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President's Message
Welcome New Members
Upcoming Events
Nominating Committee Looking For
Candidates For 2007-2008
Founders Award 2007
Previous Founders Award Winners
NYSSEA Tax Bytes
CURRENT STATE AND LOCAL TAX
DEVELOPMENTS
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Foreign Exchange Rates and
Other Useful Links
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An
electronic publication of the New York State Society of Enrolled Agents
(NYSSEA)
The
mission of the New York State Society of Enrolled Agents is to foster the
professionalism and growth of its Members; to be an advocate of taxpayer
rights; to protect the interests of its Members; and to enhance the role
of the Enrolled Agent among government agencies, other professions and
the public at large, with an emphasis at the state and local levels.
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· President's
Message
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Greetings to everyone!
I sincerely hope everyone had a joyous holiday season and I wish all of you
a great tax season and a prosperous 2007.Our Education and Convention
Committees continued their hard work right after our October convention
with the plans for our October 2007 Convention. Right now the preliminary
plans look like another Super convention. Mark your calendars now.
As my final year as President of NYSSEA continues, I have designated 2007
as “ The Year of the Membership “ where every Enrolled Agent and every
Chapter needs to look around to see who could be a member of NYSSEA but
has not taken the time to join. We need to have new involvement and new
ideas in order for our organization to continue, as it states in our
Strategic Plan, to be THE innovative force in the field of taxation in New York State. That is a very powerful
statement. Approach the EAs you know today to
encourage them to be a part of NYSSEA.
Starting in June, I will be attending the various Chapter meetings
throughout the State to communicate how important membership is to our
Society. I hope to see you at the meetings and am looking forward to
meeting the new members. The best to all of you.
Hope to see you there!
Sincerely, Frank Cornell, EA
President NYSSEA
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· Welcome New
Members
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Daniel Altman-New York, William M. Auty-Gloversville, Fred Baruch-New York, Patrick G.
Cummings-Saratoga Springs, Marjorie A. Deacon-Averill Park, Judith A.
Dixon-Manlius, Eugene A. Dobson-Queens Village, Jeremy M. Fahey-
Endicott, Sal Fassy-Brooklyn, Kevin Fuller-New
York, Amy C. Hass-New York, Kenneth W. Hettwer-
Washingtonville
Angela Jackson-Ithica,
Arlene D. Jordan-Selkirk, Frank Karpicki-Staten
Island, Thomas Kiernan- Cheektowaga, Michael T. McDonough-New York, Glen
Morris-Carmel, Linda S. Paoff-East Syracuse
Susan E. Pizzuta-Watertown,
Homar A. Reyes- New York, Francine
Rick-Williamsville, David B. Robison-Princeton Junction NJ, Shaju Sam-New Hyde Park, Hyacinth Simms-Brooklyn,
Robert W. Smith- Saratoga Springs, Richard C. Thomas-Centereach,
Joseph M. Verdi-N Bellmore, Herbert Waldhauser-
Massapequa, Mason Wristen-Auburn, Karim Zayer- Woodside
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· Upcoming Events
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NYSSEA is joining with the Internal
Revenue Service and Revenue Canada
in presenting 8 hours of CPE on June 26, 2007, in Syracuse, NY.
Topic will be how US and Canadian taxes relate to each other. More
information to come.
Contact Barbara A.
MacDonald, EA
email: BarbMacDon@aol.com
______________________________
CAPITAL CHAPTER RENAISSANCE
On Friday, January 12th, the Capital Chapter held its first meeting in a
number of years. The meeting was made possible through the efforts of
Brenda Quinn, EA who volunteered to organize an effort to revitalize the
dormant chapter.
Attendees were given 2 hours of CPE by Vicki McGinn,
CPA, EA and Bob Nadel, EA covering this year’s
tax changes in preparation for the upcoming tax season.
Those attending the January 12th meeting were: Bruce Allen EA, David Ellers EA, Fred Guilmette
EA, Kathy Harrison EA, Paul Kormony EA, Brenda
Quinn EA, Judy Strauss EA, and James Thomas EA.
Plans for a March 1st meeting are being made. The meeting will be a
“roundtable” to which members can bring questions and problems related to
returns they have on their desks. If you are interested in attending the
March 1st meeting or future meetings of the chapter, please contact
Brenda Quinn at 518 785-1080 or via e-mail at taxbren@aol.com.
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· Nominating
Committee Looking For Candidates For 2007-2008
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Would you like to become involved
with the leadership of NYSSEA?
The Nominating Committee is looking for members who would be interested
in serving on the New York State Society of Enrolled Agents Board of
Directors. There are five officer positions to be filled on an annual
basis: President, First Vice President, Second Vice President, Secretary
and Treasurer. There are also six Directors who serve two-year terms.
Every year we elect members to three of these Director positions.
Please send your nominations
(including yourself) to Sandra Martin, EA Nominating Committee Chair. The
deadline for submitting nominations to the Committee is May 1, 2007.
Please provide the committee with name, telephone number and e-mail
address. Also include the position you would be willing to fill.
