As tax departments look to fix their fiscal deficits, residency audits for those who have moved out of a state are all but guaranteed. So when the auditor comes knocking on your door, how will you meet your burden of proof?
Kristine Bly, former NYS residency auditor and Senior Audit Manager at premier residency law firm Hodgson Russ shares one of her residency tax audit war stories as she defends a taxpayer whose credit card records got subpoenaed.
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One case that sticks out specifically in memory is a client who lived in Connecticut with his wife and minor, children happened to maintain a vacation home [in the Hamptons].
What complicated the situation is, he had grown children from a prior marriage that used that Hampton's home and also had access to his credit cards. Had he had something that showed, "my cellphone and I were in Connecticut," would have solved all of his problems, so he spent a lot of time and legal expense having to go line by line transaction through transaction supporting that he wasn't the one who made these- these charges.
All of which generate additional legal expense for us to do that investigative work and hundreds of thousands of dollars. Later, he was able to overcome the fact that he was not a statutory resident.