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

New York City residents may owe federal, New York State and New York City income taxes, depending on residency, income and the applicable tax year. Residents and businesses may also face IRS audits, federal tax debt, wage levies and bank levies. Federal IRS procedures are distinct from state and city tax administration.

Contact Segal, Cohen & Landis (SCL) to discuss the matter. Verify the proposed representative’s qualifications, meeting arrangements and scope of engagement; do not assume a particular result or completion time.

Federal Tax Issues Relevant to New York City

Tax issues that can arise in New York City:

• Finance and investment compensation can raise reporting questions involving carried interest, deferred compensation, equity compensation and partnership distributions. The applicable rules depend on the arrangement. IRS examination selection uses multiple methods and depends on the return and circumstances.
• Manhattan real estate: Short-term rental income (including Airbnb), like-kind exchange timing, depreciation recapture and income connected with co-op or condominium property can raise tax reporting questions. The applicable rules depend on the transaction; these items do not establish a special Manhattan audit trigger.
• Self-employed and gig workers must correctly report taxable income and substantiate claimed business deductions. IRS examination selection uses multiple methods; maintain records relevant to the income and deductions on your return.
• International connections can raise foreign-account, foreign-asset, foreign-trust or foreign-gift reporting questions. FBAR, Form 8938 and Form 3520 have different status, interest, transaction and threshold requirements. Occupation, nationality or residence in NYC alone does not impose every form requirement.

The IRS Office Serving Manhattan Taxpayers

IRS Audits in New York City

The IRS uses several audit selection methods, including statistical computer screening that compares returns with norms for similar returns, and related examinations involving other taxpayers. Selection does not necessarily mean there is an error. A New York City address alone does not establish a special audit threshold.

Reporting and documentation issues NYC taxpayers may need to review 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 (including whether you are a New York domiciliary), which involve state tax rules and are distinct from federal IRS audit selection

Contact Segal, Cohen & Landis to discuss the matter. Verify the proposed representative’s qualifications, meeting arrangements and scope of engagement; do not assume a particular result or completion time.

International Tax Issues for NYC Residents

NYC residents with international financial connections, including U.S. citizens abroad and foreign nationals working in banking or finance, may need to review foreign account, asset, trust and gift reporting. Each requirement depends on the person’s status and the relevant facts.

FBAR (FinCEN Form 114)

A U.S. person generally must file an FBAR if they have a financial interest in or signature or other authority over foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year, unless an exception applies. Nonwillful FBAR penalties are measured per report, not per account, under Bittner. Statutory penalty amounts are inflation-adjusted; willful violations have a different maximum and may involve criminal exposure.

Foreign Trust and Gift Reporting (Form 3520)

A U.S. person may need to report gifts or bequests exceeding $100,000 from a nonresident alien individual or foreign estate, including amounts from related foreign persons. Different indexed reporting thresholds apply to purported gifts from foreign corporations or partnerships. A distribution from a foreign trust has separate reporting rules and should not simply be treated as a foreign gift. Foreign-gift reporting penalties generally accrue at 5% of the gift amount per month, capped at 25%; relief requires reasonable cause and absence of willful neglect. Foreign-trust reporting has different penalties, generally starting at the greater of $10,000 or the applicable percentage, with its own requirements and exceptions.

Expat and Dual-Status Returns

Foreign nationals and U.S. citizens working across borders may have reporting obligations determined by residency, citizenship, the transaction and applicable treaties. Evaluate foreign tax credits and any foreign earned income exclusion under their specific eligibility requirements.

Federal Tax Debt Resolution for NYC Taxpayers

If you have IRS tax debt, including income or payroll taxes or a liability determined in a Tax Court case, possible resolution options depend on your income, assets, filing compliance and ability to pay over time:

• Offer in Compromise: An eligible taxpayer may request settlement for less than the full liability. IRS allowable-expense rules include applicable national and local standards and the taxpayer’s actual circumstances. A higher-cost location alone does not guarantee a lower offer amount or acceptance.
• Installment Agreement: Qualified individuals with $50,000 or less in assessed tax, penalties and interest may qualify for a Simple Payment Plan without a collection information statement. Most taxpayers have up to 10 years, subject to the applicable collection period; all filing and payment requirements must be current.
• Currently Not Collectible: If your verified living expenses exceed your income (after IRS expense standards), you may qualify for a collection delay after financial review. CNC generally delays most collection activity while the hardship continues; interest and penalties accrue, a lien may be filed, refunds may be offset, and collection can resume if finances improve.
• Innocent Spouse Relief: A taxpayer who filed a joint return may qualify for relief from certain understated tax attributable to a spouse or former spouse, subject to knowledge, fairness and other requirements. Separation of liability and equitable relief have different eligibility rules. Review the facts and applicable deadlines before requesting relief.

IRS Wage Garnishment and Bank Levies in New York

Federal IRS levy rules differ from state garnishment rules. Generally, the IRS must provide the required notice of intent to levy and right to a hearing at least 30 days beforehand, subject to statutory exceptions. A bank generally holds funds attached by an IRS levy for 21 days before remitting them. Review the actual notice and deadline promptly.

Contact the IRS promptly during the 21-day bank holding period to address the debt or an error and request release where appropriate. Release may be required for economic hardship or under an installment agreement whose terms do not allow the levy to continue, among other grounds. An attorney can help evaluate and present a request, but hiring one or proposing a payment plan does not itself guarantee release. Release does not cancel the debt.

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?

Contact Segal, Cohen & Landis to discuss the matter. Verify the proposed representative’s qualifications, meeting arrangements and scope of engagement; do not assume a particular result or completion time.

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

Possibly. U.S.-person status for FBAR purposes and the account rules must both be assessed; a visa label alone does not decide the obligation. A U.S. person generally must report a financial interest in or signature or other authority over foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year, unless an exception applies. U.S. tax residency may arise under the green card or substantial presence test. The substantial presence test ordinarily requires at least 31 days in the current year and 183 weighted days across three years: all current-year days, one-third of the preceding year and one-sixth of the second preceding year. Exceptions and excluded days may apply. H-1B and L-1 visa holders should assess their actual circumstances.

What is the U.S. Tax Court petition deadline for a notice of deficiency?

A notice of deficiency generally provides 90 days to petition the U.S. Tax Court, or 150 days if addressed to a person outside the United States. The period generally runs from mailing. The IRS cannot grant an ordinary extension, but statutory exceptions and postponements can affect the deadline. Review the actual notice and seek advice promptly.

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

The IRS uses Collection Financial Standards when evaluating ability to pay. Housing and utility standards vary by county and household size; in most cases, the allowable amount is actual spending or the local standard, whichever is lower. Documented circumstances may justify a deviation. An Offer in Compromise also depends on income, expenses and asset equity; living in NYC alone does not guarantee a lower offer or acceptance. An initial consultation can identify possible options, but an offer calculation requires verified financial information and current IRS rules.

Related guidance: IRS Audit Representation.