Few places in the world offer the same opportunities that you can find in New York. From business ventures to a bustling social scene, the city that never sleeps is a dynamic place to call home. Although many enjoy all New York has to offer, it does have its downsides. One of the most notable: taxes.
New York is notorious for its high income tax rate. While some believe the price tag is worth all the city has to offer, others disagree and are looking to make a move. Whether the move is fueled by a desire to lower tax obligations, the call of warmer weather in the winter months, or other reasons, no taxpayer wants to make a move only to get a bill from New York officials claiming they still have to pay the state’s income taxes. Unfortunately, this is a reality for many who leave the state.
How can New York taxing authorities demand payment if I do not live in the state?
New York has strict rules that guide when it can and cannot demand state taxes. If state taxing authorities can establish that you are domiciled in the state, they can demand payment. The term “domicile” generally refers to anyone who lives in the state, but it gets more complicated for those who have homes in different states or who are in the midst of a move to a new state. New York only accepts a change of domicile if you can establish the move with “clear and convincing evidence.” This is a demanding standard, and you will need proof to support the change.
Keep in mind that taxing officials are motivated to establish that you are domiciled in their state. If they succeed, they will be able to gather additional funds for their state … and they are very successful. Reports find these residency audits have resulted in billions of dollars in collections.
What do I need to establish a legitimate move?
New York state taxing authorities are looking to see if you have truly shifted your life to a new location. Although things like purchasing a home and registering to vote in a new state will help, they are not enough to defeat a challenge from New York authorities. You will need to provide evidence that goes further. Cases have turned on things like where you keep your exercise equipment or the location of the family dog. The investigators will try to find anything that makes a place “home” for you and use it to make their case.
It is also important to note that in some cases state taxing authorities will attempt to demand income taxes even if you establish New York is not your domicile. They may argue a resident, or one who has spent 184 days or more in New York, should still pay state taxes. It is important to prepare a response for this argument as well.
What are some common audit triggers?
There are certain things that are likely to catch the attention of the auditors. Common triggers can include:
- A change of address. Those who move to a new state are likely to find themselves the subject of a residency audit. This is especially true if you move to a state with low or no state income taxes, like Florida.
- Property in New York. State auditors will also take note if you move but retain some property in New York.
- Amount of time in New York. The state will also look into how much time you spend in the state. As noted above, if it is 184 days or more, the state will likely build a case to demand payment.
An audit from New York taxing authorities is a serious matter. The above highlights some of the things that investigators will look for when building a case. It is important to keep these things in mind when building a defense. For broader insight into what may initiate an audit, see common audit triggers that go beyond just state-level residency factors.
The attorneys at Goldburd McCone are experienced in these matters and can help advocate for your interests, better ensuring a more favorable outcome. For guidance after receiving an audit notice, read how tax audits typically end or explore your reconsideration options if you’ve already been audited.