NY State Auditors Hunt Nonresidents for Taxes Evasion!

NY State Auditors Hunt Nonresidents for Taxes Evasion!

New York State auditors are on a mission to ensure that even residents who have moved out-of-state pay their fair share of taxes. The auditors leave no stone unturned, monitoring everything from individuals’ travel patterns to the locations of their pets to validate tax obligations, as reported by the *New York Post*. Wealthy New Yorkers who predominantly reside elsewhere but maintain ties to the Empire State are still required to contribute to Albany’s tax coffers despite spending the majority of their time away. State auditors, detailed in a report by *Bloomberg News*, engage in thorough investigations to scrutinize claims of part-time or nonresidency.

In their determined pursuit, auditors deploy tactics like the ‘teddy bear test,’ delving into the personal lives of individuals to ascertain the primary residency. They even go as far as considering mere hours spent within state borders as a qualifying day. This meticulous scrutiny extends to cases like a former New Yorker who sought medical treatment while in the state briefly and even individuals stopping for lunch after a quick highway detour.

The intensity of New York’s tax audits is likened to a ‘tax version of a colonoscopy,’ humorously remarked by Mark Klein, a tax attorney. Auditors have escalated efforts in recent years to track down individuals who have relocated outside New York but still maintain connections, sometimes basing cases on seemingly trivial items like a pet or a Peloton bike. The criteria for state residency are strict, with individuals spending 184 or more days in New York during the taxable year and having a permanent abode deemed residents.

Florida has become a popular destination for former New Yorkers seeking to reduce their tax burden. However, merely migrating to the Sunshine State does not absolve them of New York’s tax obligations, as auditors diligently pursue those who attempt to circumvent their residency requirements. Jonathan Mariner, creator of TaxDay, an app monitoring residency days, warns that even individuals with substantial ties to Florida face scrutiny if they fail to meet New York’s residency thresholds.

Careful planning is advised for high-income individuals subject to state income tax, with strategies like timing private jet flights to avoid surpassing the 184-day limit. Anecdotes reveal individuals waiting near the George Washington Bridge for the stroke of midnight to strategically time their entry into Manhattan. The diligence of auditors is evident in their substantial collections, amounting to around $1 billion from 15,000 audits between 2013 and 2017. Notably, audits in the 2022-2023 tax year generated $3.22 billion from over 750,000 audits, underscoring the state’s intensified enforcement.

New York, grappling with an outflow of residents post-pandemic, faces challenges in retaining high earners who seek refuge in tax-favorable states like Florida. Surveys indicate the state’s tax rate ranked third highest in 2023, prompting many to relocate to states devoid of state income tax. The mass exodus from New York, exacerbated by pandemic-induced concerns and urban challenges, underscores the shifting landscape of residency patterns within the region. The contentious relationship between high-earning individuals and state auditors reflects the ongoing battle to uphold tax compliance, ensuring a fair distribution of tax burdens. As New York navigates these dynamics, the quest for revenue and regulatory control continues, shaping the landscape of state taxation and residency compliance amid changing socio-economic paradigms.

The Post has reached out to the Department of Taxation and Finance for their perspective on this vigilant pursuit of tax obligations.

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