Are you a high earner living in New York? Beware, the state tax collectors are on the hunt, and they’re using Artificial Intelligence to target potential audit candidates more effectively than ever before.
In 2022, New York saw a significant increase in audits, with 771,000 cases reported, representing a 56% jump from the previous year. What’s even more surprising is that the number of auditors actually declined by 5% during the same period. How is this possible? The answer lies in the state’s sophisticated use of AI technology to pinpoint individuals who may be hiding taxable income.
According to tax attorney Mark Klein, New York is sending out hundreds of thousands of AI-generated letters to identify potential sources of revenue. These letters often focus on two key areas: changes in tax residency and the rise of remote work arrangements. With the mass exodus of high earners from high-tax states like New York to states with lower tax rates like Florida, the state is cracking down on individuals who may be attempting to avoid their tax obligations.
In an effort to prove that these moves were not permanent or legitimate, state tax authorities are scrutinizing cellphone records to determine where individuals spent the majority of their time. Additionally, New York is invoking “convenience rules” to argue that even if you work remotely for a New York company from a different state, you still owe taxes to New York.
Furthermore, the state is challenging individuals who claim to have relocated by arguing that since they retained their apartments and belongings in New York, they have not truly moved for tax purposes. This has created additional complexities for high earners who are now facing intense scrutiny from state auditors and AI programs.
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