Legal Ruling 1965-300

California Franchise Tax Board
Legal Ruling No. 300

April 23, 1965

Personal Income: Military Personnel

A career serviceman becomes a nonresident when he leaves California under permanent change status orders.

This Board has been following the principle that under the Soldiers' and Sailors' Civil Relief Act a person entering the Armed Forces from California retains his California residence even though stationed outside the state under military orders.

On December 11, 1963, the Appeal Board entered its decision in the Appeal of Harold L. and Miriam Jane Naylor in which it concluded that a career serviceman became a nonresident when he left California to pursue his military career. In supporting its decision the Board reasoned that the taxpayer's absence from this state was not temporary or transitory in nature, and since the Legislature has not adopted a specific definition of residence in our Law to include this type of individual, the Soldiers' and Sailors' Civil Relief Act did not cause his residence to be frozen in this state. The Board further concluded that since Reg. 17014-17016(h) (formerly 17013-17015(h)) incorrectly interpreted the provisions of the statute it was not controlling.

In view of the Naylor decision the following conclusions have been reached:

  1. Since the Soldiers' and Sailors' Civil Relief Act will not create a residence which is not otherwise provided for in the Personal Income Tax Law, California military personnel will be treated as nonresidents when they leave this state under permanent military orders to serve at another post of duty. If the wife remains a California resident she is taxable on one half of her husband's community income provided the husband retains his California domicile.
  2. Unless out-of-state military personnel adopt California as their domicile of choice the Board cannot tax them even though they are serving at California posts of duty. If a California domicile is adopted, however, the Board can tax them on their entire income during periods of service at California posts of duty.
  3. Declarations of legal residence are now being obtained by all branches of the service from their personnel. A declaration showing California as the legal residence will be treated as presumptive evidence of California residence unless proof is submitted to dispel the presumption.

Since this memorandum is inconsistent with the principles established in Digest No. 236 that memorandum is hereby withdrawn.