New Yorkers Leaving State Causing $2.3B Revenue Shortfall

Near the end of 2018, the state of New York experienced a $2.3 billion decrease in tax revenues, with the fleeing of its wealthy citizens to lower-tax states believed to be the cause. Since 46% of their income taxes are sourced from the New York’s top one percent, it’s no surprise that the state may have some worries. As New York has increased limits on state and local income tax deductions, many have sought tax refuge by moving to Florida, a state that has no income or estate taxes. Although this may seem like a simple change of location, attempting to relocate can bring tax liabilities into question and can ultimately result in an audit.

Over the past ten years over 3,000 residency audits were conducted resulting in an estimated $1 billion in collections. In the past three years alone, more than half of those who were audited lost their cases, resulting in an average tax bill of $144,270. New York auditors are using traditional and new methods of digging for information, including credit card statements, schedules, cell phone records, social media, vet and dentist records, and in-home inspections.

Many believe spending 183 days out of New York will automatically exempt them from state taxes. Though the amount of days you spend in and out-of-state matters, these cases ultimately come down to proving “domicile,” being able to demonstrate that a taxpayer’s permanent, primary home is in Florida rather than New York. For people who spend time in two or more states, evidence can come from comparing which house is nicer, where your primary doctors are, where your prized possessions or pets are, and even which refrigerator is stocked with fresh or expired food. Since rulings on “domicile” can be subjective, this gives New York an advantage and most taxpayers being audited end up settling.

Consulting tax experts is one way individuals can educate themselves on policy changes and learn how their life decisions may impact their tax situation.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.