- New York is using AI-generated letters to incentivize remote workers to move to low-tax states.
- CNBC reported that AI is helping to address staffing shortages at the New York Internal Revenue Service.
- The state said there was an increase in audits in 2022 but a decrease in the number of auditors.
New York is the millionaire capital of the world, but some of those who want to stay rich are fleeing to low-tax states like Florida and Texas.
The state tax department has a solution: the letters AI.
According to CNBC, it sends hundreds of thousands of AI-generated letters, mostly to wealthy remote workers or those who need a change of tax residency.
These letters could help address staffing shortages, although it is unclear whether this partly explains their implementation.
The state reported an increase in audits in 2022 but a decrease in the number of auditors.
There were 771,000 audits in New York in 2022, according to a recent report from the State Department of Taxation and Finance cited by CNBC. This represents a 56% increase from the previous year, the media outlet said.
Meanwhile, the number of New York-based listeners declined 5% to fewer than 200 that same year due to tight budgets, CNBC reported.
New York City. Alexandre Spatari/Getty Images
Mark Klein, partner and chairman emeritus of Hodgson Russ LLP, told CNBC that the Internal Revenue Service uses sophisticated technology “to determine the best candidates for audit,” with a focus on high-net-worth individuals who have moved from ‘High tax states to low tax states. , like Florida or Texas.
“And guess what? When you’re looking for revenue, it’s not going to be the person who makes $10,000 a year. It’s going to be the person who makes $10 million,” he said.
New York City is home to 340,000 millionaires, 724 centimillionaires and 58 billionaires, making it the richest city in the world, according to data from residential and citizenship investment firm Henley and Partners.
The United States Internal Revenue Service is using both human auditors and AI to review cell phone records, which will help determine where taxpayers spend most of their time and, subsequently, where they owe taxes. taxes, Klein said.
“New York is very aggressive,” he said.
“The state says, ‘Well, you haven’t really moved since all your television and all your business is still in New York,'” Klein said outside.
“They don’t understand, rich people can buy more stuff for their house in Florida. They can buy another TV.”
The question of location is not uncommon when it comes to taxes. Celebrities and millionaires around the world have gotten into trouble for filing their taxes in the wrong place, apparently in an effort to pay less.
One notable example is Shakira, who in November was fined 24 million euros (about $26 million) for failing to pay 14.5 million euros (about $15 million) in taxes on Spanish income between 2012 and 2014.
During this period, Shakira listed her primary residence as the Bahamas (where tax rates are lower) although she spent most of her time in Spain, according to prosecutors.
Shakira, who had always denied accusations of tax fraud, said at the time that she had chosen to “prioritize her career, her stability and that of her children” by ending the process and ” thus avoiding the impact of media coverage and trial time, which is often of an exhausting duration.
The New York Department of Taxation and Finance did not immediately respond to a request for comment.
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