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New York Juggles Its Tax Rates

December 8, 2011

New York Governor Andrew Cuomo reached an agreement with the Assembly and Senate to provide lower tax rates for most taxpayers, although there is now a higher top tax rate of 8.82 percent through 2014 for those making over $2 million.

The so-called “millionaire’s tax,” a surcharge of 7.85 percent that actually applied to those making above $200,000, or 8.97 percent for income over $500,000, will expire as scheduled at the end of the year. But most of the previous tax rates willl be lower, with income tax brackets for couples between $40,000 and $150,000 dropping from 6.85 to 6.45 percent, between $150,000 and $300,000 falling from 6.85 to 6.65 percent, between $300,000 and $2 million decreasing from 7.85-8.97 percent to 6.85 percent, and income over $2 million for couples (and $1 million for individuals) going from 8.97 to 8.82 percent.

During his gubernatorial campaign, Cuomo had insisted he would let the millionaires tax expire, but budget realities, and probably pressure from the Occupy Wall Street movement, led him and other lawmakers to change their minds. However, some lawmakers in Albany are miffed about being left out of the process. Cuomo struck the deal with Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos.

At a New York State Society of CPAs Conference on Wednesday, officials from New York State and New York City’s tax departments talked about their audit procedures for taxpayers.

Nonie Manion, director of the audit division at the New York State Department of Taxation and Finance, discussed the state’s information document request, or IDR, forms. At times, the department has to issue overly broad information requests when communication has broken down, and when that doesn’t work, it will go further.

“If we are not getting the information, we may issue a subpoena,” she warned. “We encourage you to make it a more open process between the practitioner and the taxpayer and the auditor.”

Michael Hyman, the deputy commissioner of tax policy and planning at the New York City Department of Finance, noted that if taxpayers have a license to do business in the city, his department will check it against their tax payments. “You shouldn’t get be getting entitlements unless you’re up to date with your taxes,” he said.

He noted that his department does information matches, as when taxpayers file for one year, but then don’t file for the next year. “That’s one way to find potential delinquencies,” he said.

His department also works with other agencies in the city and state to do matches and see whether there are economic indicators that taxpayers are still doing business in the city. But auditors also try to avoid contacting taxpayers who aren’t liable for taxes in case they have gone out of business. “We have improved significantly the number of cases that lead to an assessment,” said Hyman.

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