One of the unintended consequences—or benefits, depending on who you ask—of the pied-à-terre tax is it’s acting like an unofficial state auditor.
The tax is meant to target secondary homes: If you claim your New York City residence is second to one you own out of state, you may owe the pied-à-terre tax, depending on the home’s value. Now, if you happen to live at that secondary residence to reap the joys of what comes with living in the Big Apple, but you file your income tax at a residence out of state, or register your car out of state to save on taxes and insurance, you’re committing tax fraud.
The pied-à-terre tax is putting potential tax cheats in a bind: keep the status quo of claiming your New York City residence as a secondary home, and pay the pied-à-terre tax. Fess up and refile your income taxes and car registration to where you lay your head in the five boroughs, and you pay New York’s income taxes and car insurance rates. Now, the New York Governor’s Office is looking into all the people who have been committing fraud all along…