On the back of SALT deductions under Tax Cuts & Jobs Act, more than 5,500 millionaires from North East moved to low tax states. State tax authorities are scrambling to close budget shortfalls but with access to new technologies, have found new ways to target and collect on citizens who are on the move.
Monaeo publishes New York State Department of Taxation 2018 data, outlining what citizens on the move are facing: $144,000 in average collections per audit and a 52% loss rate.
Analysis on data obtained from New York state shows a sharp decline in the number of disagreed residency cases, an outcome with dual factors: (i) tax department’s aggressive use of cell tower data by issuing subpoenas to phone carriers to get data about their location while taxpayers are unprepared, (ii) taxpayers using technology (e.g., Monaeo) to collect & submit clear and convincing evidence to shift the burden of proof to tax authorities.
Tax time is always ripe with talk about taxpayers leaving high tax states. Monaeo data helps explain what they are facing when they move.
Significant increase in taxes for taxpayers in high-tax states like New York, New Jersey, Maryland and California given caps on SALT deductions; Representative Thomas Suozzi, a New York Democrat of a Long Island District says of his constituents; “They are just getting battered.”
A rare opportunity to ask a former NYS auditor questions about the current trends and general risks around residency tax audits, get tips and advice to prepare for and fight residency and domicile change audits, “As an auditor webinar, 64 minutes”.
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Residency tax experts from Hodgson Russ published a seminal paper in TaxNotes about the use of cell tower data in residency audits, limitations of the cell phone carrier data acquired by tax authorities in subpoena, how that data differs by cell phone carriers, and why Monaeo is critical for helping taxpayers stay protected in an audit (p 325, 332), “Residency Audits, Day Counts, and Your Cell Phone.” This is a must read for anyone who keeps paper records and believes they will be well prepared in an audit.
New York state field auditors are walking up-and-down Park Ave looking for FL number plate cars, while practitioners and experts report a year unprecedented:
Bloomberg: More People Are Leaving NYC Daily Than Any Other U.S. City (08/29/2019): Almost 300 people are leaving New York City every day, up 109% from last year. From July 2017 to July 2018, NYC had a net loss of 200,000 people.
Fox Business: Fleeing New York’s high taxes? Audit cases are expensive to lose (09/11/2019), “...Anyone maintaining a residence in the state with an adjusted grow income in excess of $500,000 has between a 90 percent and 99 percent chance of being audited.” - Geoffrey Weinstein, special counsel in the Tax, Trusts & Estates Department of Cole Schotz.
Moore capital and Carl Icahn move their shops to Florida for tax purposes, and the taxman is taking note. Based on data we received from New York, the state is becoming aggressive about auditing companies and individuals for not allocating their earned income to the state - see the FOIA data we received from New York. We recommend sharing this with your firm’s head of tax or CFO.
President Trump announces he will be moving to Florida. Most experts agree that President Trump is moving to save taxes, the question remains if he can avoid the NY taxman. James Barron at New York Times reached out to Monaeo co-founder Nishant Mittal to get his perspective on trends we are seeing; Can Trump Avoid Taxes by Leaving New York? It’s Not So Simple (11/01/2019).
Monaeo has the largest market share serving high net-worth individuals who want battle-tested evidence to defend themselves in residency and domicile change cases. We saw a 205% growth in individual clients who use Monaeo for audit defense - this is the fastest growth we have recorded in our 8 year history and signals that the menace of residency audits is here to stay.