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.

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.

New York City’s Unique Federal Tax Exposure

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 (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 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 selects returns for audit using the Discriminant Function (DIF) score — a statistical model comparing your return to similar filers. The IRS uses several selection methods, including computer screening and related examinations. A taxpayer’s New York City address does not establish a special audit threshold. 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?)

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

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)

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. The IRS has been actively using FATCA data to identify unfiled FBARs.

Foreign Trust and Gift Reporting (Form 3520)

Did you receive 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. 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. Foreign-gift reporting penalties generally accrue at 5% per month, capped at 25%, with a reasonable-cause exception. Foreign-trust reporting has different penalties, generally starting at the greater of $10,000 or the applicable percentage.

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 — 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: 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: 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

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.

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?

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, 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. 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. Many H-1B and L-1 visa holders are surprised to discover they have FBAR obligations.

What is the IRS Tax Court petition deadline?

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 (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. An initial consultation can identify possible options; an offer calculation requires verified financial information and application of current IRS rules.

Related guidance: IRS Audit Representation.