Leaving New York’s harder than ever – especially if you’re coming to Florida
Bottom Line: There’s a universal thought we share. An IRS audit sounds like an awful experience. While only around 1% of Americans have to be concerned with being audited every year, the same isn’t true of those seeking to leave high tax states like New York. With the highest average total tax burden of any state in the country, New Yorkers have been fleeing for years in mass. As we’re well aware, Florida’s (with a total tax burden that’s only about 35% of New York’s) the top destination for those leaving New York.
With the great flight of citizens leaving the state, often for economic reasons, rather than reducing taxes to become more competitive, the state has gone the other way. Ramp up restrictions on those attempting to leave and audit those who. According to the accounting firm Withum Smith+Brown, New Yorkers who leave the state are more likely to be audited than residents. Those who leave for Florida are the most likely to be audited, and those who are high income earners relocating to Florida are “100%” likely to be audited.
Most recently more than half of audits of New Yorkers leaving for Florida have resulted in fines, penalties and back taxes demanded by the state. Since the 2015 tax year the average audit of a transplanted New Yorker has resulted in more than $144,000 in fines, penalties and back taxes being demanded by the state. Many New Yorkers leaving the state don’t realize how difficult the state has made it to leave without consequence.
First and foremost, New York is tracking relocation's for a minimum of 183 days to ensure residents aren’t still residing in the state, but even then, newer regs and laws are catching people in their tax trap. There are examples of people who maintained a fishing license in the state being nailed with tax evasion for example. Other examples include using a physician or even a vet in the state after you’ve left.
In essence, to leave New York, you pretty much have to ensure you’ve cut ties with everything in the state and filled out all of the forms and paper work accurately to their satisfaction or there’s a good chance that the New York auditors, rather than the IRS, will become your biggest and most expensive headache. As I mentioned other high tax states are starting to adopt similar policies as well but none more so than New York.