The owner of the popular Brighton Beach-based Tatiana’s Restaurant (3152 Brighton 6th Street) lost a tax battle due to a ruling that will cost her hundreds of thousands of dollars. Forbes is reporting that the New York Division of Tax Appeals has denied Tatiana Varzar’s claim that she is a Florida resident, and owed back taxes for the years 2004, 2005 and 2006.
In those years, Varzar claimed to be living in Pompano Beach, Florida. By doing so, she saved herself $231,422, money she’ll now have to pay back plus penalties and interest. Forbes went through the ruling and showed why Varzar failed to make her case that she was a Florida resident in the mid 2000s, and used it to illustrate New York State’s strong tax law. Dual residents beware.
The administrative law judge tackled the domicile question first. Things did not go well for Ms. Varzar. The judge noted that there was no evidence that Florida Intangibles Tax had been filed. Ms. Varzar had purchased her home in Pompano Beach in 1992, but it was not until 2004 that she decided to claim that as her principal residence. That can be a problem in a domicile case, since there is supposed to be this clear delineation when you abandon one domicile and adopt a new one.
Petitioner was asked to explain why she changed her domicile from Brooklyn to Florida. She testified that she decided to abandon Brooklyn based upon two events. First, she stated that there was a fire at her restaurant and nightclub in September of 2003 and, secondly, she was robbed at gunpoint in February 2004.
I liked the robbed at gunpoint one. In Florida, you have a right to carry and stand your ground. That makes the fact that they don’t have no stinking state income tax incidental. Also according to a New York Times story, the fire was suspicious
The authorities said from the start that the fire was suspicious. A second alarm was called one minute after firefighters first arrived, an indication that the flames had burned with extraordinary intensity. Battalion Chief Steven Bernius spent a good part of the next morning examining a charred propane space heater, and people in the neighborhood quickly voiced sinister theories.
Unfortunately for the domicile narrative, the same story indicates that Ms. Varzar was not intimidated.
She has a steely gaze, too, and if indeed someone was trying to scare her by setting fire to her restaurant, the effort failed. Enlisting the help of elected officials, civic boosters and others in the neighborhood who feel they owe her gratitude for enlivening the boardwalk, Ms. Varzar managed to reopen before the next beach season began. The city quickly replaced the damaged slats of boardwalk, she said, and she replaced the water-damaged carpets, ceilings and music gear.
Things went downhill from there.
Petitioner submitted seven months of bills for Comcast for the year 2005. The bills indicate that service was for the Florida house, yet all the bills were mailed to petitioner at the New York house. Petitioner submitted eight months of bills for DISH network service; however, these bills were in the name of Michael Varzar.. Petitioner submitted various other documents that were in the name of Michael Varzar. It is noted that most of this documentation was for periods outside of the audit period and, additionally, the Florida address indicated in these documents does not coincide with the Pompano Beach address of the Florida house. Additionally, Michael Varzar did not testify at this proceeding, and petitioner did not mention him in her testimony except regarding the aforementioned exhibits with his name on it.
That was probably enough to doom her. If you want to draw a lesson there it is a pretty obvious one that you should have all the bills going to the place you say is your home, even if that is a bit inconvenient some times.
We know a lot of our readers have homes in Pennsylvania, upstate New York and Florida – so consider this a teachable moment.