State Tax Issues

Limited Liability?

Many individual taxpayers who invest in a closely held business, including one organized as a corporation, fail to appreciate there are circumstances in which they may be held personally liable by a state or local taxing authority for the sales tax collected or required to be collected by the business.

In other words, if certain criteria are satisfied, the limited liability protection that an individual shareholder would normally enjoy as a matter of state corporate law, and which they may have assumed – not unreasonably – would shield them from personal responsibility for any and all liabilities of the corporation, including taxes, will be of no avail even where the shareholder has respected the separate legal status of the corporation.[i]
Continue Reading Shareholder Beware: Personal Liability for N.Y. Sales Tax

The 2023 Budget

Last week, the New York Legislature passed the State’s 2022-2023 Budget. The $220 billion Budget reflects an $8 billion increase over last year’s budget (a more than 3 percent jump). It is also $4 billion more than what the Governor had initially proposed. In fact, it is the largest spending bill ever to have been enacted by Albany.

I suppose the explanation is obvious: bolstered by still unspent Federal stimulus money[i] and better than expected tax revenues, the Governor and the Legislature decided to be especially generous to their constituents during this election year.[ii]
Continue Reading The Deduction of Cannabis Business Expenses Following New York’s 2023 Budget

“Yes” to Art, “No” to Tax

Private patronage of the arts. For centuries, artists, museums, and galleries have depended, in no small part, upon the largesse of wealthy families.

Today, as in the past, many of these benefactors are the successful owners or former owners of businesses who can afford to indulge their passion for visual art.[i] Others are investors for whom art represents merely one part of a balanced portfolio.

Continue Reading The Rental of Art Between Related Parties: Applying the Resale Exclusion to the N.Y. Sales Tax

Taxes and Snowy Weather?

How many of you awoke Saturday to find that the winter storm about which we had heard so much during the preceding days had lived up to its hype?

What was your first thought? “Fudge,” right? Time to shovel the driveway and clean off the car. Slippery sidewalks and roads. Ultimately, slush.

A few of you may have mused aloud about moving to Florida, perhaps oblivious to the cold that visited that state over the weekend.[i]

I’ll admit that I immediately wondered whether some enterprising individuals would show up, armed with the latest in snow removal technology, to offer their services.

Which brings me to another confession: I tried to recall whether snow removal services were subject to New York sales tax. A quick check and, “sugar” – turns out they are.[ii]
Continue Reading The Liquidation of a Partner’s Interest Under NYC’s Unincorporated Business Tax

Goodbye New York

Late last year, the U.S. Census Bureau released data showing population shifts across the country during 2021.[i] According to this information, New York lost 1.8 percent of its population.[ii]

It appears New York’s experience was not an isolated case. In a report issued earlier this month, the Tax Foundation – relying not only upon the Census Bureau’s data but also upon the data sets of some major moving companies – concluded that “[t]he picture painted by this population shift is a clear one of people leaving high-tax, high-cost states for lower-tax, lower-cost alternatives.”[iii]
Continue Reading Leaving New York – But What About One’s New York Business?

According to Justice Learned Hand, “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Stated differently, taxpayers have the right to pay only the amount of tax legally due.

Having said that, taxpayers have, over the years, demonstrated varying degrees of aversion to their tax obligations – especially in high-tax states like New York. Those New York taxpayers who are willing to “roll the dice” are hopefully aware of the associated audit risk, but many of them may be ignorant of the exposure they face from New York’s False Claims Act.

Continue Reading Thinking About ‘Avoiding’ NY Tax Increases? Then Think About the False Claims Act

Are the rich making enough of a contribution to society? Are they bearing their fair share of taxes? Many New York legislators don’t think so.

Following the elections of November 2020, the State’s Democratic party secured a veto-proof supermajority not only in the Assembly, but also in the Senate.[i] This development was significant because, until then, the State’s chief executive, Governor Cuomo – ironically, also a Democrat – had been the major obstacle standing in the way of tax increases on the State’s businesses and on its wealthier residents.

Continue Reading New York is Poised for Some Significant Tax Increases