SALT TALK: The Better Part of Valor is the Discretionary Adjustment

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Dec 3, 2018 11:30:00 AM

Just a few years after William Shakespeare’s death[1], the English Parliament passed the Petition of Right, a major step forward in the history of taxation in that it prevented the Crown from creating new taxes without Parliament’s approval. Had Bill lived just a few more years, he would have witnessed the King’s discretion severely limited. While this limit on discretion was certainly helpful as it related to new and arbitrary taxes, discretionary authority certainly has a place in modern day state taxation, especially when it relates to allocation and apportionment of income.

I’ve blogged many times about and as a Firm have issued more formal publications regarding the current thinking in state apportionment formulas. I’ve explained the traditional three factor method of property, payroll and receipts as compared to the trend towards a single receipts factor. We have discussed the evolution away from a manufacturing to a service economy and as a result the total revamping of sourcing rules as they relate to the performance of services. The technical details and variations are the subject of many an article and treatise.

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SALT TALK: I Don’t Like (Cyber) Mondays

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 26, 2018 11:30:00 AM

The Boomtown Rats second number one single, “I Don’t Like Mondays” released in 1979, obviously has absolutely nothing to do with Cyber Monday, first recognized in 2005. It also has nothing to do with that nagging feeling some of you have after an extended Thanksgiving weekend.

So while my team and I are eager to go this Monday morning, why you ask, don’t we like Cyber Mondays?

The answer lies in the sales and use tax and the payment and collection obligations associated with the two. We started explaining years ago that there are no federal laws banning sales tax related to internet purchases. (In particular, see my January 1, 2013 article, “Marketplace Fairness Act May Help Clear Muddy Tax Waters.”) Many articles and blog posts since have delved into the various legislative proposals since. In addition, as avid Berdon Blog and Evisor readers know, the word is the world has turned upside-down since the Supreme Court decision in Wayfair. (See the June 22, 2018 Client Alert, “Most Impactful State and Local Tax Ruling in More Than 25 Years . . .”)

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SALT TALK:  New Jersey – Pardon Me, Excuse Me, or Give Me Amnesty

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 19, 2018 1:08:03 PM

The timing could not have been any better. New Jersey’s latest holiday gift presents itself as the long anticipated start date for the latest in tax amnesty.

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SALT TALK:  Florida Dyscalculia Proves No Obstacle to Constitutional Amendments

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 12, 2018 11:30:00 AM

I was excited to start writing the blog this morning, until doing a little research on the topic has put me into an anxiety-ridden Monday morning state of mind. Late last week, I was scanning the numerous emails I receive regarding the latest happenings in the world of state and local taxes and something caught my eye.

I found it interesting that Florida is struggling to finalize two major elections, yet managed to pass an amendment to the State Constitution requiring judges in state court and hearing officers in administrative hearings to no longer defer to a government agency’s interpretation of a statute or rule. The ballot measure appeared like this:

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SALT TALK: All Politics Is (State and) Local – Get Out and Vote

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 5, 2018 11:30:00 AM

The catchphrase “all politics is local,” most closely associated with former Speaker of the House, Tip O’Neill, can be and most certainly is interpreted many different ways by many different people. Regardless of the various interpretations, in my opinion the phrase can only have one meaning the day before possibly the most significant election since I have walked the face of this earth; get out and vote.

The phrases’ core meaning was and still means that a politician’s constituents are most likely to vote based on concerns that affect their day-to-day personal lives. While the core still rings true, in many ways the dawn of social media has made it more difficult than ever for us to determine what our elective representatives have done, will do, and plan on doing.

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SALT TALK:  Plan on Winning the $1.6 Billion Mega Millions Jackpot? Better Read this First

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 22, 2018 11:30:00 AM

Fortunately, there were no winners in Saturday’s Mega Millions drawing. Why is this good news, you ask? It means that we all have a chance at Tuesday’s potential prize of $1.6 billion. It also means that we have an extra day to do some state tax planning before tomorrow’s drawing.

State tax planning and the lottery; what does that have to do with me? I buy a ticket, I win, I pay my federal and resident state tax, and I still walk away with a large sum of money, right? Well, yes, but if some states have their way, maybe a little less.

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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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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 ( to commemorate the release of the Notice.

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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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