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New York City Facing Auditor Shortage, Practitioner Says

Posted on Dec. 16, 2021

New York City is facing a shortage of auditors as the city digs its heels in on a five-days-a-week in-office policy for its employees, according to a local tax practitioner.

“Some of the auditors don’t want to come in five days a week. They’d rather work for New York state and come in two days a week. Or some have gone to the IRS" to work from home full time, Richard W. Genetelli of the Genetelli Consulting Group said. “Their feeling is, ‘I’m pretty good working at home, getting things resolved.’”

Genetelli, who spoke at a December 14 online panel during the New York University School of Professional Studies' Institute on State and Local Taxation, explained that as the COVID-19 pandemic drags on, city auditors are looking elsewhere for employment opportunities.

“Not only the inexperienced auditors are leaving — you also have some very high-level people at the city who are leaving and taking early retirement. They really don’t want to come in five days a week,” Genetelli continued.

According to Genetelli, the shortage comes as the city has indicated it would like to start in-person audits that were paused because of the pandemic. “But a lot really depends on omicron and how bad it’s going to be,” he cautioned. “It seems like it’s going to be a tough road, at least for a couple of months, with this new variant.”

Genetelli also addressed the state’s desk audit initiative meant to target taxpayers who claim a change in residency or report less income attributable to New York sources than in previous years. He pointed out that the combined city and state rate for personal income tax is 14.76 percent, and “based on that, a lot of people are leaving New York state and New York City and moving to Florida, Texas, a lot of other jurisdictions.”

Around 300,000 people have left New York since the pandemic started, according to Genetelli. He explained that those taxpayers may be filing their returns incorrectly. “They’re either saying, ‘Well, I have a summer home in Florida — I’ll just say I changed my residence. I’ll change my voting, and I’ll change my driver’s license, and that’s enough.’” 

“When you look at residency, the driver’s license is not important. The voter registration is not important,” Genetelli cautioned. The state instead will look at factors such as the size of the home in New York compared with the home in another state, the amount of time a taxpayer spends in each place, where the taxpayer’s family and business connections are, and the amount of time the taxpayer spends in each jurisdiction, he said.

“It’s like a scale. To the extent the scale is even, they’re probably going to say you haven’t proved your case that you’ve had a change of residency, particularly when you maintain the residence you have in New York,” Genetelli added.

He also said that the state is “sending out letters to everyone” who may be trying to get around filing as a New York resident, not just those with high incomes, because the state is "convinced that a lot of people are not filing their returns appropriately,” Genetelli said. 

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