Berdon Blogs

SALT TALK: Counting Days: The Tax Consequences of Getting Sick

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 5, 2017 10:33:04 AM

For those of you familiar with the comic strip Dilbert, my favorite strip ever involves Dilbert pointing out to his boss that they did an extensive research study and determined that forty percent of sick days are taken on Monday and Friday. (For those of you who don’t have similarly warped senses of humor, Monday and Friday are forty percent of the five day work week.)  While New York doesn’t care what day of the week you are sick, getting ill in New York can have serious consequences for your day count and the statutory residency test.

Read More

Topics: SALT TALK

SALT TALK: Online Marketplace Sellers Highly Incentivized to Say Sorry

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 28, 2017 9:18:00 AM

In the 1970 film “Love Story”, actress Ali McGraw may have immortalized the line “Love means never having to say you’re sorry.”  Many opinions exist whether this is good relationship advice, but I can state with certainty it is bad advice for online marketplace sellers as approximately 28 states have joined with the Multistate Tax Commission (MTC) to offer an extremely generous amnesty program.  The program is in place through October 17, 2017.

Online marketplace sellers are those sellers of merchandise who don’t have their own website or even warehousing infrastructure, but use the likes of Amazon or a similar marketplace to distribute and sell their merchandise.  So while the seller may not have any contacts or nexus in a taxing jurisdiction, the marketplace provider may very well.  States have been successful in attributing the nexus of the marketplace to the seller himself and accordingly attaching all of the sales tax collection obligations and even income franchise tax liability created by the marketplace to the seller.

Read More

Topics: SALT TALK

SALT TALK: Substance or Forlorn; or How I Stopped Worrying and Learned to Love Tax Planning

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 21, 2017 9:21:00 AM

[Readers Note: In conjunction with my firm’s centennial, 1917-2017, this happens to be my 100th blog. Where does the time go?]

Following in the spirit of the 1964 film “Dr. Strangelove” the New York State Department of Taxation and Finance has recognized that perceived anti-abuse legislation is only a deterrent if everyone knows about it. Just this week the Department has issued a Technical Memorandum[1] explaining how legislation effective April 10, 2017 purports to eliminate certain sales and use tax planning techniques perceived to be abusive.

While most other taxing schemes look to interpret the underlying law and regulations so as to put substance over form, sales tax has notoriously been recognized for taking the opposite approach. The simplest example being of two separate businesses having 100% common ownership and one sells taxable services to the other as a valid business reason (liability issues, perhaps) exists to have the employees of the selling entity separate from the recipient of the services. Had the employees of the seller been instead employees of the purchaser, no tax would result for essentially the identical transaction.

Read More

Topics: SALT TALK

SALT TALK: Mayor Proposes Outlaw Motorcycle Gangs Pay for Subway Improvements

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 14, 2017 1:30:57 PM

The August 7, 2017 edition of the New York Magazine blog states “Bill de Blasio is asking one-percenters to save the subways.”  It’s well known that if you see a motorcycle club member wearing a patch that says 1%, you should certainly walk the other way as this is a reference to the statement often made that 99% of all motorcycle club members and riders are law abiding citizens. 

We all know I’m not referring to motorcycle gangs, but once again, New York City is going to the well of one-percenters to resolve its woes.  Just this year, the so called “millionaires tax” which was set to expire, was extended through the end of 2020 leaving New Yorkers with a top rate (not including the almost 4% New York City resident tax) of 8.82%.  The latest proposal seeks to place an additional burden on single taxpayers earning more than $500,000 and couples making over $1 million, by raising the top City rate to 4.4%

Read More

Topics: SALT TALK

SALT TALK: Head in the Clouds?  You Might be Subject to Sales Tax

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Aug 7, 2017 9:30:00 AM

I may want you to get off my cloud, but that just might not be possible like it was back in 1965 when Mick Jagger and Keith Richards urgently begged their listeners to do so[1]. You see, those of you not old enough to remember the days when you had to buy software on tangible media (floppy disk, compact disc, or flash drive) and install it yourself may actually have your head in the clouds and not be aware that many jurisdictions are seeking to tax the cloud equivalent, often referred to as “software as a service (“SAAS”).

Read More

Topics: SALT TALK

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.

Read More

Topics: SALT TALK

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.

Read More

Topics: SALT TALK

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.

Read More

Topics: SALT TALK

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.

Read More

Topics: SALT TALK

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?

Read More

Topics: SALT TALK

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