Montana and change of Domicile

When you renewed your driver's license, I'm assuming that you did so in Montana in 2006. The State then has a point - you didn't completely abandon your ties. Had you "renewed" your license in another state (by obtaining a license from the other state), that would have helped. What about your voter's registration?

Any gains from sale of real property in Montana (if it is like most states) will have its source in Montana and therefore will be taxable by Montana whether you are a resident or not, possibly with an offsetting credit from the state where you are a resident (so you don't have to pay tax in two different states on the same income).

-Mark Bole

I think you've missed the point somewhere. You can forget about "domicile". It matters not that you didn't live in Montana, nor even had other income in Montana, or anywhere for that matter. What matters is that you sold Montana land and that sale, no matter who you are, is taxable. I'm a resident of Alabama, but if and when I sell some of the family land in Georgia, I will owe Georgia tax on that. ChEAr$, Harlan Lunsford, EA n LA

I suspect that if you earned money in Thailand or sold land in Nevada, Alabama would want you to declare that, based on your resident status.

Yes, if Harlan sells his Georgia land, both Alabama and Georgia will tax the gain. Alabama (the residence state) will allow him credit for the tax he pays to Georgia (the source state), limited to the proportion of his Alabama tax liability that relates to that item of income. That's the way it usually works, although some pairs of states stand in a reverse relationship (where the source state grants the credit), and some pairs of states have reciprocal agreements limiting the source state's taxation of income of residents of the reciprocal state. If he has income from a foreign country or a state with no individual income tax (such as Nevada), Alabama will still tax the income on a residence basis. In that case, of course, there would be no offsetting credit. The OP did not state whether he was subject to an individual income tax as a Thai resident in 2000, or whether he paid any tax to Thailand on the gain from the sale of the Montana land. If he did, of course, he would get a foreign tax credit on his U.S. individual income tax return. States generally do not allow any credit for taxes paid to foreign countries, however. Katie in San Diego

Thanks to every one for the advice. I did not have any other income for the Year 2000 in the USA or thailand so that is not an issue for me. I injured my back in 1999 so did not work in 2000 and I did not get my new factory built until December 2000 so no income until 2001. I just sent an email asking what kind of settlement we can make to resolve this. I hope they come back with a discount.

No income at all? Interest? Dividends? How did you pay your living expenses in 2000? (That's a rhetorical question .)

There is no reason why Montana should compromise the tax liability. It sounds to me as though that assessment is long since final and there is nothing to settle at that level. My guess is that it is a collector you are talking to, not an auditor, and that person may be able to abate any penalties that were assessed. It's not likely that he or she can abate any of the tax or interest on the tax.

Good luck.

Katie