California Residency Audits Reach Your Vet Records. Here Is Why That Matters Beyond Billionaires

California voters will decide Proposition 40, the 2026 Billionaire Tax Act, on the November 3 ballot. According to the Legislative Analyst’s Office, it would impose a one-time 5% tax on the net worth of billionaires who were California residents on January 1, 2026, with real estate, pensions, and retirement accounts generally excluded. CalMatters estimates roughly 200 Californians would be affected, with revenue earmarked primarily for healthcare and smaller shares for food assistance and education.

Whatever happens at the ballot box, the measure has already changed behavior at the Franchise Tax Board. The FTB is reported to be preparing to examine whether people who relocated in late 2025, ahead of that January 1 cutoff, actually left, and it is not relying on a change-of-address form to decide.

The FTB’s inquiry is not primarily a day count. Its staff handbook instructs examiners to determine whether a former resident "substantially severed his California connections upon his departure or whether he maintained his California connections in readiness for his return." Reporting on the anticipated Proposition 40 audits describes examiners working from bank statements, travel records, cell phone data, and social media activity to test that question.

The connection factors reach further into ordinary life than most people expect. Practitioners who defend these cases describe the FTB weighing where children are enrolled in school, where vehicles are registered, where doctors and dentists are located, where banking relationships sit, where real property is held and how much time is spent there, where professional work is centered, and where family and social ties are maintained. Veterinary records land in that same category: where your pets receive care is a small, unglamorous data point about where your household actually lives.

None of this is a new invention for Proposition 40. The factor list traces to the Appeal of Bragg, the 2003 State Board of Equalization decision that California practitioners still call the Bragg factors, where a rancher who had moved to an Arizona ranch was held to be an Arizona resident for 1993 on objective facts, over his own later amended return claiming he had been a California resident all along. The decision is worth reading in the direction it actually runs: the factors measure where a life is anchored, and they bound the taxpayer against his stated position rather than for it.

California, like New York and New Jersey, applies a "clear and convincing evidence" standard to residency changes for high earners, and the burden sits entirely on the person claiming to have moved. California, New York, New Jersey, Connecticut, Maryland, and Minnesota are consistently named among the most aggressive residency-audit states for departing high earners, and their toolkit for a $2 million earner is built from the same categories of evidence as their toolkit for a $2 billion household.

Proposition 40 raised the stakes for a narrow group of billionaires, but it also previewed the evidence bar that ordinary high earners already face in a garden-variety residency audit. A founder who sold a company, an executive who relocated ahead of an equity event, or a retiree splitting time between two states can all be asked to reconstruct the same kind of record, just without the news coverage.

The timing exposure is worth naming plainly. FTB residency audits concentrate on high earners whose departure date lines up with a liquidity event, business sale, or large stock vesting; a claimed move date of late December followed by a January capital gain is a classic trigger. For a filed part-year or nonresident return, the FTB generally has four years to assess. If no California return was ever filed for a year the FTB believes you were a resident, there is no statute of limitations at all under R&TC section 19057(a), which is what makes silent nonfilers, not honest part-year filers, the highest-risk group.

The problem with reconstructing a year of movement from phone data, card statements, and old receipts after the fact is that it is slow, incomplete, and largely out of your control. Location history gets cleared. Receipts get lost. A vet visit six states away tells an examiner almost nothing about intent unless it sits inside a broader, organized timeline.

A defensible position looks different: a contemporaneous record of days and nights in each state, residence and utility evidence for the new home, documentation of retained ties to the old state and why they exist, and a clear chronology an advisor can review before an examiner asks for one. It is worth building for its own sake. Tax attorneys and CPAs who handle contested California residency cases informally put the cost of defending one through the administrative process at roughly $15,000 to $75,000 or more, climbing sharply if the dispute reaches the Office of Tax Appeals.

The Mobility Map tracks days and nights across states as they happen, so the record does not depend on reconstructing a year from memory or subpoenaed data. Evidence Vault organizes the residence, financial, and travel documentation that supports a presence claim, and AuditIQ flags gaps and retained-tie exposure before a state examiner does. Exposure™ adds advisor sharing so a CPA or tax attorney can review the record directly.

This article is informational and does not evaluate any individual’s tax situation. ResidencyIQ is not a law firm or accounting firm; work with a qualified CPA or tax attorney on your own residency change.

Legislative Analyst’s Office, Proposition 40 ballot analysis, provides the official nonpartisan summary of the 5% rate, the January 1, 2026 residency date, and the real estate, pension, and retirement account exclusions: https://lao.ca.gov/BallotAnalysis/Proposition?number=40&year=2026.

CalMatters, "Voter guide to Proposition 40: Billionaire tax," covers the measure’s scope, the roughly 200 affected taxpayers, and where the revenue would go: https://calmatters.org/california-voter-guide-2026/proposition-40-billionaire-tax/.

Mortgage Professional America, "California turns up heat on billionaires who fled its wealth tax," reports on the FTB’s anticipated audits of late-2025 departures and quotes the staff handbook standard on substantially severing California connections: https://www.mpamag.com/us/mortgage-industry/industry-trends/california-turns-up-heat-on-billionaires-who-fled-its-wealth-tax/582529.

Kugelman Law, "California Residency Audits and the Billionaire Tax: What High-Net-Worth Residents Need to Know," details the connection factors the FTB weighs, including school enrollment, vehicle registration, medical providers, and veterinary records: https://www.kugelmanlaw.com/blog/california-residency-audit-billionaire-tax/.

Appeal of Bragg, 2003-SBE-002, is the source of the domicile factor list California practitioners still apply; summary at: https://www.lataxattorney.com/practice-areas/residency-audits/important-california-residency-cases/appeal-of-bragg/.

FTB Publication 1031, Guidelines for Determining Resident Status, is the Franchise Tax Board’s own explanation of how residency and domicile are determined: https://www.ftb.ca.gov/forms/2024/2024-1031-publication.pdf.