NYC's Audit Surge: What It Means for Your Business and How to Stay Ahead

The Rising Audit Landscape

After a few turbulent years, New York City’s corporate tax landscape is starting to stabilize—but not without a few surprises.

This year, the city saw a significant revenue bump, fueled in part by a sharp citywide tax revenue growth of 8% for business income and corporate profit. That momentum recently helped the NYC Council forecast an extra $1.7 billion more in tax revenues for 2025 and 2026. 

This surge is partly due to a strategic emphasis on auditing, aiming to recover owed taxes and close compliance gaps, and is a clear sign that NYC is prioritizing UBT enforcement and expanding its audit activity to bring in more revenue from unincorporated businesses.

For those who are unfamiliar, Unincorporated Business Tax (UBT) is a 4% city-level tax applied based on where work is physically performed—not just where a company is headquartered. That means if employees are working remotely outside of NYC, businesses may be overpaying by default

For businesses operating in, or for people working and/or living within the five boroughs, these shifts signal both opportunity and caution—and raise important questions about how the city should plan for an economy that’s still in transition.

Common Audit Triggers and Implications for NYC Businesses and Residents

For NYC businesses, this heightened audit activity translates to increased scrutiny. Certain red flags can increase the likelihood of being audited from the New York State Department of Taxation and Finance. Common triggers include large swings in income, mismatches between reported and actual sales, or gaps and errors in your records.

The best way to stay off the audit radar? Keep your finances clean and consistent. Maintaining clear, accurate records of your income, expenses, and business activities not only shows you're playing by the rules—it also makes it easier to defend your position if you're ever audited.

Proactive Measures to Mitigate Audit Risks and Optimize Tax Savings

To navigate this environment, businesses should consider the following steps:

• Keep Meticulous Records—Make sure all financial transactions, employee work locations, and business activities are accurately recorded and easily retrievable. Disorganized or incomplete records are one of the fastest ways to attract audit scrutiny.
• Run Regular Internal Reviews—Don’t wait for an audit to catch an issue. Conduct periodic internal audits—or better yet, implement a solution that automatically tracks, stores, and organizes your compliance data in real-time.
• Monitor Policy Changes—Tax laws and local regulations change frequently. Assign someone on your team (or a trusted advisor) to stay on top of updates at the city and state level so you can adjust your processes as needed.
• Document Work Location Policies—If you have remote or hybrid workers, be sure your company has a clear, documented policy around work location reporting. It’s not enough to assume employees are where they say they are—back it up with data.
• Train Your Team—Make sure finance, HR, and operations teams are aligned on compliance practices. The more your internal stakeholders understand the risks and responsibilities, the fewer cracks there will be in your audit defense.
• Use the Right Technology—Tools like Monaeo Enterprise can work in the background to automate location monitoring, help you stay audit-ready, and reduce your risk of overpaying or underreporting taxes. With the right tech in place, you reduce human error—and the anxiety of an unexpected audit.
  
  

Stay One Step Ahead with Monaeo Enterprise

With NYC ramping up audit enforcement—particularly around UBT—businesses can’t afford to be reactive. The key to avoiding penalties (and surprise tax bills) lies in proactive compliance. That means tightening up record-keeping, staying current with tax regulations, and leveraging smart technology that does the heavy lifting for you.

Monaeo Enterprise helps organizations precisely monitor employee work locations, so they can quantify days worked outside the city and reduce their UBT liability. For many companies, this translates into significant tax savings and stronger audit defense—all backed by automated, audit-ready data.

Example:

Let’s say your business earns $10 million in income. If you assume all work happened in NYC, you’d owe $400,000 in UBT.

But what if Monaeo shows that 57% of workdays were actually outside the city?

Your tax liability drops to around $172,000. That’s over $225,000 in tax savings—just by having accurate location data.

Want to see how it works? Schedule a demo and find out how Monaeo can help your business stay compliant, confident, and ahead of the curve.