R 302019Z DEC 09

ALCOAST 722/09
COMDTNOTE 5800
SUBJ: MILITARY SPOUSES RESIDENCY RELIEF ACT
1. ON VETERANS DAY, THE PRESIDENT SIGNED INTO LAW S.475, THE
MILITARY SPOUSES RESIDENCY RELIEF ACT (THE ACT), AS PUBLIC LAW NO.
111-97. THIS ACT AMENDS THE SERVICE MEMBERS CIVIL RELIEF ACT
(SCRA) TO GRANT ADDITIONAL PROTECTIONS TO MILITARY SPOUSES.
2. IF CERTAIN CONDITIONS ARE MET, THE ACT ALLOWS THE SPOUSE OF A
SERVICE MEMBER, WHOSE STATE OF LEGAL RESIDENCE (DOMICILE) IS THE
SAME AS THE SERVICE MEMBERS, TO RETAIN THAT DOMICILE FOR PURPOSE OF
TAXATION, VOTING AND CERTAIN REAL PROPERTY RIGHTS WHEN RESIDING IN
A DIFFERENT STATE BECAUSE OF THE SERVICE MEMBERS MILITARY ORDERS.
THE ACT ALSO PROVIDES THAT WHEN THESE CONDITIONS ARE MET, INCOME
EARNED BY A SPOUSE IN THE STATE OF RESIDENCE CANNOT BE TAXED EXCEPT
BY THE MEMBERS AND SPOUSES STATE OF DOMICILE (NOTE: OTHER THAN
MILITARY COMPENSATION, INCOME THAT A MILITARY MEMBER EARNS, E.G.,
FROM AUTHORIZED OFF-DUTY EMPLOYMENT, DOES NOT RECEIVE PROTECTION
FROM TAXATION UNDER SCRA).
3. UNTIL NOW, ONLY THE SERVICE MEMBER WAS ALLOWED TO MAINTAIN HIS
OR HER DOMICILE WHILE RESIDING IN A DIFFERENT STATE PURSUANT TO
MILITARY ORDERS. THE CIVILIAN SPOUSE, LIKE OTHER PRIVATE CITIZENS,
WAS GENERALLY DEEMED TO BE DOMICILED IN THE STATE IN WHICH HE OR
SHE WAS RESIDING. AS A RESULT, EACH TIME A MILITARY FAMILY MOVED
TO ANOTHER STATE, THE NEW STATE REQUIRED THE SPOUSE TO ASSUME THAT
STATE AS HIS OR HER DOMICILE OR AT LEAST BE LIABLE TO TAXATION BY
THAT STATE FOR INCOME AND PERSONAL PROPERTY TAX LAW PURPOSES,
INCLUDING, E.G., PAYING PROPERTY TAX ON VEHICLES REGISTERED IN THE
SPOUSES NAME ALONE.
4. THE NEW ACT DOES NOT ALLOW THE SPOUSE TO RANDOMLY CHOOSE ANY
STATE FOR DOMICILE, NOR DOES IT APPLY TO ALL SITUATIONS.  THE
SPOUSE MAY CLAIM THE SERVICE MEMBERS DOMICILE STATE AS HIS OR HER
OWN DOMICILE ONLY IF THE SPOUSE RESIDES WITH THE SERVICE MEMBER AND
MAINTAINS THE REQUISITE CONTACTS WITH THAT DOMICILE STATE, E.G.,
REGISTERING TO VOTE.
5. MANY SERVICE MEMBERS HAVE CHANGED THEIR DOMICILE OVER THE COURSE
OF THEIR CAREERS, OFTEN TO STATES THAT DO NOT TAX INCOME SUCH AS
FLORIDA, TEXAS OR WASHINGTON, BY FILING A DD FORM 2058 WITH THEIR
PERSONNEL OFFICE. THIS FORM CHANGES THE LES TO INDICATE THE NEW
STATE FOR TAX PURPOSES, BUT DOES NOT COMPLETELY FULFILL THE
REQUIREMENTS TO ESTABLISH DOMICILE. CHANGE OF DOMICILE REQUIRES
PHYSICAL PRESENCE IN THE STATE WITH SIMULTANEOUS INTENT TO MAKE
THAT STATE YOUR PERMANENT HOME.  THIS INTENT IS SHOWN BY ACTIONS
SUCH AS REGISTERING TO VOTE, PURCHASING RESIDENTIAL PROPERTY OR
OTHER REAL ESTATE, REGISTERING OR TITLING YOUR AUTOMOBILE OR
WATERCRAFT IN THE NEW STATE, NOTIFYING YOUR OLD STATE OF THE CHANGE
TO THE NEW STATE AND BY CREATING A NEW WILL WHICH INDICATES THE NEW
STATE AS YOUR DOMICILE. ONCE THE SERVICE MEMBER ESTABLISHES A
STATE AS HIS/HER LEGAL DOMICILE, HIS OR HER SPOUSE ALSO MAY BE
LEGALLY DOMICILED IN THAT STATE.
6. THE STATE IN WHICH MILITARY FAMILIES RESIDE MAY SCRUTINIZE CLAIMS
OF LEGAL DOMICILE IN OTHER STATES, ESPECIALLY THOSE STATES WITHOUT
INCOME TAX. CARE SHOULD BE TAKEN BY ALL PERSONNEL THAT THE CHANGES
TO THEIR OWN OR THEIR SPOUSES DOMICILE, SUCH AS DESCRIBED
IN PARAGRAPH 5, ABOVE, ARE ESTABLISHED AND MAINTAINED.
7. THE NEW PROTECTIONS BECOME EFFECTIVE FOR INCOME TAXES PAID IN
2009, MEANING ELIGIBLE SPOUSES MAY BE ENTITLED TO A REFUND OF STATE
TAXES PAID THIS YEAR AND REPORTED ON TAX RETURNS FILED IN 2010.
SPOUSES WHO QUALIFY AND WISH TO CHANGE THEIR DOMICILE SHOULD VISIT
THEIR EMPLOYERS HUMAN RESOURCES OFFICE IN ORDER TO CHANGE THEIR
TAX INFORMATION.
8. STATE TAX AUTHORITIES MIGHT INTERPRET ELIGIBILITY UNDER THE
MILITARY SPOUSES RESIDENCY RELIEF ACT DIFFERENTLY.  MEMBERS SHOULD
ALSO BE AWARE THAT, IN SOME STATES, CHANGING THE DOMICILE MAY
AFFECT ELIGIBILITY FOR REAL PROPERTY TAX HOMESTEAD EXEMPTIONS OR
IN-STATE COLLEGE TUITION RATES FOR DEPENDENTS. IF YOU HAVE ANY
QUESTIONS REGARDING THIS ISSUE, CONTACT YOUR LOCAL LEGAL ASSISTANCE
OFFICE AT: HTTP://WWW.USCG.MIL/LEGAL/LA/LEGAL ASSISTANCE FIND LAWYER.ASP.
9.  RADM W.D. BAUMGARTNER, JUDGE ADVOCATE GENERAL, SENDS.
10. INTERNET RELEASE AUTHORIZED.