Audits

• The Department of Finance sends a questionnaire to determine if your business is operating within the City of New York. The questionnaire must be returned with proof of active or inactive status. Corporations that are no longer in business must submit a copy of their Certificate of Dissolution from the New York State Department of Taxation and Finance.
• Unincorporated businesses must submit an affidavit stating that they do not operate in NYC. Business owners must produce an affidavit for each business owned. (There is no official City affidavit for this purpose.)
• If the business is inactive, submit one of the following:
  • Corporations must submit the Form NYC-245 activities report
  • Partnerships must submit federal Form 1065
  • Unincorporated businesses other than partnerships must submit federal Schedule C and the front page of federal Form 1040. Visit the Internal Revenue Service for forms and additional information

We may send you an Information Document Request while your return is under review. The Information Document Request will also list the initial audit issues as well as phone numbers for the auditor, supervisor, and manager assigned to your case.

You must respond by the deadline on the Information Document Request. It is important to send complete records for the period under review. An audit will continue with or without the additional information and a determination will be made based on available information.

We may send you a Notice of Proposed Tax Adjustment when the audit results in an additional tax due. The notice lists the tax due plus any interest and penalties.

If you agree with the stated amount, the balance due must be paid within 30 days of the date on the notice unless other payment arrangements are made. If you disagree, send a reply stating your position with supporting documentation within 30 days of the notice date, or request an exit conference.

If there is a payment error, send proof of payment with your reply. If you made payment by bank check, send a copy of the front and back of the cancelled check. If payment was made by money order, obtain and send a copy of the cancelled money order from the place where it was purchased.

We will send with the audit workpapers a Workpaper Cover Letter that explains how to accept or disagree with the audit findings.

If you accept the audit findings, inform the auditor, and a Consent to Audit Adjustments will be sent to you.

If you disagree, send a reply stating your position with supporting documentation within 30 days of the letter date, or request an exit conference.

The Department of Finance will send the Consent to Audit Adjustment(s) with the Notice of Proposed Tax Adjustments, or when you accept the audit findings mailed to you with the workpaper cover. The Consent to Audit Adjustment(s) lists the tax due plus any interest and penalties. You will also receive a Payment Transmittal Form with instructions for making your payment.

A Consent and Waiver is sent to you when the audit has been settled. The Consent and Waiver lists the tax due plus any interest and penalties. You will also receive a Payment Transmittal Form with instructions for making your payment.

DOF issues a Consent Determination at the conclusion of the audit in confirmation of the Consent to Audit Adjustment(s) or Consent and Waiver. A Consent Determination lists the tax due plus interest and penalties.

A Notice of Determination is issued at the conclusion of the audit if you do not agree to the audit findings or if you did not respond to the Information Document Request(s) or Notice of Proposed Tax Adjustment. A Notice of Determination lists the tax due plus interest and penalties. In these cases the amount of tax will be based on all available information, including federal tax returns and the past records of the Department of Finance.

You or your representative have 90 days from the date stated on the Notice of Determination (or 150 days if the notice is addressed outside the US) to decide which of the following options to choose:

• Pay the tax shown.
• File a Request for a Conciliation Conference.
• Petition for a Tax Appeals Tribunal hearing.
  

If you fail to respond to a Notice of Determination within the required period, DOF will issue a Notice and Demand for Payment, which marks the beginning of collection procedures.

The Department of Finance sends this notice at the end of an examination of your tax return if no adjustments were necessary.

The Department of Finance sends this notice after a refund request has been examined and all or part of the refund is denied. The notice explains the reasons for this decision.

• Deadlines to Appeal a Notice of Disallowance
  • If you receive a denial of a refund claim for general corporation, banking corporation, or unincorporated business taxes, you have two years from the date on the Notice of Disallowance to file a Request for Conciliation Conference or a Petition for Hearing with the Tax Appeals Tribunal.
  • If you receive a denial of a refund claim for any other tax, you have 90 days from the date on the Notice of Disallowance to file a Request for Conciliation Conference or a Petition for Hearing with the Tax Appeals Tribunal.
  • The disallowance or partial disallowance becomes final if you do not appeal by the deadline.

If you disagree with an audit finding, you have the option of filing an Appeal.