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

Wayne K. 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:  “The Truth Will Set You Free” – New Jersey Amnesty Edition

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 15, 2018 12:00:00 PM

The title of this week’s post is frequently attributed or misattributed to the twentieth President of the United States, James Abraham Garfield (As he pulled it from the Bible). Regardless of who said it first, I find it very relevant as applied to the smorgasbord of voluntary disclosure programs offered by the various state and local taxing jurisdictions. For those of you old enough to remember smorgasbords (current translation is “the cocktail hour”), while many of the offerings seem identical, like the various voluntary disclosure programs, it is essential to be aware of the specifics of what is being offered up.

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Topics: SALT TALK

SALT TALK:  California’s Minimum Franchise Tax – Now One is No Longer the Loneliest Number

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 8, 2018 11:30:00 AM

It was one of those days where I remember exactly where I was and what I was doing. February 28, 2017 is etched forever in my mind as the day the California Franchise Tax Board (“FTB”) released FTB Notice 2017-01. My heart was warmed over (or maybe it was just that it was 58 degrees in New York at the end of February) by the fact that the FTB saw the light and decided to follow the law.

For the uninitiated, California is notorious for grabbing the $800 minimum franchise tax (plus interest and penalties) from unsuspecting “taxpayers” whose only contact with California is a deminimus interest in a partnership or LLC. I outlined the typical scenario in my March 6, 2017 blog (https://blogs.berdonllp.com/salt-talk-california-minimum-franchise-tax-refund-opportunity-may-the-swart-1-be-with-you) to commemorate the release of the Notice.

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Topics: SALT TALK

SALT TALK: Let’s Chart a Course

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 1, 2018 11:30:00 AM

As a kid, I always loved to look at maps and still do. GPS devices of all kinds have eliminated the need to consult with the paper monsters thereby eliminating the required graduate degree in Origami[1] to return the map to its original neatly folded state.  The need to consult a map to get from here to anywhere is gone.

Map lovers do not fret. The paper might be gone from the equation, but the internet provides us with the ability to look at anywhere in the world at any time.

What does any of this have to do with state and local tax, other than this author indulging his sense of humor? Well, in charting a course to a state and local tax planning strategy, some see it as nothing more than a chart. As all practitioners know, we are often asked to boil down complex issues to chart form. With the ability to generate a so-called custom chart from one of the various research services, the temptation and the pressure to chart your course becomes overwhelming at times.

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SALT TALK: World’s Most Expensive Vacation Destinations

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 24, 2018 11:30:00 AM

Regular readers of SALT TALK know that many states and localities follow a similar model in determining whether one will be a tax resident of the jurisdiction and subject to tax on one’s world-wide income. Two tests, domicile or, in the alternative, statutory residency are out to accept your tax dollars.

Focusing on the statutory residency test, if one has a permanent place of abode (a term of art in itself, but for sake of simplicity let’s simply view it for this blog as a place for you to stay that you have unfettered access to) and is present in the jurisdiction for more than 183 days, the test is met (or failed, depending on your perspective) and a resident of the jurisdiction you will be.

I have had more than one potential resident make the statement to me that because I walked down the street in New York City one afternoon that cost me $5 million. My answer: Well, maybe. That one-day putting taxpayers over the edge of the day count can result in one of the most costly strolls ever down Fifth Avenue. Hence the importance of documenting one’s days through some straightforward and not so straightforward documentation techniques.

If you are the paranoid-government-conspiracy-theory-loving-type, this post is not for you. You will cringe at the very thought of the suggestions and ideas contained herein and will insist that I am an integral part of the treachery. For the more practical-minded reader who thinks they may have a residency issue, read on.

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Topics: SALT TALK

SALT TALK:  Losing Interest or Don’t Always Trust Your State K-1

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 17, 2018 11:30:00 AM

As my marketing department knows, SALT TALK is often written at the very last minute.  The reason being is that I like to capture current events, whether that be the latest news or what I am currently experiencing.  Hence the subject of today’s blog.

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SALT TALK:  Rock and Roll and the Internet Never Forget

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 4, 2018 11:55:38 AM

The year was 1977 and the internet was barely a glimmer in a 29 year-old Al Gore’s eyes. (In all fairness, I would like to note that the internet says that the rumors that Al Gore claims to have invented the internet are not true.) Accordingly, even though more than forty years ago Bob Seger knew rock and roll never forgets, we simply could not have contemplated that the internet would not.

