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Covid-19: FAQs for New York Tax and Residency Considerations

Our law partners at Hodgson Russ answered 6 important questions for individuals at risk of a residency audit. Based in NYC, this team focused on the state and local taxes of those who may be targeted by New York State Department of Taxation. With state budgets decimated by the virus response, experts are warning these individuals that a sharpe increase in audits launched once the government comes back online. Prepare in order to prevent and win residency audits swiftly. 

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As of the writing of this alert, New York City is, unfortunately, the epicenter of the COVID-19 outbreak in the United States. As the State and City scramble to deal with this unprecedented pandemic, state and local taxes may be the furthest thing from the minds of those who typically spend significant time in the Empire State. Nevertheless, there will come a time when it will be necessary to calculate your 2020 state and local tax liability. Actions taken now will likely impact that calculation. In light of this, the attorneys in Hodgson Russ’s State and Local Tax Practice Group have put together the following FAQs to respond to some of the New York residency-related questions we’ve encountered during these extraordinary times. We are still early in this outbreak, and the New York State Department of Taxation and Finance (“Tax Department”) hasn’t specifically addressed any of these issues yet. So the information below should be considered to be our current “best guess” on the topic and subject to change.

FAQs:

  1. I recently changed my domicile from New York to another state, but now I find myself back in New York to help family deal with COVID-19. Will this impact my claimed domicile change?
  2. My domicile is outside New York State, but I have a vacation home in New York where I typically spend summers. Because of COVID-19, I have decided to spend more time in New York. Will this impact my New York taxes?
  3. What if I can’t travel due to governmental declarations or medical emergencies? Will those days still count against me?
  4. The federal government has urged Americans to reconsider traveling abroad and to return from foreign destinations. If I follow this advice, do I jeopardize my 548-day filing position?
  5. What about telecommuters and New York’s Convenience Rule?
  6. My audit is now going to be delayed. If the audit ends up in some tax liability, will there be any relief from the extra interest caused by this situation?

Citations: 

  • [1] Matter of Brush, Division of Tax Appeals, April 12, 2001 (DTA 817204).
  • [2] Stranahan v. New York State Tax Commn., 68 AD2d 250 (3d Dept 1979).
  • [3] Matter of Klingenstein, Division of Tax Appeals, August 6, 1998 (DTA No. 815156) (Conclusion of Law “H”). 
  • [4] Brush, supra (Conclusion of Law “M”). 
  • [5] NYS Nonresident Audit Guidelines (2014) at pg. 68.
  • [6] Matter of Unterweiser, Division of Tax Appeals, June 13, 2002, aff’d Tax Appeals Tribunal, July 31, 2003 (DTA No. 818462).
  • [7] Matter of Kakar, Division of Tax Appeals, February 16, 2006 (DTA 820440).
  • [8] Matter of Devers, Division of Tax Appeals, May 5, 2005 (DTA 819751).
  • [9] See Ariele Doolittle, Coronavirus/COVID-19 Update from the NYS Division of Tax Appeals, Noonan’s Notes Blog (Mar. 23, 2020).
  • [10] See, e.g., N.Y. Tax Law § 684 (personal income tax); N.Y. Tax Law § 1145 (sales tax).
  • [11] See Tax Law § 171(28)(a).
  • [12] See Tax Law § 2026.

See the original article on hodgsonruss.com at hodgsonruss.com/newsroom-publications-11836.html

Tim Noonan
Tim Noonan
Tim focuses his practice in the state and local tax area. His work primarily involves New York State and New York City tax litigation and controversy. Over the past 20 years, he has handled more than 1,500 personal income tax, sales tax, corporate tax, or other New York tax audits. Tim also has handled about 100 cases in New York’s Division of Tax Appeals. Tim leads the firm’s Tax Residency Practice and he is one of the leading practitioners in this area of the law. He has handled some of the most high-profile residency cases in New York over the past decade, including a 2014 win in the Gaied case, one of the first New York residency cases to ever reach New York’s highest court. Tim also co-authored the 2018 edition of the CCH Residency and Allocation Audit Handbook and Contesting New York StateTax Assessments--Fourth Edition, published by the New York State Bar Association. He is often quoted by media outlets, including The Wall Street Journal, The New York Times and Forbes, on residency and other state tax issues. Under his direction, the Tax Residency Practice authored a publication, What to Expect in a Residency Audit, a copy of which can be accessed here.

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