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New York Tax Update. Mark S. Klein, Esq. Hodgson Russ LLP 1540 Broadway, 24 th Floor New York, NY 10036 Phone: (716 ) 848-1411 Fax : ( 716) 819-4624 mklein@hodgsonruss.com. New Legislation. A. StartUp New York Beginning in 2014

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new york tax update

New York Tax Update

Mark S. Klein, Esq.

Hodgson Russ LLP

1540 Broadway, 24th Floor

New York, NY 10036

Phone: (716) 848-1411

Fax: (716) 819-4624

mklein@hodgsonruss.com

new legislation
New Legislation
  • A. StartUp New York
        • Beginning in 2014
        • No corporate, personal, real estate or sales taxes
        • College and university related
        • For new businesses/new jobs
        • Not for retailers or personal service businesses
new legislation con t
New Legislation (con’t.)
  • B. Family Tax Credit
        • $350
        • Incomes of $40,000 to $300,000
        • One or more dependent children under 17
new legislation con t2
New Legislation (con’t.)
  • Charitable contribution limitation extended
  • Small business tax reduction
  • 3.25% rate for Manufacturers
  • Royalty “loophole” closer
  • Credit for hiring vets
  • Minimum wage credit
new legislation con t3
New Legislation (con’t.)
  • New collections initiatives
  • NYC co-op/condo tax abatement
  • Marriage equality and DOMA
  • MCTMT update
tax reform and fairness commission
Tax Reform And Fairness Commission
  • Hurricane Sandy residency relief
  • LLC responsible officer rules
  • Limiting a permanent place of abode to a dwelling located within 50 miles of work.
  • Resident trust exemption.
  • Like-Kind Exchanges
  • Reform and integration of corporate and bank taxes
  • NYC revenue raising options
compliance and enforcement
Compliance and Enforcement
  • New compliance measures
  • New reporting obligations
  • New York wants a “CISS”
  • Whistleblowers
  • Increased criminal investigations
fish in a barrel
“Fish in a Barrel”
  • Hot Buttons
        • Corp v. sales tax revenue
        • Licensed professionals
        • NYC residents with Sch. C income
        • Visiting executives
        • Taxable percentage always the same
        • Data mismatches
        • Still looking at CPAs!
fish in a barrel con t
“Fish in a Barrel” (con’t.)
  • Investigations
      • Interviews
          • Doormen
          • Parking attendants
          • Return preparers
      • Cross References
      • U.S. Customs
      • Speeding and parking tickets
  • Ask, call, subpoena
  • Voluntary disclosure?
administrative update
Administrative Update
  • BCMS
    • 7,000 cases
    • 75% agreement
    • 67% resolved within six months
  • ALJ
      • 11-month backlog
  • Judicial Court
franchise tax update
Franchise Tax Update
  • Decombination initiative
  • NYC resident problem
  • Sourcing of income
  • Dormant businesses
withholding t axes
Withholding Taxes
  • 14-day safe harbor – for employers
  • Look at nonresidents
  • Deferred compensation
  • Interest and penalties – even if all tax paid!
  • How do you prove a negative? SeeSuburban Restoration (3d Dep’t. 2002).
investment tax credit
Investment Tax Credit
  • Even for a building
  • You don’t have to sell what you make
  • A “true” lease eliminates all credits
personal income tax update
Personal Income Tax Update
  • Entities that own real property (50% threshold)
  • Anti-“Baum” legislation- retroactive to 2007
  • Anti-PC or -PA legislation for nonresident partners
  • College Incentive – qualifies for “Double Dipping”
residency
Residency
  • Why do we care?
  • Domicile or by statute
  • “Leave and Land”
  • When did you “move” or “change” your domicile?
  • Explain the “change”
  • Who proves what?
slide17

How Money Walks

How Money Walks by Travis H. Brown

Reprinted with permission.

residency con t
Residency (con’t.)
  • Statutory Residence
      • 183 days and a permanent place of abode (PPA)
      • What is a “day”?
      • Proof
      • Exceptions
        • Travel
        • In-Patient
slide19
PPA
  • Physical Attributes
    • Suitable for year -round living
    • Not mere camp or cottage
  • Relationship
    • Ownership/property rights
    • Maintenance
      • Monetary contributions
      • Contributions in kind to the household (furniture, food, etc.)
      • Payment of bills
    • Relationship to co-inhabitants
    • Registration for governmental/business services (mail, voting, car, phone)
    • Personal items
    • Access

Cases: Gaied BarkerKnight

top ten errors
Top Ten Errors
  • Nobody moves on January 1
  • Statutory residence trumps domicile
  • Never amend a return under audit
  • The “Living Quarters” box
  • Consistency!
  • Credits for taxes paid elsewhere
  • Don’t let client “chat” with auditors
  • Correct W-2s, 1099s and K-1s with New York address
  • Don’t start an audit with an offer to settle
  • Understand the burden of proof
domicile primary factors
Domicile – Primary Factors
  • Home
      • Bigger, better, more valuable
      • Watch out for “STAR” and IRC § 121 issues
  • Business
      • Limited to active involvement
      • Location of business headquarters, your office, assistant, etc.
domicile primary factors con t
Domicile – Primary Factors (con’t.)
  • Time
      • Not 183-day rule!
      • Domicile day count
  • Near and Dear
      • Where is your teddy bear,
      • Safe deposit box,
      • And insured and other “valuables”?
      • Moving vans v. storage
domicile
Domicile
  • Family Factor
      • Most spouses share their domicile
      • Minor children can be critical
  • Other Factors
      • Checklist items – nice but not determinative
      • Parking tax exemption
  • 548- and 30-day rules
taxation of n onresidents
Taxation of Nonresidents
  • Wages (including “convenience” rule)
  • Business and flow-through income
  • Sales of NY property (Ittleson). Is New York location temporary?
  • Accrual rule (a cruel rule)
top 10 1 2 sales tax audit issues
Top 101/2 Sales Tax Audit Issues
  • Cloud computing
      • Is it a license of software?
      • Is it a an information service?
      • Is it the electronic delivery of other tangible property?
      • Remember allocation and overlapping audit rules.
  • Catering rules
  • Interior decorating/design fees
  • Cheeseboard consultants
  • Bulk sales rules
top 10 1 2 sales tax audit issues con t
Top 101/2 Sales Tax Audit issues (con’t.)
  • Cash businesses
  • Intra-business transactions
  • Delivery and storage fees
  • Sales to New Yorkers – delivered out of State
  • Contractors

10½. Pole dancing developments

nuts and bolts of a sales tax audit
Nuts and Bolts of a Sales Tax Audit
  • Expenses – recurring test or stat sample
  • Sales – guest checks - test?
      • Reconcile to corporate return and bank deposits
  • Capital – usually in detail
      • Reconcile to depreciation schedule
audit questions
Audit questions
  • Where to hold audit
  • Responsible officer questionnaire (special statute of limitations)
  • Access to information
  • Consent to extend
  • Consent to test period
  • Exemption certificate issues
thank you
Thank You

Mark S. Klein, Esq.

Hodgson Russ LLP

1540 Broadway, 24th Floor

New York, NY 10036

Phone: (716) 848-1411

Fax: (716) 819-4624

mklein@hodgsonruss.com