If you have any questions, please contact Sandra M. Martin, EA -
585-381-8585 or smartinea@rochester.rr.com
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· Founders Award
2007
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FOUNDERS AWARD NOMINATIONS SOUGHT
The purpose of the Founders Award is to recognize significant leadership
and contributions that have immediate or long-term impact on the growth
and progress of the association. The tenth annual Founders Award was
presented to William Stevenson, EA for his significant contributions to
NYSSEA. The Founders Award will be once again presented at the annual
NYSSEA Convention, which will be held this year in Albany.
The Awards Committee is currently
seeking nominations for 2006. Nominees must meet the following
criteria:
- Nominees must be current members in good standing
- Nominees should be someone who contributed
significantly to the development and growth of NYSSEA
- All Nominees must have been a member of NYSSEA
for at least five years
- The Nominees must have attended at least five
NYSSEA Conventions
- All Nominees are for the current year only.
Send your nominee’s name, address
and the capacity he or she served, as a member of NYSSEA and NAEA. In a
brief Statement, state how NYSSEA has benefited from the nominee’s
efforts. Be sure to include your name and address.
Nominations must be postmarked by
September 15, 2007
and sent to:
Mark J. Cascino, EA
Tax Consulting Services
151 Angelus Drive
Rochester, NY 14622-3141
E-mail: mjctaxco@rochester.rr.com
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· Previous Founders
Award Winners
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1997 - Larry M. Liptscher, EA
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1998 - David J.
Silverman, EA
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1999 - Francis X. Degen, EA
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2000 - Marie
Belvedere, EA
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2001 - Mary E. McGuire, EA
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2002 - Jeffrey R.
Gentner, EA
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2003 - Sharon Ziegler, EA
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2004 - Frank
Cornell, EA
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2005 - Victoria McGinn, CPA/EA
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2006 - William
Stevenson, EA
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· NYSSEA Tax Bytes
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The education committee is going to
be sending out tax tips on a regular basis (hopefully monthly). We are
hoping to send out items of particular interest to NYS, however we are
looking for any tax tips that might be of interest to the general
preparer.
So if you see something of note let us know. Send everything to Don
Rosenberg, EA at Drosenb189@aol.com. Indicate that it is a tax tip in the
subject line so he doesn’t delete it by mistake.
Let’s make this as interesting as possible.
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· CURRENT STATE
AND LOCAL TAX DEVELOPMENTS
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Income Tax: New Rules Apply To
Nonresidents’ Stock Options
The New York Department of Taxation and Finance has released a personal
income tax memorandum announcing new rules applicable to stock options,
restricted stock, and stock appreciation rights received by nonresidents
and part-year residents.
In the recently issued Stuckless decision the
Tax Appeals Tribunal held that the allocation method based on days worked
in and outside New York during the period from date of grant to the date
of exercise, as described in TSB-M-95(3)I, could not be applied as a
general rule. Instead, with respect to compensation related to an option,
the Tribunal rules that Reg. §132.18 generally requires that the days-in-
and-out allocation for the year the option is exercised must be used to
determine the amount that is includable in New York source income.
Accordingly, it is the Department’s position that the following rules are
applicable for tax year 2005 and any prior year for which the statute of
limitations is still open.
For statutory options, non-statutory options that do not have a readily
ascertainable fair market value at the time of the grant, restricted
stock plans where the election under IRC §83(b) has not been made (except
for dividend income related to the stock), and stock appreciation rights,
the general rule is that a full year nonresident uses the day-in-and-out
allocation for the tax year when the options or rights were exercised or
the restricted stock vested (or, if earlier, the year the stock was
sold), as set forth in Reg. §132.18. Under some circumstances, however,
it may be necessary to use an alternate allocation.
For part-year residents, when the compensation is recognized in the
nonresident period, the same rules apply as for nonresidents. If the
compensation is recognized in the resident period, then it must be
included in New York source income as explained in TSB-M-95(3)I.
For non-statutory stock options that have a readily ascertainable market
value at the time of the grant, restricted stock where the IRC §83(b)
election has been made, and dividends related to such strict stock, the
allocation methods, including the alternative method, described in
TSB-M-95(3)I continue to apply for both full-year nonresidents and
part-year residents.
The Department is proposing new regulations concerning the allocation of
compensation related to stock options, restricted stock, and stock
appreciation rights. Future guidance will be issued regarding the
allocation methods for tax year 2006 and subsequent years. (TSB-M-06(7)I,
New York Department of Taxation and Finance, October 12, 2006.)
Income Tax: Tolling Of Statue Of
Limitations Rejected
In a New York personal income tax case involving a taxpayer whose refund
claims were denied as untimely, the taxpayer was not entitled to an
equitable tolling of the statute of limitations. The taxpayer argued that
he was prevented from filing his returns in a timely manner due to
physical and mental illness, but the Tax Law contained no exceptions
allowing for consideration of such individual circumstances. (Ramkissoon,
New York Division of Tax
Appeals, Administrative Law Judge Unit, DTA No. 820310, September 14,
2006.)
Income Tax: Temporary Stay For
Particular Purpose Not Established
Taxpayers were subject to New York
personal income tax as residents, despite the fact that they were
domiciled in Mexico,
because they had a permanent place of abode in New York during the years at issue.
