Berdon Blogs

SALT TALK: Take My Tax . . . Please (California)

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jul 31, 2017 9:15:00 AM

I’ve addressed real estate transfer tax traps before (February 21, 2017, July 11, 2016, October 12, 2015, October 5, 2015) and the concept of the controlling interest transfer. Simply put, state real property transfer taxes used to be simple; if you transferred title to the property, the tax applied.  Life got more complicated and taxpayers got smarter.  What about the sale of a business that owns real property?  If the buyer were to purchase the existing business entity, the deed stays in the name of the existing business and no transfer tax would apply.  Clever property owners came up with the idea to put the property in a special purpose entity specifically to hold title to the property they wished to sell.  The buyer would purchase the entity, real property and all.  Under the old simplistic transfer tax statutes the tax wouldn’t apply.

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SALT TALK: Remote Sellers - Cry Uncle, Not Wolf?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jul 24, 2017 9:24:00 AM

Some of my readers may have thought that I was crying wolf as far back as February 29, 2016 and again on May 8, 2017 as well as October 24, 2016.  As it turns out, I wasn’t and now just might be the time we have to face the music.  You see dear readers, as of July 1, Colorado is now enforcing the infamous “tattle-tale” rule enacted almost seven years ago.

I’m not sure if Colorado was Connecticut’s inspiration, but rumor has it that Connecticut has been recently sending demand letters to remote sellers (sellers with no place of business or other connection with the State, other than its customers) requesting that the remote seller either register for and collect and remit Connecticut sales tax or provide to the Department of Revenue Services (“DRS”) a list of Connecticut customer names, addresses, items purchased, quantities sold and amounts paid.  Apparently DRS wasn’t crying wolf as a press release was issued back in March indicating this was in the works.

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SALT TALK: Traps In Transactions:  To Bulk Up or Not?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jul 17, 2017 11:40:00 AM

I have lost count as to the number of times I have received a panicked call (from non-clients, of course) days before a transaction is about to close. The question is often the same; “What’s all this noise I hear about the bulk sales tax?”

Well, the good news is there is no additional tax added to the sale of a business or all of its assets. The bad news, however, is that states have a bulk sales notification requirement and the rules are as diverse as the states themselves.

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SALT TALK: Texas Issues New Specialty License Plate for Complying with State Tax Law

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jul 10, 2017 9:19:00 AM

Well, not really. But if you go to the Texas DMV website you will see they have over 452 different types of specialty license plates to choose from. (55 are discontinued)  So upon receiving a “no change” letter for a recently completed Texas audit, which in addition to informing me that my client had no additional tax liability, I was awestruck by the following additional language:

Let me commend you for your diligent and successful efforts to comply with the applicable Texas law. The manner in which you have handled your obligations helps make each tax dollar go further in paying for the essential services provided by state government. I also want to thank you for the cooperation and courtesy extended to my auditor during the audit.

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SALT TALK: The Founding Fathers Never Envisioned an “Internet Tax”

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jul 5, 2017 11:41:00 AM

John Adams, Benjamin Franklin, Alexander Hamilton, John Jay, Thomas Jefferson, James Madison, George Washington, Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams . . . We didn’t start the fire, nor did the federal government start an internet tax this week.

It’s confusing. I used to get almost daily calls from clients, friends, potential clients and even Mom (although I still don’t believe she has ever made a purchase on the internet) insisting that the federal government banned internet taxes. The calls have decreased dramatically, after having explained for years that what the “government” prohibited was the imposition of any new taxes on internet access. Access meaning the actual service provided by the old beeping phone modems or the flashing lights of your fiber optic access point. It’s all about the connection(s).

So when President Trump tweeted on July 28th that “. . . Amazon not paying internet taxes (which they should) . . .” I was very concerned. Was the President, confused like Mom and mistaking the Internet Tax Freedom Act, which banned any new taxes on internet access, with the obligation internet merchants may or may not have to collect sales tax from their customers?

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SALT TALK: Love vs. the Tax Department – Love Wins Round One

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jun 26, 2017 11:41:00 AM

They[1] say love conquers all.  While that has been my experience, I’m not so sure it is an effective tax planning tool. That is until I read the recent New York State Administrative Law Judge (ALJ) decision, In the Matter of the Petition of Stephen C. Patrick.[2] I had another topic in mind for this week’s blog, but just had to push it aside once I realized the great lawyering[3] that won this case.

