August 8, 2022

So let's suppose you live in a state like New York (and a city like New York City) where the local income tax is based on the IRS numbers.  Does getting audited by the IRS mean you automatically have to pay the city more?

Basically, yes - the IRS shares its numbers with the New York City and State tax administration, who use it to make adjustments.  However, this process doesn't always work in reverse...the IRS won't necessarily make changes based on what the state does.

Right now I'm doing a case where the state did an examination and some changes were made as a result...and let's just say it created a huge mess.  Basically, a business was audited by the state and forced to issue a W-2 instead of a 1099.  However, the IRS wasn't wise to this and saw both a 1099 and a W-2 in the system.  Cue the audit chaos...

Don't give people a 1099 when you should give them a W-2, but if you do...make sure you fix it at all levels of government :)

In other news...August is a slow time here on planet tax attorney so I'm catching up on my science fiction.  (Yay for the iBooks app...)


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Nate Strand, Tax Attorney  | Upper East Side, NYC 

399 East 78th Street, Apt 1D, New York, NY 10075

(646) 737-4639   nate.strand@icloud.com