SALT TALK: NY Residency Fight of the (Next) Decade?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 14, 2019 11:40:00 AM

The year was 2014 and the New York State Court of Appeals breathed life and a lot of common sense into the New York residency wars.  Matter of Gaied v New York State Tax Appeals Tribunal[1] was decided by New York State’s highest court, and it seemed like a new competitor named common sense has finally entered into the residency battles.

As my readers know, there are two ways to be taxed as a resident in New York; either by being domiciled in the State or by being a statutory resident.  The statutory residency test involves a mechanical day-count test (more than 183) and requires the maintenance of a permanent place of abode (“PPA”).  Unfortunately, until the Gaied decision, determining whether one had a PPA was also viewed somewhat mechanically.  To sum up a long line of litigation in one sentence, if you maintained living quarters that were suitable for year-round use, regardless of the use to you as a taxpayer or whether you used the living quarters, you had a PPA.

Read More


SALT TALK: Dismissal of SALT Deduction Lawsuit Guaranteed to be First Year Law Students’ Civil Procedure Final Exam

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 7, 2019 11:33:45 AM

Way back when, July 22, 2019 to be exact, this writer informed his faithful readers of the battle of the Blue States vs. the newly enacted state and local tax cap [I Sue You, You Sue Me, They Sue Us, Here We Go Again].  Most experts predicted the plaintiffs didn’t have a chance and, on September 30, 2019, United States District Judge J. Paul Oetken agreed, by granting the Federal Government’s motion to dismiss the lawsuit[1].

In a thirty-seven-page opinion, Judge Oetken outlines the Plaintiffs’ (New York, Connecticut, Maryland, and New Jersey or the “States”) objections to the Tax Cuts and Jobs Act’s (TCJA) substantial restriction on the deductibility of state and local taxes— a limitation to a maximum of $10,000.

The Opinion begins with a history lesson delving into the financial hardships of the Civil War as well as the creation of the federal tax system in general, and how the SALT deduction was always a mainstay.  Without ever mentioning baseball, Judge Oetken does recognize that the 2017 TCJA “changed the ballgame.”

Read More


SALT TALK: Let’s Chart a Course

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 23, 2019 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?

Read More


SALT TALK: Should I Stay or Should I Go?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 16, 2019 11:35:00 AM

The year was 1971 and it made sense that Robert Plant and Jimmy Page were “Going to California.” Although the highest individual tax rate in California that year was somewhere around ten percent, the decision was much easier since the federal government picked up a large part of the bill. The top marginal federal tax rate was seventy percent. With the benefit of the itemized deduction for state and local taxes, a $10,000 California tax bill now only cost you $3,000. A small price to pay for experiencing the wonders of Hollywood Boulevard.

Ten years later, in 1981, the Clash having the foresight to realize the sacred deduction of residents living in high income tax states may come to an end some thirty or so years in to the future, asked us to consider whether we should start thinking about leaving. Once the feds stop subsidizing the deduction, they so clairvoyantly forecast, it might be time to consider whether you should stay or go.

Read More


SALT TALK: Golf and a Little Bit of Residency Planning, Anyone?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 10, 2019 9:32:54 AM

At Berdon, we do our best to educate our clients about the tax ramifications of their decisions. They know that in most states there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. First, the domicile test. It’s the “touchy-feely” test of what your intentions are and where you intend your home to be. Then there is the arguably more objective statutory resident test. If you have a “permanent place of abode” (a term of art to be discussed some other time) and are “present” (also a term of art to be further explored) in the jurisdiction for more than 183 days, you are a resident.

Read More


SALT TALK: Online Retailers – You’re Not in Kansas Any More

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 3, 2019 11:30:00 AM

Based on the calendar and the devastation of Hurricane Dorian, there is no doubt that we are at the height of hurricane season. Tornado season, I’m told, peaks from about May to July. While prepared, I was surprised that the Kansas Department of Revenue waited until August 1, 2019 to issue Notice 19-04, “Sales Tax Requirements for Retailers Doing Business in Kansas.” 

