New York Update: Nonresident Audit Guidelines Update

The New York State Department of Taxation and Finance (Department) revised its Nonresident Audit Guidelines (the 2021 Guidelines). While several changes were made, one of the most important was changing the 11-Month Rule for determining whether someone is a permanent resident of New York state to a 10-Month Rule, beginning in the tax year 2022.

Beginning in the tax year 2022, the December 2021 Guidelines consider "'substantially all of the year" to mean "a period exceeding 10 months." The 11-Month Rule, however, applies for tax years before the tax year 2022 (i.e., through the tax year 2021).

The 2021 Guidelines not only change the period from 11 months to 10 months, but they also appear to only apply the rule when a taxpayer acquires or disposes of the property in that particular tax year, further narrowing the rule's applicability (for example, individuals who lease out their home every summer will still be deemed to have a permanent place of abode). The 10-Month Rule remains a "general rule" and not an "absolute rule."

Implications

Nonresident New York taxpayers should review the changes to the audit rule and determine whether the change from an 11-Month Rule to a 10-Month Rule will cause them to be deemed a New York resident.

Here are the full Guidelines (107 pages). Please contact us if you have any questions.