New York Cracks Down Wealthy Residents Avoiding Taxes by Fleeing the State

By Madz Dizon

Apr 20, 2024 06:46 AM EDT

New York Cracks Down Wealthy Residents Avoiding Taxes by Fleeing the State
eople walk in the departure hall of Terminal 7 at JFK airport on March 15, 2020 in New York City. (not the actual photo)
(Photo : JOHANNES EISELE/AFP via Getty Images)

According to a report, New York State auditors track everything from people's travel plans to the locations of their pets to prove that they owe taxes, even if they live out of state.

Wealthy Empire State residents who live in New York but spend the most of their time elsewhere are nevertheless required to pay taxes in Albany.

New York Auditors Target Residents Trying to Avoid Paying Their Taxes

According to Bloomberg News, state auditors go to tremendous efforts to investigate claims made by those who claim to work part-time or are not residents of New York.

Auditors will peep into people's private lives and use the "teddy bear test" to determine where they keep some of their most valued possessions to support their claims of primary residency.

The state will also consider someone to have spent the day inside its jurisdiction, even if they were only there for a few hours.

A New Yorker who relocated out of state and then returned for outpatient treatment at a hospital will be considered to be a resident of New York during that period.

New York State auditors will even consider someone driving from New Jersey to Connecticut and stopping off the highway in New York for lunch to have spent the day in New York.

"We always tell people that a tax audit from New York is like the tax version of a colonoscopy," Mark Klein, a tax attorney at Hodgson Russ, told Bloomberg.

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Residents Who Flee Their State Would Still be Required to Pay Taxes

According to the New York Department of Taxation and Finance, a New York resident is someone who spends at least 184 days in the state during the taxable year and has a permanent place of residence.

Florida has recently been one of the most popular vacation destinations for New Yorkers. However, taxpayers who moved south might still expect to hear from tax auditors in Albany.

According to Jonathan Mariner, an investor who founded TaxDay, an app that follows users' locations to ensure they don't stay over the 184-day threshold, New Yorkers who relocated to Florida and filed a partial return with Albany should expect to hear from auditors.

Tax professionals urge their rich clients to limit their stay in New York to avoid paying high state income tax.

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