New York auditors crack down on out-of-state residents avoiding tax

New York State auditors monitor everything from people’s travel schedules to the locations of their pets in order to prove that they owe taxes even if they have residency out of state, according to a report.
Wealthy Empire State residents who maintain an abode in New York but spend most of their time elsewhere are still on the hook to pay the taxman in Albany.
State auditors go to great lengths to investigate claims by those who say they are either part-time or nonresidents of New York, according to Bloomberg News.
4 New York State tax auditors are particularly aggressive in tracking down filers who claim part-time residency. JohnKwan – stock.adobe.com
Auditors will peek into people’s private lives and apply a so-called “teddy bear test” to see where individuals keep some of their most prized possessions so as to back up their claims of primary residency.
The state will also consider someone as having spent the day within its jurisdiction even if they were there for just a few hours.
A transplanted New Yorker who moved out of state and then came back for outpatient treatment at a hospital will have that time be counted as residing in New York.
New York State auditors will even consider someone driving from New Jersey to Connecticut and getting of the highway in New York to stop for lunch as having spent the day in New York.
“We always tell people the tax audit from New York is like the tax version of a colonoscopy,” Mark Klein, a tax attorney at Hodgson Russ, told Bloomberg News.
4 In recent years, tax auditors in Albany have stepped up efforts to collect from New Yorkers who have decamped to other parts of the country. luzitanija – stock.adobe.com
“I’ve had cases that have hinged on a single dog,” Klein said. “And I had a case once that was based on the fact that the person moved their Peloton bicycle to Florida.”
According to the New York Department of Taxation and Finance, a New York resident is anyone who spends at least 184 days in the state during the taxable year and maintains a permanent place of abode.
One of the most popular destinations in recent years for New Yorkers is Florida. But those who migrated south can still expect to hear from tax auditors in Albany.
Jonathan Mariner, an investor who created TaxDay, an app that tracks users’ locations to ensure they don’t overstay the 184-day threshold, said that New Yorkers who moved to Florida and filed a partial return with Albany can expect to hear from auditors.
4 The New York State Department of Taxation and Finance is notorious for investigating claims of part-time residency. JHVEPhoto – stock.adobe.com
“Even though you have a Florida driver’s license, Florida voting record, Florida home, it does not matter,” Mariner, himself a transplanted New Yorkers who decamped for Florida, told Bloomberg News.
“You could be on vacation in New York and they’ll pull you back in.”
Tax attorneys advise their wealthy clients to be particular about how much time they spend in New York so that they can avoid paying significant sums of state income tax.
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Those who own private jets make sure to take off or land in the state either just a few minutes before or after midnight so as to make sure they don’t cross the 184-day limit.
Others will be in their vehicles near the George Washington Bridge just before midnight — waiting for the clock to strike 12 before crossing the Hudson River into Manhattan, according to Bloomberg News.
Between 2013 and 2017, New York State auditors collected around $1 billion from 15,000 audits.
The state has stepped up the pace of tax audits in recent years. In the 2022-2023 tax year, the state conducted 756,344 — which yielded $3.22 billion in collections, according to the Department of Taxation and Finance.
4 New York has seen an exodus of residents who have moved out of state since the onset of the coronavirus pandemic. AFP via Getty Images
The year prior, the state conducted 826,577 audits, which resulted in $2.21 billion in collections.
Residency audits are a key source of tax revenue for the state, which has seen an exodus of high earners who moved to Florida.
In 2023, New York State had the third highest income tax rate in the country, according to a study by TurboTax.
Florida is among nine states that do not levy a state income tax.
According to census data, more than half a million people have left New York since 2020 — an outflow that was spurred by the coronavirus pandemic as well as a sharp decline in the quality of life throughout the Big Apple, which saw a spike in crime, homelessness and cost of living.
Last year alone, the New York metropolitan area lost 65,000 residents.
The Post has sought comment from the Department of Taxation and Finance.