As New York State Citizens, the top reason a person thinks they need a lawyer is when they are audited by the IRS or NYS Tax Department, or when they have unfiled tax returns that need to be filed and a tax payment plan established. However, timely tax planning is a better offensive approach to tax issues than being in a defensive mode. As New York Tax Attorney law firm, we can clearly state that a proactive approach to solving tax issues produces better results.
One common life event that benefits from advance planning is the tax issues related to receiving an inheritance. As New York readers may know, rarely do inheritances trigger a tax liability, unless it is in the form of a tax deferred account (i.e. 403(b), 401(k), etc.) that is received as a beneficiary. Less likely, but still a significant issue is that about 15% of estates in New York State have unresolved outstanding tax issues or tax liabilities. From a practical approach, this means the executor or beneficiaries of the estate are put into the position of needing to defend the tax issue or liability before they receive their inheritance since the IRS or NYS Tax Department can have a claim against the estate assets by filing a tax lien or tax warrant. Another area of concern is unreported income related to unreported assets (FBAR foreign account issues). This tax controversy would need to be resolved before the assets are distributed. Lastly, even with the high estate tax threshold of $5.25 million before an estate is taxable for federal tax purposes, the New York State threshold is only a modest $1 million, so it is triggered more often and needs to be planned out.
For these issues, a lawyer can work with the estate attorney to assist with these issues and reach a result that everyone can benefit from.