New York State Tax Update - University at Buffalo · New York State Tax Update Mark S. Klein, Esq....
21
New York State Tax Update Mark S. Klein, Esq. Hodgson Russ LLP 140 Pearl Street Buffalo, New York 14202 [email protected] Phone: (716) 848-1411 Fax: (716) 819-4624 Copyright © 2016
Transcript of New York State Tax Update - University at Buffalo · New York State Tax Update Mark S. Klein, Esq....
New York State Tax Update
Mark S. Klein, Esq.Hodgson Russ LLP
140 Pearl StreetBuffalo, New York 14202
[email protected]: (716) 848-1411
Fax: (716) 819-4624
Copyright © 2016
2016-17 BUDGET BILL
Income tax rates reduced (ish)
NY charitable giving won’t affect domicile
Business credits extended
E-filing mandate continues
2
CORPORATE TAX REFORM
$1,000,000 NY sales threshold
Market-based sourcing
Exempt investment income limited to stocks held over one year
8% limitation on investment income exemption
Special rules for pre-2015 NOLs
Mandatory combined reporting (50% ownership test)
Special NYC rules
3
ESTATE TAX CHANGES
Rates Exclusion phase-out Gift “tax” GST gone No portability New calculation for nonresidents Trust changes
4
WHAT DIDN’T PASS
Expand sales tax collection requirements to marketplace vendors
Disregard SMLLCs for sales tax purchases Disallow related party leases Eliminate the sales tax exemption for contributions of
property to new ventures Reduce the tax liability threshold to $5,000 to suspend
a taxpayer’s driver’s license Like-kind exchanges under IRC § 1031 – still the best
loophole in New York! Limited sales tax liability for LLC owners
5
COMPLIANCE AND ENFORCEMENT
Whistleblowers
New compliance measures
New reporting obligations
New York wants a “CISS”
Increased criminal investigations
CARP
6
“FISH IN A BARREL”
Hot Buttons for 2016-17• Corp v. sales tax revenue• Art Gallery sales and use• NYC residents with Sch. C income (BOD members, too!)• “No” Box• Visiting executives• Cash/credit ratio seems off• Used automobile registration • Facebook
Return preparer penalties - $1K/return – no reasonable belief$5K/return – reckless disregard
Voluntary Disclosure
Offers in compromise
7
PERSONAL INCOME TAX TAKE-AWAYS
Move out of NYC before the closing.
Avoid permanent place of abode (PPA) rules with brokerage agreement.
Does statutory residence trump domicile?
Keep an eye on Wynne
8
RESIDENCY
Why do we care?
• Income tax• 17 states still impose an estate or inheritance tax
Domicile or by statute
“Leave and Land”
When did you “move” or “change” your domicile?
Explain the “change”
Who proves what?
9
RESIDENCY (CON’T.)
Statutory Residence• 183 days and a permanent place of abode (PPA)
• What is a “day”?
• Proof
• Exceptions
− Travel− In-Patient
Gaied/Barker/Sobotka
Campaniello – failure to check the box is negligence
10
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.
11
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
12
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
13
TOP TEN RESIDENCY ERRORS1. Nobody moves on January 1
2. Statutory residence trumps domicile
3. The “Living Quarters” box
4. Consistency!
5. Husbands and wives usually share a domicile
6. Correct W-2s, 1099s and K-1s with old address
7. Don’t let client “chat” with auditors
8. Credits for taxes paid elsewhere
9. Understand the burden of proof
10. Never amend a return under audit
14
TAXATION OF NONRESIDENTS
Wages (including “convenience” rule)
Business and flow-through income
Post retirement remuneration
Sales of property (see, e.g. Ittleson). Is location temporary?
Accrual rule (a cruel rule)
Withholding audits
15
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
16
AUDIT QUESTIONS
Where to hold audit
Responsible officer questionnaire (special statute of limitations)
Access to information
Consent to extend
Statute of Limitations
Consent to test period
Penalties
Exemption certificate issues
FOIL!!
17
TOP TEN SALES TAX AUDIT ISSUES
1. Cloud computing
• Is it a license of software?• Is it a an information service? – RetailData and
Wegmans• Is it the electronic delivery of other tangible property?• Remember allocation and overlapping audit rules.
2. Cheeseboard consultants
3. Catering rules
4. Bulk sales rules (derivative liability)
18
5. Contractors
6. Sales to residents – use tax
7. Substitute of assets in a Trust
8. Art Galleries
9. Cash businesses
10. Boats
TOP TEN SALES TAX AUDIT ISSUES (CON’T.)
19
ADMINISTRATIVE UPDATE
BCMS
• 7,000 cases
• 75% agreement
• 67% resolved within six months
• 88% consent rate
ALJ
• 11-month backlog TAT
Article 78
20
THANK YOU
Mark S. Klein, Esq.Hodgson Russ LLP
140 Pearl StreetBuffalo, New York 14202
Phone: (716) 848-1411Fax: (716) 819-4624
