Federal and State Tax Residency Rules: New IRS Examination Guidance and Navigating State Tax Regulations

New Residency and Allocation Issues, Tax Planning Techniques, Nonresident Audits

Recording of a 110-minute CPE webinar with Q&A

Conducted on Tuesday, December 18, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will guide tax professionals and advisers on recent IRS examination guidance and state tax law issues regarding taxpayer residency. The panel will discuss federal and state tax residency rules, new residency and allocation issues, U.S. income tax treaties, available tax planning techniques, managing nonresident audits, and overcoming state regulatory challenges.


Advising taxpayers on issues relating to residency has become more cumbersome over the past year. The IRS LB&I unit has issued examination guidance focused on taxpayer residency and the application of U.S. income tax treaties. State tax residency rules and an increase in state audits and enforcement require tax professionals to become knowledgeable of new state residency and allocation issues to implement effective tax planning strategies for taxpayers.

Federal tax residency rules applicable to individuals or businesses are relatively straightforward but can be burdensome to evaluate depending on the facts and circumstances. Tax treaties are intended to eliminate or reduce double income taxation, and benefits are available to nonresident aliens and U.S. citizens living abroad under some conditions. Due to the critical nature of residency for tax purposes, taxpayers must understand residency rules and applicable tax treaties that will determine if they are subject to taxation, the necessary forms to be filed, and if they qualify for any exemptions.

Also, state regulatory challenges to taxpayer residency and overcoming them is an obstacle faced by many individuals with dual-residency between states or by companies operating in multiple jurisdictions. State residency determination is based on more than declarations or physical presence in the state, and the burden of proof falls on the taxpayer in such cases. This fact is typically learned the hard way by taxpayers resulting in the endangering of assets and being subject to tax liability that could have been limited or avoided with careful planning.

Listen as our panel discusses key components of federal and state residency rules, state residency and allocation challenges, and effective tax planning techniques to limit unintended tax liability and manage nonresident audits.



  1. Federal residency rules
    1. IRC Section 7701(b) and substantial presence
    2. Tax treaty residency
    3. Exceptions based on facts and circumstances
    4. Recent IRS examination guidance
  2. State regulatory challenges; new allocation and residency issues
    1. California residency rules and guidelines
    2. New York domicile test and critical factors
    3. Florida and other non-personal income tax states
  3. Managing nonresident audits
  4. Tax planning techniques and best practices for dual-resident taxpayers and multistate companies


The panel will discuss these and other key issues:

  • Recognizing the importance of both citizenship and residence in determining tax liabilities of individuals
  • Purposes of income tax treaties and their applicability
  • Common residency provisions and tiebreakers for dual residents
  • Allocating income between jurisdictions
  • Principal items targeted by state regulatory authorities
  • California tax residency rules and guidelines
  • New York domicile test and primary factors in determining tax residency
  • Dual-residency issues with non-personal income tax states
  • Preparation for nonresident audits
  • Current planning techniques and best practices for tax professionals


Stein, Michel
Michel R. Stein

Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

Toscher, Steven
Steven (Steve) Toscher

Hochman Salkin Toscher Perez

Mr. Toscher has been representing clients for more than 35 years before the Internal Revenue Service, the Tax Divisions...  |  Read More

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