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Msg. 04611 of 62138 |
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July 23, 2018 Among the wealthy tri-state-area set, there’s more buzz than ever about fleeing south to Florida, land of mild winters and, more importantly after last year’s federal tax overhaul, zero state personal income tax. Actual action? Pretty scarce. High-earners are learning what tax experts have known for years: Tax collectors in states like New York make it really hard to leave. Wealth managers and tax lawyers say many of their clients are staying put after hearing about the scrupulous records they would have to keep to show they’ve really uprooted their lives and severed ties with their former states -- and that it’s not as easy as just spending a few more days a month in a Florida vacation home. Like other high-tax states, New York’s Department of Taxation and Finance will go to great lengths to keep wealthy residents on their tax lists. The states’ methods can be aggressive: Issuing subpoenas to pore through credit card statements, bank transactions or phone records to track a taxpayer’s location, and sending auditors to interview doormen or confirm doctors’ appointments. “When people understand they have to change their life circumstances, some people say: ‘Never mind, that’s too big a life change for us to do right now”’ said Timothy Noonan, a partner at law firm Hodgson Russ LLP, who’s based in Buffalo and Manhattan. Lloyd Abramowitz, a wealth manager who works with clients who live in New York City and Greenwich, Connecticut, says fewer than 10 percent of clients who express an interest in moving are actually going through with it. He said he typically counsels people making around $500,000 in taxable income a year not to uproot themselves just for tax reasons. Even above that level, family considerations and ties to community have to be taken into account, he said. It isn’t easy to measure, but one early indicator shows no evidence of a mass exodus. In the past 12 months through May, the number of net change-of-address forms filed with the U.S. Postal Service for people moving to Florida from New York, New Jersey and Connecticut has actually declined slightly from recent highs. Of course that data doesn’t account for movement among certain groups, like the ultra-rich, for whom the tax savings may just be too great to ignore. In recent years, hedge fund titans including David Tepper, Paul Tudor Jones and Eddie Lampert have moved to Florida. This year, some money managers are planning to relocate as Miami and Palm Beach officials ramp up their advertising efforts following the new $10,000 limit on state and local tax deductions. Overall, more than 10 percent of New Jersey residents will see a tax hike this year -- in California, it’s 8.6 percent, while 8.3 percent of New Yorkers will see higher levies, according to a study from the Tax Policy Center. Four northeastern states most affected -- New York, New Jersey, Connecticut and Maryland -- sued the Trump administration last week to invalidate the cap, saying it unfairly targets them. Years of litigation are likely to ensue, but some legal experts have said the states’ arguments are dubious. There are two main hurdles for New York residents looking to flee. The first is the domicile test, which requires proof that a resident moved to a new home with no intention of coming back. Submitting a change-of-address form alone isn’t enough, nor is obtaining a new driver’s license or registering to vote in a new district, though checking those boxes is still important. Instead, New York tax collectors look at five factors: homes that are owned, how time is spent, where favorite possessions are kept -– the so-called “teddy bear test” -- and business activities and family ties. Potential relocators are finding they can’t just buy a one-bedroom condo in South Beach, but leave behind a 20-room palace in Westchester County, or kids in a Manhattan private school. Former New Yorkers must meet another test as well, called the 183-day rule, if they move but then hold onto a home in New York state. They must prove that they haven’t spent more than 183 days per year in the state. The rules are strict: Any days without proof can be counted as a day in New York, and even a second inside the state’s borders can count as a whole day. Auditors generally pre-screen transcripts of tax returns to unearth those that could have issues or require additional verification. They used to spend a couple weeks every year in a warehouse near Albany combing through pallets of tax returns for irregularities, but computer programs have made it easier for New York state to identify taxpayers who might be flouting residency laws, said Brian Gordon, former district audit manager in Manhattan and Brooklyn, who worked for the state for more than 30 years. Taxpayers who move away just before a big spike in income, say from a severance package or the sale of a business, are likely to be targeted for an audit, Gordon said. Those who have recently moved and make more than $500,000 are among those also likely to be scrutinized, said Annie Zhao, who spent seven years as a New York state tax auditor and now works at accounting firm Anchin. Taxpayers who seem to be on the cusp of spending 183 days in their new homes could also be caught in auditors’ crosshairs. The tax issues created by a move can linger for years. Taxes are generally subject to a three-year statute of limitations from when a return is filed, but taxpayers who start spending more time in New York even years after they’ve made a move -- like around the birth of a grandchild -- may come to auditors’ attention and be forced to provide evidence of a move that happened a decade or more in the past. “Residency audits are different from any other kind of audit,” said Christopher Manes, a tax attorney at Sanger & Manes who specializes in California residency cases. “It’s a lifestyle audit. It’s very unpleasant. It’s very expensive.” Still, some taxpayers may still decide to head south after they file their tax returns in April and see how they really fare under the new tax law. Advisers add that there’s nothing wrong with moving for tax reasons – even if it means New York, New Jersey or California lose out just before a big windfall. It’s just essential that their clients have taken all the proper steps beforehand. “You can do it right,” said Verenda Smith, deputy director of the Federation of Tax Administrators. “You’ve just got to move. You’ve got to really leave the state with no intention of coming back.”
 Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months |
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