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Changing Nexus Rules: What you need to know

How can states increase revenue without raising taxes? The answer is to create new taxpayers. Many states have created new taxpayers by expanding the reach of their nexus laws. This means making laws that require companies physically located in other states to either pay their state’s taxes or collect their state’s sales tax. This is referred to as economic nexus as opposed to physical nexus. Continue reading Changing Nexus Rules: What you need to know

New York Sales Tax Audits: Are Test Period Agreements Binding?

This article originally appeared in the January 2016 TaxStringer and is reprinted with permission from the New York State Society of Certified Public Accountants.

There are many different types of sales tax audits. Audits of cash businesses, which are often closely-held or family-owned businesses that lack internal controls, are very common. In these audits, records are sometimes incomplete or, as the state audit division would say, “inadequate.” An auditor may then employ an indirect method to determine if the reported sales are correct; this could be based on a physical observation of the business, counting actual sales for a full day, or calculating sales using ratio analysis. Continue reading New York Sales Tax Audits: Are Test Period Agreements Binding?

Massachusetts Tax Amnesty

The Massachusetts Department of Revenue is providing a Tax Amnesty program effective April 1, 2016 and it will run through May 31, 2016 for qualifying taxpayers. All tax types are included, except for Preferred Provider excise and taxes covered under the International Fuels Tax Agreement (IFTA ).

Amnesty is available to both businesses and individuals, who have not yet registered or filed a tax return or who has underreported tax on a previously filed return for any tax return that was due on or before December 31, 2015. This is for taxes due of which the state of Massachusetts is not yet aware. This amnesty program does not cover existing tax liabilities. If you already have an existing liability determined by the state of Massachusetts, amnesty will not apply to that liability. Continue reading Massachusetts Tax Amnesty

New York State and New York City Business Allocation: What Has Changed, and What Has Not

This article originally appeared in the November 2015 TaxStringer and is reprinted with permission from the New York State Society of Certified Public Accountants.

In the past few years, there have been vast changes to the landscape of corporate allocation in the world of state and local taxes. For example, we have seen New York follow some other states into the realm of economic nexus, where nexus (i.e. filing responsibilities) could be based solely on sales in a particular state rather than on the old test of physical presence. This is effective for tax years beginning on or after January 1, 2015. Continue reading New York State and New York City Business Allocation: What Has Changed, and What Has Not

Cleveland Can’t Win on the Football Field, or in Tax Court

The City of Cleveland took two football players involved with two separate cases before the Ohio Supreme Court in order to try to collect tax on a portion of their earnings based on games played in Cleveland.

The City of Cleveland requires non-resident professional athletes to allocate part of their salary to Cleveland based on the percentage of the total games their team plays in Cleveland. If there are 20 games (including pre-season) and there is just one game played in Cleveland, the allocation would be 1/20 of the player’s salary. Continue reading Cleveland Can’t Win on the Football Field, or in Tax Court

New York Residency: Splitting Hairs

In one of the oddest Advisory Opinions I’ve seen in a while, a petitioner asks if he is a resident of New York City or Yonkers. Doesn’t he know where he lives? He only has one residence. Petitioner’s address is in The Bronx, so what is the problem?

The petitioner’s property straddles the Bronx/Yonkers border. The front yard of the house is in the Bronx. The actual house structure is sitting on land on the Yonkers side of the border line. The petitioner pays property taxes to both New York City and Westchester County for the respective portions of the property in each jurisdiction. Continue reading New York Residency: Splitting Hairs

New residency case: Matter of Sobotka, or can you be a part-year statutory resident?

An important matter was addressed in a recent New York tax hearing in front of an Administrative Law Judge (ALJ). The issue being: Can someone be domiciled in New York for part of a year, and be a statutory resident for the other part of the year?

For a quick recap on residency, someone is domiciled in New York if their primary residence is in New York. A statutory resident is someone that is not domiciled in New York, but has a residence in New York and spends more than 183 days in New York during the year. Continue reading New residency case: Matter of Sobotka, or can you be a part-year statutory resident?

New Exemption from Use Tax for Alcoholic Beverage Tasting

What is Use Tax?

Usually, when a vendor sells you a product, they collect sales tax from you. When you purchase goods out of state from a vendor with no connection to New York, they are not required to charge or collect New York State Sales Tax. The most common instance of this is when you order goods from an out of state vendor to be delivered to you in New York. When these goods arrive in New York at your business or home, you owe the sales tax directly to New York. In this case, because you are the purchaser and you are “using” the goods in New York, the technical term for this tax is “Use Tax.” Continue reading New Exemption from Use Tax for Alcoholic Beverage Tasting

Republic Airport in East Farmingdale added as Start-Up New York Facility

Start-Up New York is a program that began last year to take advantage of unused land owned by the State of New York. The program is intended to promote job creation by transforming vacant sites into tax-free communities for new businesses across the state. The tax benefits include, in most cases, zero tax for ten years for both the new business and the employees that work there. They hope to attract high-tech and other start-ups, venture capital and other new business and investments from across the world. Excluded from this program are retail and wholesale businesses, restaurants, professional firms and hotels. Continue reading Republic Airport in East Farmingdale added as Start-Up New York Facility

Miscellaneous Updates to New York Sales Tax Law: New for 2015

Solar Energy

Currently, the purchase of solar equipment is exempt from sales tax. The laws of 2015 also exempt solar-generated electricity from state sales tax, with an option for localities. These changes take effect on December 1, 2015.

Sales Tax Cap on Boats

The laws of 2015 exempt the portion of the purchase or lease price of a vessel that exceeds $230,000. Therefore, sales tax must be paid on boats up to the purchase amount of $230,000. The cost in excess of that amount is exempt. Continue reading Miscellaneous Updates to New York Sales Tax Law: New for 2015