You really should read the case. The facts read like a true love story years in the making. While I won’t delve into the details here, the taxpayers were both high school sweethearts who both went their separate ways. They both married others and had established families of their own.  Many years later they were reunited.

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SALT TALK: Are You a Visionary?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jun 19, 2017 11:40:00 AM

Girl Scout Cookies, Converse All-Stars (aka, Chuck Taylors), the World Book Encyclopedia, and Berdon LLP are all turning 100 years old in 2017.  While I can’t say if the first 100 years have gone quickly, I can certainly say my almost 22 years at Berdon have gone by in the blink of an eye. In fact they have gone by in some respects much quicker than the first 100 days of 2017.

Like the 101 year old 100 meter sprinter from India, Man Kaur, who won the Gold Medal at the World Masters Games in Auckland New Zealand this year, we at Berdon like to view this milestone as a new beginning and see no signs of slowing down. As always, we look ahead. 

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SALT TALK:  I Read the (State Tax) News Today, Oh Boy

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jun 12, 2017 9:20:00 AM

I read the state tax news every day. Fifty states, numerous localities and the thirst for revenue practically insures that Berdon will need me when I’m sixty four and beyond. Well, I just had to laugh when I read that the Beatles’ Sgt. Pepper’s Lonely Hearts Club Band album turned fifty years old last week.

I asked several colleagues if I may inquire discretely as to their views and experiences as to the current state of state taxation for nonresident athletes and entertainers. While some said, nothing changed, it’s all the same, and others commented that it’s getting better all the time.

Well, it is Friday morning at 9:00 and “Lucy in the Sky with Diamonds” is playing in the background. I’m reminded somehow of the Berdon tagline Listen, Solve, Do and am inspired to do just that. 

Even though virtually all jurisdictions have addressed the issue of withholding income taxes from nonresident entertainers and athletes performing or playing in the jurisdiction, some are still taking the attitude that it really doesn’t matter if I’m wrong or right and either simply going along with the jurisdictions general rules or ignoring requirements all together.

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SALT TALK:  “I Wanna Be a Lifeguard” – But Not in New York

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on May 30, 2017 10:33:00 AM

Memorial Day has come and gone.  Visions of the beach are swirling through my head and memories from my high school and college summers take over and surmount any state tax concerns I may have at the moment.  I had the second best job in the world (SALT Partner at Berdon being number one) back in those days.  I was a lifeguard.

Not one of those muscle-bound Jones Beach types, but at a day camp, where I made lots and lots of extra money giving swim lessons after the camp day was done.  Since one hundred percent of my income was disposable in those days (thanks Mom and Dad) I had more money to go around than I do now.  A typical day consisted of getting to the pool early, commiserating about our previous night out, teaching bright eager minds to swim (to this day, I still bump into doctors, lawyers, accountants, engineers, school teachers and the like, who I taught to do so) and listening to the hit song by the Band Blotto, “I Wanna Be a Lifeguard” over and over.

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SALT TALK:  States Look to Lessons Learned In Fairy Tales to Maintain Sales Tax Base

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on May 22, 2017 7:00:00 AM

Anyone remotely familiar with sales and use tax, regardless of the state and locality, knows the first and most basic lesson you learn is the tax applies to tangible personal property (“TPP”) and enumerated services.  Of course, a myriad of exceptions and exemptions apply to the taxation of TPP, but a service needs to be specifically mentioned by the taxing scheme (or the law as we sometimes like to refer to it) in order for the tax to attach itself.

We are now seventeen years into the twenty first century and even my Mom knows Egghead Software closed its last retail location in 1998 because no one buys those floppy discs anymore.  While I know most of you don’t miss the floppy (or even know what it is), the state sales tax base certainly does since “canned” (non-custom) computer software is taxable as TPP in virtually every jurisdiction I can think of.  Software as a service (SAAS) has largely replaced the actual physical ownership of code or floppy discs and the states no longer knew how to impose the tax.  Is the software still TPP or is the software vendor now simply providing a service—which as we all know, needs to be specifically enumerated in order for sales tax to apply.

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