A Motivating Factor

February 01, 2011 | Written by: Mark D. Olander, EA, USTCP
dolly moving a cardboard box shaped like a house


Good coaches are experts on the rules, techniques and strategies of their sports. A coach’s job is to instruct and prepare a team for competition, to set a strategy for winning, and to motivate players to give 100% effort to their game. This month’s case shows how an Audit Representative from TaxResources can be the coach and the game-changer you need to win your audit.

This Audit Representative was first assigned to the case in March of 2010. It was a New York residency audit of three tax years beginning in 2006. Those who have worked these types of cases know it is extremely rare and difficult to win. Even New York Yankee Derek Jeter chose to settle with the state rather than submit to a full-blown residency audit.

Two of our members, a married couple, were caught in the situation of having to prove that New York was not their primary place of residence. She lived and worked in Detroit where the family home was located. She never lived in New York. Her husband had an apartment in New York, and he worked there throughout 2006 and up until August of 2007, when he got a new job and moved back to Michigan. His lease in New York did not end until some time in 2008.

When your domicile is not in the state of New York, you are generally considered to be a resident of New York for income tax purposes if you maintain a permanent place of abode in the state for more than 11 months of the year and spend 184 days or more (including any part of a day) in New York during the tax year. Our member was unable to satisfy the condition of being in New York for less than 184 days, so it came down to proving that he actually did not have an abode in New York after 11/30/07.

The landlord had looked for someone else to lease the property and told the taxpayer that he had found a new tenant to take over the lease as of 12/1/07. But when the member tried to obtain definite proof from the landlord that someone had actually moved in on the first of December, the landlord was unable to provide it. The member called the Audit Representative to say he was ready to give up.

Undaunted, the Audit Representative calculated the amount the member would owe if he could not obtain the necessary documentation. Then she explained to him exactly what losing his case would mean. When the member learned he would owe $18,844 for 2006 and 2007, he became more motivated than ever to prove his case.

The Con Edison bill was ordered and was found to have been canceled on 12/7/08, seven days past the date of no return. This was the nail in the coffin, unless the taxpayer could get more information from the landlord.

Our member had moved his belongings out of the New York apartment at the end of November. He had U-Haul, gas, and storage expenses as proof. Finally, he managed to get a copy of the lease showing that the new tenant had moved into the apartment on 12/1/07.

Eleven months of phone calls and documents passing back and forth between the Audit Representative and the New York examiner finally paid off. The member had to pay the bill for 2006, but not for 2007 and 2008. Our Audit Representative’s determination and excellent coaching saved our member $10,938.
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