I have always told my family and friends, do not post anything on the internet you do not want coming back to haunt you, because it will. (Hence, the proliferation of “fake” Facebook accounts acquired under bizarre aliases by all juniors in High School, about to apply to college.) Although it is often difficult to follow your own advice, I try to as often as possible. Generally, having done so with my blog, I was ecstatic to see that one of my March 2017 posts was quoted in last week’s New York Post. (https://nypost.com/2018/08/28/vornado-preparing-for-20m-tax-showdown-with-city/)

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Topics: SALT TALK

SALT TALK:  Act Immediately - Once In a Lifetime Tax Opportunity?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 28, 2018 2:46:41 PM

Is it too good to be true? Can I really get the best of both worlds? Should I bend over backwards to do this? Maybe I shouldn’t look a gift horse in the mouth. Did the Governor of New York hit the nail on the head in his Sunday Press Release[1] entitled “Governor Cuomo Alerts New Yorkers To Tomorrow Deadline To Make Charitable Donations Before Politically Motivated IRS Regulations Take Effect?”

I am going to cut right to the chase and go out on a limb in telling the Governor, once in a lifetime opportunities that look too good to be true, usually are. Moreover, this was the case here.

The IRS released Proposed Regulations addressing the various state attempts to recharacterize the now limited state and local tax deduction to a charitable contribution. As expected, the IRS came down hard on the attempt and effectively eliminated doubt from anyone’s mind as to the ability to make the conversion.

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Topics: SALT TALK

SALT TALK:  New Internet Taxes and Wayfair?  Don’t Forget the Use Tax

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 20, 2018 11:30:00 AM

Many science fiction adventures have posited the idea of a parallel universe, but to my knowledge, we have not found intelligent life out there yet.  Readers don’t fret.  If you had your heart set on discovering a parallel universe, just take the lead of state government.  Go out and create your own.

The parallel universe created by the states is known as the Use Tax.  The Use Tax is a virtual mirror to the Sales Tax.  It is imposed on the user of goods and services that would be subject to the Sales Tax, but for the fact that the seller or service provider didn’t charge and collect the Sales Tax.

For that new 90-inch TV you just purchased from www.wedon’tchargesalestax.com, your State is looking for you to voluntarily compute the amount that would have been charged as Sales Tax and submit it as Use Tax.  Despite the mistaken belief that internet sales aren’t subject to tax, your State expects you to be a good citizen and hand over what you believed to be your savings.

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Topics: SALT TALK

SALT TALK: Back to School Means Back to Taxes

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 13, 2018 11:30:00 AM

By now, taxpayers with high state tax burdens are all too well aware of the impact the federal Tax Cuts and Jobs Act of 2017 has had in limiting state and local tax deductions to $10,000.  We also know states have been proactive in fighting back.  For example, New York State has gone as far as enacting legislation enabling local governments and school districts to establish charitable funds so that residents can make “contributions” and receive a tax credit towards the local tax obligation.  In other words, through the alchemic magic of the tax law, converting now-capped SALT deductions to much less restricted charitable contributions.

New York State has demonstrated their commitment to make this work and has even established a web link to provide local governments with guidance in setting up the charitable funds[1].  Yet the IRS has been warning of their intention to issue regulations that are likely to undermine the plan.

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Topics: SALT TALK

SALT TALK: Sales Tax Slip-Ups; Back to Basics in the Age of Wayfair

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 6, 2018 11:30:00 AM

Rightfully so, we have all been occupied with the U.S. Supreme Court decision in Wayfair, but that doesn’t mean we should forget about the basics of sales tax planning.  As has always been the case, a simple change in a transaction’s structure or the check of a box (or not) can either be a big money saver or a huge unexpected cost.

Case in point is a recent New York State Advisory Opinion[1]. The Petitioner asks the Department of Taxation and Finance whether the rental of a truck to a customer, where the customer is using the truck for a project performed for an organization that is exempt from sales tax, will require the Petitioner to collect the tax from its customer.  The customer provided the Petitioner with a Contractors Exempt Purchase Certificate and checked box “A” indicating tangible personal property (“TPP”) is purchased for use as part of a project for an organization exempt from tax.

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Topics: SALT TALK

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