Knowledgeable New York Residency Audit Lawyers
Some people who live in New York State (NYS) maintain residences in other states and countries. If they travel between locations frequently, whether for work or for leisure, they may not have a clear idea of where their primary residence is for tax purposes. This uncertainty can put them at risk of a NYS residency audit.
At Goldburd McCone LLP, we have spent over 40 years helping clients navigate residency audits and other tax-related matters. Our tax lawyers have a comprehensive knowledge of state law and will do their best to protect you against a residency audit’s consequences.
What Is A New York State Residency Audit?
The purpose of a NYS residency audit is to determine whether someone is a legal resident of the state for tax purposes. Residency audits often impact high net worth individuals, who may own properties or conduct business in multiple places. The state conducts these audits to ensure that legal residents do not try to dodge their tax obligations.
In theory, residency audits are essential for shoring up New York’s tax base. In practice, however, they can place a burden on individuals with complex financial circumstances. In the face of a residency audit, retaining a tax attorney is essential for avoiding unanticipated financial setbacks and penalties.
What Red Flags Can Trigger A NYS Residency Audit?
A residency audit is often triggered by one of the following events:
- Moving away from New York: If you move out of the state but it remains, for legal purposes, the location of your permanent residence, authorities may want further details about your arrangements.
- Moving specifically to a tax haven: If you purchase real property in a low-tax or no-tax state that you claim as your domicile, yet continue to spend significant time in New York, officials may think you are trying to dodge your tax obligations.
- Spending substantial time in the state: If you spend half the year in New York, yet do not claim it as your state of residence, you may arouse the state’s suspicion.
While some of these scenarios may seem incriminating, the reality is rarely so straightforward. A tax audit lawyer can help you gather the information you need to establish your residence accurately and to address any residency issues.
What Can You Expect In A Residency Audit?
The process for a NYS residency audit is often as follows:
- You will receive a Nonresident Audit Questionnaire. This form will request you to provide evidence of your address during a certain period.
- If state officials have cause to believe you are a resident, you may need to provide further documentation. The state will send you Information and Document Requests to obtain relevant records from you. The documentation you provide will help the state determine, using its domicile and residency tests, whether, for tax purposes, you live in New York or elsewhere.
If you experience a residency audit, you have the right to challenge it at any point. You will want to undertake this endeavor with the help of an attorney.
How Does New York Determine Residency?
Under state law, there are two tests that can determine whether you qualify as a resident for tax purposes. The first is the domicile test: if New York is where your permanent home (or domicile, legally speaking) is located, you must pay state taxes. The second is the residency test: if you keep a permanent residence in New York – regardless of whether you or another party own the residence – and you reside in the state for at least 184 days per year, you must pay state taxes.
We Can Guide You Through The Residency Audit Process
No matter how frightening a NYS residency audit may seem, you have the power to handle it with grace. When you work with Goldburd McCone LLP, you will have the tools – and the team – you need to protect yourself. Complete our law firm’s intake form or call 212-302-9400 to book an appointment with one of our tax audit attorneys.