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.