June 11, 2026
***UPDATED STATEMENT***
Dear: NYC-1127 City Wavier Filers,
If you did not read the letter below that I originally wrote, please read it now to understand the issue in its entirety.
At this point, after speaking to several unions’ board members and some tax advocates, there does not appear to be any legal steps being taken to fight the NYC Department of Finance. The City is charging all NYC Employees who live outside the city an additional $400-$700 on average in taxes, contrary to what it says in its own laws, instructions, and on their 1127 tax return. NYC Department of Finance claims it forgot to change the laws on paper since 2016, even though the tax laws were approved to be changed by the legislature and the Governor at that time. Unless a class action suit or a tax advocate advises otherwise, I would have to urge my clients, at this point, to pay the amount owed and then fight to get the funds back. We will assist in any way we can; however, all the accounting associations feel taxpayers should pay it, then fight to recover the payments.
We at Crowley & Sons will continue to monitor the progress to see if there is anything we can do to help you recover the taxes that they are charging. In addition, if we see any court action or a fight by tax advocates on behalf of taxpayers, we will post it here so that you can become part of it. Until then, unfortunately, we must advise our clients to continue making payments until an action is taken to stop the taxpayers from having to pay the NYC Department of Finance 1127 Tax. This affects every single person who files a 1127 tax return.
Lastly, according to published laws, instructions, and the tax return, they were done correctly, and you should not owe anything; however, they sent letters demanding payment from every taxpayer or reduced your refund. These payments are trusting the NYC Department of Finance 1127 group, which had the law changed in 2016, and the money is owed to them.
To be clear, this is an NYC Department of Finance error with a mistake built into the laws, instructions, calculations, and credits within the tax return.
Sincerely,
Sean M. Crowley
Crowley & Sons
May 22, 2026
Dear: NYC-1127 City Wavier Filers,
It appears that the NYC Department of Finance 1127 group has made an error in the coding of their tax returns since 2016. Thismeans the tax return calculations are correct from everything we did, the software company did, and what the NYPD, FDNY, and other city agencies reported. However, the NYC Department of Finance has made an error in calculating credits on every 1127 tax return since 2016. This affected every tax that was filed as the error is in the tax return itself, the instructions, and the calculations. In almost every case, it costs the taxpayer money out of their pocket. We have been seeing adjustments averaging $400-$600 per tax return.
Again, this is an error on the part of the NYC Department of Finance, not anybody else, and it affects every tax return filed.
The Department of Finance finally caught the coding error and fixed it in the last few weeks. They are only adjusting this year’s returns and allowing everyone to keep the additional funds from 2016 to 2024. However, they are adjusting the 2025 1127 tax returns and reducing your refund or increasing the amount owed. In some cases, taxpayers went from receiving a refund to owing the city and having to write a check.
It is our position that these tax returns were prepared in accordance with the tax laws distributed with the tax returns and their instructions by the NYC Department of Finance. We believe that the city should NOT adjust this year’s returns, as they were prepared correctly according to the 1127 instructions and, therefore, their own laws. On behalf of our clients, we will reach out to tax advocates and discuss with them the possibility of taking legal action against the city for adjusting this year’s tax returns. Our position is that they should update the laws and the instructions, then make the changes starting next tax season for tax year 2026.
Lastly, we recommend that our clients hold off on making payments on this issue until we see whether any of the labor unions will take action on a class-action suit against the city. Keep an eye on when the payments are due (if any), and hopefully, we will have a better understanding of the tax advocates’ and labor unions’ positions by the due date. So in addition to you contacting your union, the National Association of Tax Professionals also recommend submitting a complaint to the Public Advocate Office at https://advocate.nyc.gov/ and The Office of the Speaker of the City Council at SpeakerMenin@council.nyc.gov
To be clear, this is a NYC Dept of Finance error with a mistake built into the laws, instructions, calculation, and credits, within the tax return.
Sincerely,
Sean M. Crowley
Crowley & Sons