Good story in Arkansas Business. Charles Morgan of Acxiom is following some other Arkansas business executives who’ve set up legal residences in other states in advance of expected financial windfalls. Morgan’s spokesman is candid about his new “residence” in Texas: It’s to avoid Arkansas income taxes.
But not so fast, Chuck: There are court precedents about changing residence for tax purposes, says John Theis of DF&A. Typically, a tax dodger will change voter registration, driver’s license and vehicle registration and also rent or buy a home. “That is a good indication of a plan to abandon Arkansas,” Theis said, “but we do a deeper analysis of the facts surrounding their life to determine if they’ve abandoned Arkansas as a domicile.” This “lifestyle review” would includewhere the person works, where he shops for groceries, where he spends most of his days, where children go to school, where his pets are kept. In short, just because you declare yourself a resident of another state, it doesn’t mean you are as far as the tax man is concerned. Theis said the state has done a number of audits over the years on “high profile” cases of people attempting to establish new residences to avoid taxation. Many have been successful. He said he had to bite his tongue over one who won an “Arkansan of the Year” award the year he was trying to avoid further Arkansas taxation.