Sorry, you may missunderstand my previous comment. I mean, for example, I earned 300K in total in that year. 100K is from NY (for the RSUs granted there); the other 200K is the base salary and bonus I earned while I live and work in California. My tax withhold for NY is based on 100K; and for CA is based on the total 300K. If my accountant report my tax as 100K to NY and 200K to CA, I won't have the penalty from NY. The issue is, my accountant allocated all 300K to NY. I know I am not double taxed. But their strategy lead to under pre-payment of tax to New York State.
If I were notified this penalty while they are preparing the tax return, I would insist on only allocating the partition I earned in NY to NY. But they didn't tell me anything about the penalty. Now, after two years, NY state told me I have the penalty. My argument is, as a tax professional, they should have warned me the penalty when they used this strategy to file tax return. This should be their negligence.
For tax professionals in this forum, do you think it is your duty to tell your customer that the strategy you used will lead to a penalty?
