Tax Law Update: December 2025
• New York court finds taxpayer remained a domiciliary—In Hoff v. Division of Taxation, State of New York Tax Appeals Tribunal, DTA 850209 (Oct. 9, 2025), a familiar issue was litigated: Did the taxpayers, John Hoff and Kathleen Ocorr-Hoff, establish domicile in Florida such that they were no longer residents of New York for income tax purposes?
John and Kathleen purchased a home in Canandaigua, N.Y. in 2011 as their primary residence but had lived in New York as longtime residents in various other areas of the state since the late 1970s. They purchased a condominium in Naples, Fla. in 2014 and began spending more and more time there. In 2018, they signed a Florida Declaration of Domicile, registered to vote in Florida and obtained Florida drivers’ licenses. In 2019, they executed updated estate plans under Florida law. In both years, they spent a few more days in New York than in Florida. They continued to work in some capacity at their jobs with ties to New York and maintained strong connections with New York.
In 2018 and 2019, they filed New York income tax returns as non-residents. The New York Division of Taxation audited the taxpayers’ income tax returns, determined that they remained residents of New York and issued notices of deficiency.
A taxpayer is domiciled in New York if they intend it to be their permanent home and it remains so until they have established a new domicile. If a taxpayer owns multiple homes, the length of time spent at each home is important but not conclusive, as many factors are taken into account.
In this case, the administrative law judge determined that the Hoffs hadn’t shown that they ended their domicile in New York. The taxpayers appealed but faced a high burden of proof: They would have to present clear and convincing evidence that the determination was incorrect. The Tax Appeals Tribunal found that there were factors showing close connections to each state, and there was no evidence showing that they cut ties with New York sufficiently to establish a new domicile. The formal declarations of domicile were insufficient in the absence of other important informal factors. They kept their employment, country club membership and primary residence style home in New York and didn’t significantly alter their pattern of use of the two residences.
• Advisor personally liable for client’s investment holding company’s $2 million tax liability—In United States v. Neuberger, the U.S. District Court for the District of Maryland (Oct. 23, 2025) held that an attorney was personally liable for the outstanding tax liability of a holding company established as part of a client’s broad investment plans. The entity, Lehcim Holdings, Inc. was one of many formed for and by the Konig family under the counsel of Isaac Neuberger, their attorney. Isaac was the sole director of Lehcim and able to act unilaterally without any direction from its shareholders. It was part of a web of various investment entities that held assets all around the world. Several of the entities were run and managed by Isaac and his team. As the opinion details, there were frequent transactions among the various entities. Most were characterized as loans, but the terms of the loans were lacking: There were no repayment terms other than noting it as a demand loan to be paid in U.S. currency.
The payments among the entities were often made under Isaac’s direction and effected on paper only, by noting transfers in and out on ledgers. Balance sheets were created for filing tax returns but not used for other purposes. The Internal Revenue Service ultimately audited the company and determined that the loans weren’t bona fide, and so the interest deductions were improper. The IRS issued a notice of deficiency and sent it to Isaac and his team. They didn’t challenge the notice.
They did, however, continue to implement a “repayment plan” to transfer funds from other entities to pay off Lehcim’s loans payable to other Konig entities at Isaac’s direction. At the same time, Lehcim submitted a Collection Information Statement Form to the IRS stating that it had no cash on hand or in banks, no investments and no available credits or receivables.
The IRS continued to pursue Isaac and served Notices of Levy on his firm in two different capacities and two other Konig family entities. The federal government then retained a forensic accountant to evaluate Lehcim’s solvency. After wading through the tangled web of transactions, she determined it was insolvent in the years in question.
The government sought repayment under the Federal Priority Statute, 31 U.S.C. Section 3713(b), which holds a representative liable to the extent of the payment made if they transfer debtor assets before paying a claim of the government, while the debtor is insolvent and the representative has knowledge or notice of the claim. The court determined that Isaac transferred significant sums from Lehcim to pay purported loans from the various entities instead of paying the amounts due to the IRS. Lehcim’s sole director, president and treasurer qualified Isaac as a “representative” under Section 3713(b). As a representative of Lehcim, he decided to implement the “repayment plan” and then distributed Lehcim’s assets when it was insolvent to a third party despite being aware of the amounts owed to the United States on the Notices of Deficiency. As a result, he’s personally liable for the outstanding tax liability of Lehcim.