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Wayne Berkowitz CPA, J.D., LL.M.

Wayne Berkowitz CPA, J.D., LL.M.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.
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SALT TALK:  June and Pennsylvania Tax Amnesty are “Bustin’ Out All Over”

Posted by Wayne Berkowitz CPA, J.D., LL.M. on May 15, 2017 11:50:00 AM

By popular demand only, I am blogging once again about Pennsylvania’s latest and greatest tax amnesty offer.  The program is “Bustin’ Out” or ending, June 19, 2017, so you’d better hurry to reap the benefits.  The Program began April 21, 2017.

What makes this program so unique is that not only are penalties on past due taxes waived, but 50% of the interest as well.  All taxes administered by the Pennsylvania Department of Revenue, whether applicable to individuals or businesses, are eligible.  While participation is rewarded, sitting on the sidelines will be penalized.  All those who are eligible, but not participating, will be hit with an additional 5% penalty should a subsequent tax liability arise.

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Topics: SALT TALK

SALT TALK:  Colorado Use Tax Notice and Reporting Requirements – Batteries Not Included

Posted by Wayne Berkowitz CPA, J.D., LL.M. on May 8, 2017 11:50:00 AM

I was all set to blog about something else, when I noticed that Colorado held a Stakeholder Work Group meeting on April 25th to get “constructive feedback and suggestions” as well as “input and insight” from those affected by and having knowledge of the notice and reporting requirements imposed on out-of-state retailers that make sales to Colorado purchasers but do not collect Colorado sales tax.  This is also known as “The Tattletale Rule”. See my previous blog posts from October 24, 2016 and February 29, 2016.

Enacted way back in 2010, but not to be enforced until July of 2017 due to a web of litigation and injunctions, Colorado enacted legislation and corresponding regulations requiring sellers with no sales tax nexus or collection obligation in Colorado, with over a certain amount of sales to Colorado purchasers, to not only notify the purchaser in exasperating detail of the fact that just because the seller didn’t collect sales tax, you still may have an obligation to remit the corresponding use tax on your own.  To add insult to injury, sellers are also being required to tattle on Colorado purchasers and inform the Department of who bought what, for how much, and when.

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Topics: SALT TALK

SALT TALK:  New York State Budget Makes Taxpayers Proud to be a Union Man (or Woman)

Posted by Wayne Berkowitz CPA, J.D., LL.M. on May 1, 2017 10:15:00 AM

Due to the serious nature of the New York State budget negotiations (rumor has it the legislation and the negotiations were referred to as “The Big Ugly”) I haven’t had a good musical reference in weeks. Well, now that it is over and done with, I can come right out and say “Live music is better.  Bumper stickers should be issued.” For those of you familiar with the Neil Young tune, “Union Man,” Mr. Young can be heard uttering this phrase during a supposed meeting of his Musicians’ Local.

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Topics: SALT TALK

SALT TALK:  New York’s Budget Makes Sales Tax Savings through Leasing Company Highly Suspect

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Apr 24, 2017 10:15:00 AM

The plan was simple.  New York State, like many other jurisdictions, allowed a purchaser, to purchase for resale, tangible personal property (TPP) that is subsequently leased to another taxpayer.  The theory is simple.  The sales and use tax (sales tax) is meant to be a tax on the actual use or consumption of goods and is not intended to pyramid on each transaction, but only impose its burden on the end user.  Accordingly, the purchaser – lessor buys TPP from a vendor for resale and doesn’t pay sales tax.  The purchaser – lessor leases the TPP to the lessee and collects and remits sales tax on the monthly lease payments.  So far, all seems in balance.  The sales tax is imposed only once on the intended party, the lessee as end user.

So what is the perceived problem with this arrangement? 

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Topics: SALT TALK

SALT TALK: The Chevy Nova, Betsy Ross and the 2017– 2018 New York State Budget

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Apr 17, 2017 10:00:57 AM

What do one of the most popular cars ever made, the creator of the banner of the U.S.A. and the late, but finally enacted New York State Budget have in common. Nothing, other than that all three are notable for things that didn’t happen.

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Topics: SALT TALK

SALT TALK: New York Budget Bill “Approved” - I’m Now a Law?

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Apr 11, 2017 10:04:00 AM

If last week’s explanation of the federal legislative process seemed daunting, I am even more perplexed by the New York State process.  It all seems logical, according to the explanation offered on the New York State Senate website (https://www.nysenate.gov/how-bill-becomes-law-1). 

