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AI


NEW YORK AND OTHER STATES ARE USING AI TO HUNT DOWN WEALTHY REMOTE WORKERS AND
DEMAND MORE TAX

Mikhaila Friel
Apr 16, 2024, 1:24 AM HST
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remote worker. Getty Images
This story is available exclusively to Business Insider subscribers. Become an
Insider and start reading now. Have an account? Log in.
 * New York is using AI-generated letters to challenge remote workers moving to
   low-tax states.
 * CNBC reported that AI is helping with staff shortages in New York's tax
   department.
 * The state said there was an increase in audits in 2022 but a decrease in
   auditors.

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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: AI letters.

It is sending hundreds of thousands of AI-generated letters, mostly to wealthy
remote workers or those who require a change in tax residency, according to
CNBC.

This story is available exclusively to Business Insider subscribers. Become an
Insider and start reading now. Have an account? Log in.

The letters could help beat staff shortages, although it's unclear if this is
part of the reason they were implemented.

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The state reported an increase in audits in 2022 but a decrease in auditors.

There were 771,000 audits in New York in 2022, according to a recent report by
the state Department of Taxation and Finance cited by CNBC. That's a 56%
increase from the previous year, the outlet said.

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America's big cities are about to run out of money

Meanwhile, the number of New York-based auditors declined by 5% to under 200 in
the same year because of tight budgets, CNBC said.


New York City. Alexander Spatari/Getty Images

Mark Klein, partner and chairman emeritus at Hodgson Russ LLP, told CNBC that
the tax department is using sophisticated technology "to determine the best
audit candidates," with a focus on wealthy individuals who have relocated from
high-tax states to low-tax states, such as Florida or Texas.

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"And guess what? When you're looking for revenue, it's not going to be the
person making $10,000 a year. It's going to be the person making $10 million,"
he said.

New York City is home to 340,000 millionaires, 724 centi-millionaires, and 58
billionaires, making it the wealthiest city in the world, according to data by
residence and citizenship investment firm Henley and Partners.

Tax departments across the US are using both human auditors and AI to examine
cellphone records, which will help figure out where taxpayers are spending most
of their time and subsequently where they owe taxes, Klein said.

"New York is being very aggressive," he said.

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"The state says, 'Well, you didn't really move since all your TV and all your
stuff is still in New York,'" Klein told the outer.

"They don't understand, the wealthy can buy more stuff for the Florida home.
They can buy another TV."

The issue of location is not uncommon when it comes to taxes. Celebrities and
millionaires around the world have gotten into trouble for filing in the wrong
location, seemingly with the intent of paying less.

One notable example is Shakira, who in November was fined €24 million (around
$26 million) over charges that she failed to pay €14.5 million (around $15
million) in Spanish income tax between 2012 and 2014.

Advertisement


During that period, Shakira listed her main residence as the Bahamas (where tax
rates are lower) despite spending most of her time in Spain, according to
prosecutors.

Shakira, who had consistently denied accusations of tax fraud, said at the time
that she had chosen to "prioritize her career and stability and that of her
children" by putting an end to the process and "thus avoiding the impact of
media exposure and the trial time, which is often of an exhausting length."

New York's Department of Taxation and Finance did not immediately respond to a
request for comment.

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Google's DeepMind CEO says the massive funds flowing into AI bring with it loads
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