People trying to flee steep taxes may find themselves stuck. High-tax states like New York make it difficult to leave, using aggressive methods to see whether people have really severed ties with their former homes, Bloomberg reported. In New York, the Department of Taxation can issue subpoenas to go through credit card statements and bank records. It may even send auditors to confirm appointments or interview doormen, the report said. Additionally, former New Yorkers who hold on to their old homes will have to prove that they haven’t spent more than 183 days in the state.
According to wealth managers and tax lawyers, those tactics are making many clients stay put. In the past 12 months through May, the number of net change-of-address forms filed with the postal service for people moving to Florida from New York, New Jersey and Connecticut has declined from recent highs, the report said.
“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,”’ Timothy Noonan, a partner at law firm Hodgson Russ LLP, told Bloomberg.
But there are exceptions. For the super-rich, the hefty tax savings might still be worth it. Hedge fund executives like David Tepper and Paul Tudor Jones have moved to Florida, the report said. Some money managers plan to relocate this year after the new $10,000 limit of state and local tax deductions.
The states most affected — New York, New Jersey, Connecticut and Maryland — filed a suit against the Trump administration, claiming the cap unfairly targets them. [Bloomberg] — Meenal Vamburkar
Source: https://therealdeal.com/2018/07/24/heres-why-its-tough-to-flee-high-tax-states/
