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What are the chances of a repeat NY tax audit?

A business or individual will likely experience frustration after receiving a notification from the New York State Department of Taxation and Finance of an impending state tax audit. One thing that can top this frustration: notification of a second audit.

How often does New York State’s Department of Taxation and Finance conduct repeat audits? The agency notes repeated audits are possible. The situation will evolve from one of two paths:

 

  • Prior resolution in favor of taxpayer. If the results of the prior audit were in favor of the taxpayer, the agency will review the current reason for the audit and attempt to avoid the same issue. If so, the agency will make “every effort” not to select the taxpayer’s return for a repeat audit.
  • Prior resolution in favor of Department of Taxation and Finance. These same efforts are not present if the prior audit was resolved in the state’s favor. In these cases, the agency states there is an increased likelihood of a repeat audit due to similar tax issues.

In addition to the presence of a prior audit, common issues that trigger an audit include a failure to file a return or properly report income, discrepancy when compared to federal tax return filings or questionable use of exclusions or credits.

How can I avoid repeated audits? It is important to take an initial notification of an impending audit seriously. Individual or businesses facing an audit can begin building a defense to help protect their interests. The lawyers at Goldburd McCone have experience in these matters and can help compile the evidence needed to better ensure a favorable outcome.

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