For those of you who have been following my blog, you know that one way to be taxed as a resident in New York State and/or NYC (collectively referred to as NY) is to be a statutory resident. One must have a permanent place of abode (PPA) and be present in NY for more than 183 days.
While understanding what constitutes a day in NY would seem to be a simple task, for the purpose of the statutory residency test this is simply not the case. Before we even explain how to count days and the various exceptions, the most important point to understand is that the burden of proof rests with you.
In other words, it is most certainly not the responsibility of the taxing authorities to show you were in NY, but your responsibility to show you were not. How does one meet this burden? The starting point is clearly to keep a contemporaneous calendar. Those of you who don’t have a fear of big brother watching, might even want to consider one of the subscription apps designed to track and verify your location. Those with a PPA bear the unfortunate responsibility of needing to track their daily whereabouts.
It is crucial to back up your calendar with as much third party documentation as possible. This documentation includes credit card charges, ATM withdrawals, country club charges, travel records, employee expense reports, and more. We stress to our clients that the time to gather these records is as the expenses are occurring.
The more you can verify the veracity of your contemporaneous calendar, the more credence the auditor gives the calendar. The documentation goes a long way in establishing patterns of behavior and acceptance of the taxpayer’s word (or calendar) as to undocumented days.
We will discuss further what constitutes a day and the nuances involved in counting, but the most important takeaway is to be prepared, contemporaneously. Save receipts. Establish good habits before the audit begins.
If you are uncertain about how to keep a calendar, contact me at email@example.com.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.