Virtually every state that has a sales tax has by this time asserted some type of “Wayfair” nexus and sales tax obligation on remote sellers. By overturning the physical presence requirement to impose a sales tax obligation, the U.S. Supreme Court invited the states to impose a sales tax collection obligation on sellers never setting one foot within their borders.

Read More


SALT TALK: You Are What You Eat – How Sales Tax Can Get You in Shape

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 26, 2019 11:30:00 AM

When I was just getting started in the SALT arena, not only were SALT specialists viewed with a modicum of dismay, but if sales and use tax were your focus, most federal tax practitioners wouldn’t be caught within fifty feet of you. That view has radically changed over the last twenty or so years and now SALT specialists, especially those with a focus on sales and use tax, are viewed as champions of the profession.

I can’t completely blame my federal brethren for their misguided views of the past. Who in their right minds would want to specialize in a field where taxability of an item or a transaction turned on some of the (let’s call them) highly technical nuances outlined below:

  • Twix “candy” bars could be subject to sales tax if located in the candy aisle, but exempt from sales tax if located elsewhere in the supermarket (taxable candy vs. nontaxable food);
Read More


SALT TALK: What’s Left Behind

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 19, 2019 2:00:00 PM

This blog has taken me months to write. Thoughts kept spinning in and out of my head. Should I write it? Will it serve a purpose?

We lost a member of the Berdon family a few short months ago. Michael Gelbtuch worked directly for me in the SALT Group. We had just promoted Michael to manager and were looking forward to more great things to come — for him and for Berdon.

I cannot even begin to detail all that I learned from Michael. But the most important of those lessons was clearly the patience he taught me to have with everyone. Whether it be a client, another employee at Berdon, an auditor, or one of my partners, Michael made it his business to listen to all and to understand their point of view.

Read More


SALT TALK: Who Let the Dog Out? – Legislation by Administration Leads to Confusion

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 12, 2019 11:30:00 AM

I’ve never been without a pet and have always considered them to be family members, not tangible personal property. Apparently, the New York State Department of Taxation and Finance agreed with me when they held “[d]og walking is not among these enumerated services subject to sales tax[1].” Yet, less than two years later, the Department growled out another Advisory finding that “pet sitting, which includes dog walking, refreshing cat litter boxes, or providing food to the pets is subject to State and local sales and use tax[2].”

The Department reasoned that “. . . maintaining, servicing or repairing tangible personal property . . .” is an enumerated service and the Regulations clearly define animals to be tangible personal property. Why the sudden shift in opinion? I would like to think it was the Department’s desire to administratively broaden the tax base and not due to any bias against cats[3].

I’ve blogged several times about the Department’s fiasco regarding protective and detective services [June 27, 2016 and March 7, 2016]. It took the Tax Appeals Tribunal to reign in the Department and remind them that receptionists are not trained security guards and their services are not subject to sales tax. Yet, the Department can’t keep its paws off this issue, despite the lack of any law change.

Read More


SALT TALK: Who Needs a Vacation When You Can Take a Sales Tax Holiday?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 5, 2019 11:50:20 AM

There are a countless number of songs about summer holidays; summer vacations, summer romances, the beginning of summer, the end of summer and even rainy summers. Yet I could not find a single song referencing the long awaited once a year sales tax holiday season.

What does a sales tax holiday encompass? Most often the holiday is an annual event occurring just prior to the back to school season, which provides exemptions for popular back to school items such as clothing, school supplies, and the like. While some credit New York for starting the trend back in 1997, the State has jumped off the train some years back and instead lets you “Enjoy a New York State Sales Tax Holiday Every Day on Clothing and Footwear Sold for Less than $110[1].” It should be noted that only New York City and a handful of other counties have opted in, so you might still need to pay a portion of the sales tax.

Read More


About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

Subscribe to Berdon Blogs

Recent Posts