The Senate explains that someone has an idea, a bill is drafted, the bill goes through the committee process, the Senate and Assembly pass the bill and the Governor signs it.  Let’s compare this to what really happened with the new budget. The Governor had a plan he released sometime in January, the Assembly, Senate and Governor fought about it for several months, the budget was late and temporary measures had to be passed to keep the money flowing.  The Senate then left Albany to start its vacation and the Governor, Senate Majority Leader, Senate Independent Democratic Conference Leader, and Assembly Speaker announced an agreement.

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Topics: SALT TALK

SALT TALK: "I'm Just a Bill" - Mobile Workforce Legislation (Re)Introduced

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Apr 3, 2017 11:57:00 AM

There is a joke that starts with three mothers sitting around discussing the professions of their respective sons. The first mother bragged about her son the doctor and all were impressed. The second mother chimed in that her son was a lawyer and everyone smiled. The third mother sheepishly stated her son was an accountant. All shrugged and one of the mothers interjected, that's ok, he always was a little slow.

Well, I'm no doctor, but I am a lawyer and an accountant and I still can't explain where or what happened to the mobile workforce legislation we have been promised for so long1. Yet to my surprise, just last month the "Mobile Workforce State Income Tax Simplification Act of 2017" comes barreling down the tracks 2.

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Topics: SALT TALK

SALT TALK: Pennsylvania Tax Amnesty - The I Forgot to Pay Taxes Strategy Works if Timing is Right

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Mar 27, 2017 11:00:00 AM

Who knew the comedian, actor, and musician Steve Martin was also prophetic?  Back in the seventies (sorry again, millennials) Mr. Martin had a plan to be a millionaire and never pay taxes[1].  When the tax man issued a friendly reminder regarding your newly found million, Mr. Martin simply suggested two simple words, “I forgot,” as the remedy to get back on good footing with the government.            

Mr. Martin must have fans at the Pennsylvania Department of Revenue (“Department”).  Their newly issued amnesty program, beginning April 21, 2017 and ending June 19, 2017 (the “Amnesty Period”) is quite generous in scope.  Not only does the program waive penalties on past due taxes, but 50% of the interest as well.  All taxes administered by the Department, whether applicable to individuals or businesses, are eligible.

Eligible taxes include known and unknown delinquencies existing as of December 31, 2015.  Let’s assume a nonresident individual has a PA tax liability unknown to him (or the Department), as long as it is for the tax year ended 2014 or prior (a 2015 delinquency won’t exist until April 2016), amnesty may apply. 

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Topics: SALT TALK

SALT TALK: Inferences, Conclusions, Relationships, and Residency Audit Traps

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Mar 20, 2017 12:50:00 PM

There are two very disparate pursuits in which I have partaken for almost 30 years; marriage and residency audits.  While the burden of proof in relationships and audits may be different, inferences drawn and conclusions reached hastily can be a disaster for both.  While no one knows the rules for lasting relationships, readers of my blog know that many jurisdictions use a two-pronged approach to determining whether an individual taxpayer is a resident for state tax purposes. 

First and foremost is domicile.  With certain exceptions, if an individual is domiciled in a state, they will be a tax resident of a state.  The so-called statutory residency test looks to whether one has a permanent place of abode in the jurisdiction and whether more than 183 days have been spent in the jurisdiction.  I have blogged extensively about the intricacies of these tests and browsing through the previous blogs at http://blogs.berdonllp.com/topic/salt-talk is highly recommended.

While I would love to list some of the inferences to be drawn, conclusions (false or otherwise) reached and relationship consequences thereof, my spouse has strongly advised me to stick to what I know best.  Here are some of the inferences, hasty conclusions, and traps I have heard over the years.

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Topics: SALT TALK

SALT TALK: NYC Taxpayer Gets Favorable REIT Transfer Tax Rate - ALJ Rules Everything is Less Than Zero

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Mar 13, 2017 11:00:00 AM

A recent taxpayer victory[1] related to one of the most onerous taxing schemes, the New York City Real Property Transfer Tax and the New York State Real Estate Transfer Tax (Transfer Tax) provides a light at the end of the tunnel for those of us facing the continued administrative assaults on relatively clear and legitimately enacted tax incentives. 

To encourage additional liquidity in the market, both New York State and City have provisions in place that effectively cut the tax rate in half for transfers to real estate investment trusts (REITs).  Without the incentive, combined tax rates can reach as high as 3.025% of the “consideration paid” for the property.  In addition to the rate reduction, the NYC tax has the added bonus of using the estimated market value (EMV), an amount determined by reference to the NYC real property tax assessment.  This amount is usually significantly less than the actual fair market value of the property.

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Topics: SALT TALK

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