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Tax Audit Success

Residency Audit: Client Saved $2 million

This office has just completed a New York State Residency audit which was referred to us by another CPA. The issue was statutory residency. Statutory residency is where you have a primary residence (domicile) outside of New York, but also have a residence in New York, and spend more than 183 days in New York. These audits focus on a detailed review of documents to establish your whereabouts for every day of the year, and to determine if you exceeded 183 days in New York to be considered a New York resident. At the time of the referral there was an audit finding with a liability proposed for a little over $2 million. My many years as a District Audit Manager for NYS Taxation and Finance give me unique experience that enables me to see the finer points of statutory resident audits and to understand day counting rules and record keeping requirements. As a result, after reviewing the records with the audit staff, I was able to convince the auditors that my client did not exceed 183 days in New York, therefore was not a resident of New York, and the $2 million tax bill was cancelled.

Sales and Use Tax
We are also having tremendous success with Use Tax issues. Use Tax is due when you purchase goods that are taxable under Sales Tax law, but sales tax was not collected on the transaction. This usually occurs when you purchase goods out of state. The vendor may not be required to collect sales tax on the transaction if they have no connection to New York; however you as the purchaser still owe the tax for using the goods, bringing them or causing them to be shipped into New York. Has New York State charged you with use tax on items purchased?

If you’re having a New York State audit, please call Brian Gordon at 516-938-5219 or email at bgordon@st-cpas.com.

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