New York City IRS Tax Attorney: A Complete Guide for NYC Taxpayers Facing Federal Tax Problems

New York City taxpayers face a tax burden unlike almost anywhere else in the United States. On top of federal income tax, New York State income tax (up to 10.9%), and New York City’s own income tax (up to 3.876%), residents and businesses can face IRS audits, federal tax debt, wage garnishments, and bank levies that cut across all three layers simultaneously.

Segal, Cohen & Landis, P.C. (SCL) represents New York City clients before the IRS — including in IRS audits, offers in compromise, tax lien withdrawal, FBAR voluntary disclosure, and U.S. Tax Court proceedings. Our practice is federal; we represent clients in all 50 states from our Beverly Hills office. This guide walks through the most pressing IRS issues for NYC taxpayers.

New York City’s Unique Federal Tax Exposure

Several factors make New York City a disproportionately high-risk IRS market:

• Finance and hedge fund compensation structures: Carried interest, deferred compensation, RSUs, stock options, and partnership distributions create complex federal reporting obligations with significant audit risk. IRS examiners are trained to scrutinize these structures.
• Manhattan real estate: Short-term rental income (Airbnb), like-kind exchange timing issues, depreciation recapture, and co-op/condo pass-through income are all audit triggers the IRS flags in the Manhattan market.
• Self-employed and gig economy workers: Freelancers, consultants, and contractors in NYC’s media, fashion, tech, and creative industries frequently underreport income or over-claim business deductions — the #1 IRS audit trigger.
• International financial connections: New York is a global financial center. Bankers, traders, expats, and foreign nationals all carry FBAR, FATCA, Form 3520, and international disclosure obligations — often going unrecognized until the IRS sends a notice.

The IRS Office Serving Manhattan Taxpayers

IRS Audits in New York City

The IRS selects returns for audit using the Discriminant Inventory Function (DIF) score — a statistical model comparing your return to similar filers. In New York City, where incomes are higher and deductions larger, the audit threshold is typically higher than in lower-income markets. But that doesn’t mean NYC taxpayers are safe.

Common audit triggers for NYC filers include:

• Carried interest and partnership K-1 reporting
• Self-employment income without adequate expense documentation
• Real estate depreciation and rental losses on Manhattan properties
• Overseas assets and foreign income from global business activities
• High Schedule A charitable deductions relative to income
• Cryptocurrency gains and losses from trading on multiple platforms
• State residency disputes (are you a New York domiciliary?)

Because IRS practice is federal, geography is irrelevant to who can represent you. Segal, Cohen & Landis has represented Manhattan clients remotely with no travel required — all communications, document exchanges, and IRS interactions happen by phone, email, and secure portal.

International Tax Issues for NYC Residents

New York City’s international financial community — from Wall Street expatriates to foreign nationals working in banking and finance — generates one of the highest concentrations of international tax complexity in the world.

FBAR (FinCEN Form 114)

If you have a foreign bank account — whether a Swiss private banking account, an account in your home country, or a joint account with a foreign relative — and the combined balance exceeds $10,000 at any point during the year, you must file an FBAR. Penalties start at $10,000 per account per year for non-willful violations and can reach 50% of the account value for willful violations. The IRS has been actively using FATCA data to identify unfiled FBARs.

Foreign Trust and Gift Reporting (Form 3520)

Did you receive a gift from a foreign person exceeding $100,000? Was that gift actually a distribution from a foreign trust? NYC’s wealthy international community frequently encounters Form 3520 issues when receiving wealth transfers from foreign relatives or business structures. The penalties for failure to file Form 3520 begin at $10,000 per form and can reach 35% of the gross reportable amount.

Expat and Dual-Status Returns

Foreign nationals working in New York on temporary visas who have foreign-source income, and US citizens working abroad with foreign employers, both face dual-reporting obligations. Treaty positions, foreign tax credits, and the Foreign Earned Income Exclusion must all be correctly applied — a miscalculation can trigger an IRS examination.

Federal Tax Debt Resolution for NYC Taxpayers

If you have IRS tax debt — whether from income taxes, payroll taxes, or a tax court judgment — you have several resolution options. The right path depends on your income, assets, and ability to pay over time:

• Offer in Compromise: Settle your IRS debt for a fraction of the balance. New York’s high cost of living is factored into the IRS’s Allowable Living Expense (ALE) standards, which determine your available income for offer calculations. NYC’s higher allowable expenses can make OIC more favorable for NYC residents than for filers in lower-cost states.
• Installment Agreement: Monthly payments over up to 72 months. If your tax debt is under $50,000, you may qualify for a Streamlined IA without a detailed financial review.
• Currently Not Collectible: If your verified living expenses exceed your income (after IRS expense standards), the IRS will place collection in hold status. This stops levies but allows interest and penalties to accumulate.
• Innocent Spouse Relief: If a joint return with a former spouse created tax debt you didn’t know about and shouldn’t be responsible for, you may qualify for full or partial relief.

IRS Wage Garnishment and Bank Levies in New York

In New York, as everywhere, federal IRS levy authority supersedes state wage garnishment protections. The IRS can levy your Manhattan bank account, seize your investment account proceeds, or garnish your wages — with relatively limited notice requirements. Once a bank levy is served, your bank holds the funds for 21 days before remitting them to the IRS.

Acting within that 21-day window is critical. An IRS tax attorney can negotiate a levy release in exchange for entering into a formal installment agreement or other resolution arrangement — but the window is short and the IRS won’t wait.

See our Manhattan IRS tax attorney page for more on how we serve NYC clients.

Frequently Asked Questions — NYC IRS Tax Attorney

Do I need to be in New York for you to represent me before the IRS?

No. IRS tax practice is federal. We represent New York City clients from our Beverly Hills office through phone, video, and secure document sharing. You never need to travel, and we communicate on your schedule.

I’m a foreign national working in NYC on a visa — do I need to file an FBAR?

Possibly, yes. If you are a US tax resident (generally defined as meeting the substantial presence test or holding a green card) and you have foreign bank accounts exceeding $10,000, FBAR filing is required regardless of your visa status. Substantial presence is typically met after 183 days in the US across a 3-year period. Many H-1B and L-1 visa holders are surprised to discover they have FBAR obligations.

What is the IRS Tax Court petition deadline?

If the IRS issues you a Notice of Deficiency (a “90-day letter”), you have exactly 90 days to file a petition in U.S. Tax Court to contest the proposed assessment without first paying. Miss this deadline and the IRS can assess the tax automatically. No extensions are available. If you’ve received a 90-day letter, call immediately — the deadline is absolute.

How do NYC’s living costs affect an Offer in Compromise?

The IRS uses Collection Financial Standards (National Standards and Local Standards) to determine your “reasonable collection potential” — the basis for any offer amount. Local standards for New York-Newark-Jersey City area are higher than the national average for housing/utilities. This means NYC residents may have a lower net available income calculation than filers in less expensive metros, which can reduce the minimum acceptable offer amount. We calculate the precise offer amount during our initial consultation.

Related guidance: IRS Audit Representation.