Two States, One Problem

California State Board of Equalization

 Investigations Division

 450 N. Street

 PO Box 942879 MIC: 42

 Sacramento, Ca. 94279-0042

Dear Sirs:

It has come to my attention that a company by the name of “Naked Undies” operating exclusively from a claimed California location in Beverly Hills,, but is registered as a New Hampshire LLC.

There is some controversy regarding the legal domicile of one of the owners, Molly Shaheen, who votes here in NH but who has lived in California for some time.

From a review of your tax laws it appears that this question of domicile may require Ms. Shaheen, a California business owner, to pay California income taxes on income derived by any means, such as wages paid here in NH.

From your site:

Coming into California

When you are present in California for temporary or transitory purposes, you are a nonresident of California.

For instance, if you come to California for a vacation, or to complete a transaction, or are simply passing through, your purpose is temporary or transitory. As a nonresident, you are taxed only on your income from California sources.

When you are in California for other than a temporary or transitory purpose, you are a California resident. For instance, if your employer assigns you to an office in California for a long or indefinite period, if you retire and come to California with no specific plans to leave, or if you are ill and are in California for an indefinite recuperation period, your stay is other than temporary or transitory. As a resident, you are taxed on income from all sources.

You will be presumed to be a California resident for any taxable year in which you spend more than nine months in this state.

Although you may have connections with another state, if your stay in California is for other than a temporary or transitory purpose, you are a California resident. As a resident, your income from all sources is taxable by


Obviously, the California SBE will be able to determine if Ms. Shaheen has a California driver’s license and clarify her true domicile for all purposes, something I am unable to do.

But please be advised that the fact that Ms. Shaheen voted in NH in no way means she is domiciled here. This issue non-resident “mobile domicile” voting in our state is currently being determined in our court system.

Our definition of domicile is the same as California’s except for the issue of California income taxes.

Again, from your web site:

State Taxes

If you are not a resident of California, but you work or are engaged in a trade or business in California, you must file a California income tax return. See California's filing requirements in the 540NR Nonresident or Part-Year Resident tax booklet. Also, California Personal Income Tax will be withheld from the wages you earn while working in California.

Meaning of Domicile

The term “domicile” has a special legal definition that is not the same as residence. While many states consider domicile and residence to be the same, California makes a distinction and views them as two separate concepts, even though they may often overlap. For instance, you may be domiciled in California but not be a California resident or you may be domiciled in another state but be a California resident for income tax purposes.

Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return.

Change of Domicile

You can have only one domicile at a time. Once you acquire a domicile, you retain that domicile until you acquire another.

A change of domicile requires all of the following:

• Abandonment of your prior domicile.

• Physically moving to and residing in the new locality.

• Intent to remain in the new locality permanently or indefinitely as demonstrated by your actions.

Since a recent lower court ruling confusing the issue of domicile, thousands of non-domiciled individuals have been voting in New Hampshire. It is my intention that they not skirt the laws of their own state in doing so.

I hope this letter helps California determine the tax and domicile status of this individual or any other person might attempt abuse domicile statutes.

Please contact me with any questions you may have.

Thank you in advance for your cooperation.


Ed Naile


Chairman, Coalition NH Taxpayers