a request for waiver to
Defendant or that Defendant denied Plaintiffs‟ request.6 There is no action taken by Defendant
for the court to review. Plaintiffs‟ request for waiver of the amnesty penalty must be denied.
III. CONCLUSION
After carefully considering the testimony and evidence presented, the court finds that
Carolyn was indefinitely employed in the Portland metropolitan area during the 2007 tax year
and may not deduct unreimbursed employee business travel expenses for her employment in
Portland during the 2007 tax year. The court further finds that Robert‟s four jobs in 2007 were
each temporary and that his “tax home” in 2007 was his personal residence in Albany, Oregon.
Thus, Robert may deduct unreimbursed employee business travel expenses related to his
6
Defendant‟s Notice states: “ORS 105-305.100-(c)(7)(d) explains the waiver of the amnesty penalty.
Relief under this type of waiver is only if there was some circumstance beyond your control at the time the amnesty
program was conducted, 9/09 - 11/19/09, which caused you to be unable to participate in the program. The
interpretation is similar to ORS 150-305.145, like you were out of the county, in the hospital, had a catastrophic
event like fire, earthquake, flood.” (Ptfs‟ Compl at 5.) The Notice does not state whether Plaintiffs requested
waiver of the amnesty penalty or whether Defendant denied Plaintiffs‟ request for waiver. (Id.)
DECISION TC-MD 111185N 16
employment in Mt. Hood, Gresham, Portland, and Gladstone, Oregon in 2007. Plaintiffs‟
request that the court waive the 2007 amnesty penalty is denied. Now, therefore,
IT IS THE DECISION OF THIS COURT that Defendant shall recalculate Plaintiffs‟
2007 tax liability to conform with the court‟s determinations.
Dated this day of October 2012.
ALLISON R. BOOMER
MAGISTRATE
If you want to appeal this Decision, file a Complaint in the Regular Division of
the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563;
or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR.
Your Complaint must be submitted within 60 days after the date of the Decision
or this Decision becomes final and cannot be changed.
This document was signed by Magistrate Allison R. Boomer on October 24,
2012. The Court filed and entered this document on October 24, 2012.
DECISION TC-MD 111185N 17