The taxpayers failed to establish that they had maintained their New York
apartments only during a temporary stay and for the accomplishment of a
particular purpose. The Division of Taxation successfully argued that
each of the taxpayers was on a career path with a New York employer and was not simply employed
to accomplish a particular purpose. The fact that the taxpayers filed as New York residents
for three earlier years also demonstrated that their stay was not
temporary in nature. (Legorreta, New York
Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 820536,
November 13, 2006.)
Income Tax: Fixed Dollar Minimum
Tax Exemption Explained
The New York Department of Taxation and Finance has issued a corporate
franchise tax memorandum explaining the fixed dollar minimum tax exemption
that is available to certain domestic business corporations for taxable
years beginning after 2005. The exemption will apply to a domestic
corporation that is no longer doing business, employing capital, or
owning or leasing property in New York, provided that the corporation has
no outstanding Article 9-A franchise taxes for its final tax year, or any
prior tax year, and has filed an Article 9-A franchise tax return
(original or amended) that has the “final return” box checked.
A domestic corporation that meets all these criteria will no longer need
to file any additional franchise tax returns for taxable years or periods
occurring after the period covered by the final return. After filing its
final return, the domestic corporation can seek consent to be dissolved.
A qualifying domestic corporation that does not voluntarily dissolve will
be subject to dissolution by proclamation after it has not filed
franchise tax returns for at least two years.
A domestic corporation that ceases to do business, employ capital, and
own or lease property in New
York but wishes to retain its certificate of
incorporation must continue to file Article 9-A franchise tax returns and
pay the applicable tax.
The memorandum provides a number of examples illustrating the application
of the exemption. )TSB-M- 06(5)C, Technical Services Bureau, Taxpayer
Services Division, New York
Department of Taxation and Finance, August 30, 2006.)
S & U Tax: Certificate Of
Authority To Collect Tax Properly Refused
The New York Division of Taxation properly refused to issue the taxpayer
a certificate of authority to collect sales tax because she had an
outstanding liability based on her previously having been the owner and
sole proprietor of a grocery store. An individual who conducted business
as a sole proprietor was a “person required to collect sales tax.” Thus,
the taxpayer was personally liable for the grocery store’s unpaid sales
tax. On exception, the taxpayer’s argument dealt with the issue of her
mistake in judgement. However, the taxpayer’s
circumstances did not warrant that she be absolved of her
responsibilities as set forth under the tax law. Therefore, the
determination of the administrative law judge was affirmed. (Womble,
New York Division of Tax
Appeals Tribunal, DTA No. 821130, August 17, 2006.)
S & U Tax: Delicatessen’s
Estimated Taxable Sales Determined
A delicatessen that failed to produce sufficient sales records was
assessed New York
sales tax based on an auditor’s use of a database of observation tests
conducted of other delicatessens in the neighborhood. This audit method
was reasonable because the taxpayer was no longer operating its
delicatessen when the auditor made his field audit visit. However, the
Division of Taxation was directed to include one more delicatessen from
the database when calculating average daily taxable sales so that all
eight neighborhood delicatessens were utilized. In addition, the Division
was directed to treat only 40% of the above calculation as representing
the taxable sales of the taxpayer to account for the smaller size of the
taxpayer’s operation. (636 Deli, Inc., New York Division of Tax Appeals,
Administrative Law Judge Unit, DTA No. 820412, August 24, 2006.)
Income Tax: Divorcee Denied
Pension, Annuity Exclusion
It was proper for the New York Division of taxation to disallow the
pension or annuity income exclusion claimed by a taxpayer on her personal
income tax returns because the taxpayer’s interest in the income resulted
from the dissolution of her marriage, rather from personal services that
she performed before retirement pursuant to an employer-employee
relationship. The taxpayer argued that the provisions of the IRC placed
her in the same position of her former husband, the plan participant, but
that argument was rejected. The taxpayer failed to meet her burden to
demonstrate that she came within the reach of the exclusion. (Lewis, New
York Division of Tax Appeals, Small Claims, DTA
No. 820779, September 14, 2006.)
Property Tax: Absentee Landlord
Surcharge Eliminated
The New York City absentee landlord property tax surcharge imposed on
certain class 1 properties is reduced to 0%. Formerly, the surcharge was
equal to 25% of net real property taxes. (NYC Intro. No. 391, Laws 2006,
effective retroactively to July 1, 2006.)
Misc. Taxes: NYC Addback Required For Payments To Retired Partners
For New York City
unincorporated business tax purposes, a partnership’s payments to retired
partners had to be added back to unincorporated business taxable income
because they constituted payment for services.
Despite a provision in the partnership agreement that no payments would
be made to a partner for goodwill, the partnership argued that the
payments were, in fact, for goodwill rather than for services. However,
that argument was rejected because it would be inappropriate to permit
the partnership to disavow the inescapable tax consequences of the
deliberate contractual language in the agreement. Further, even if the
contract provision was reformed to reflect the fact that the payments
were for goodwill, the partnership would not be entitled to deduct the
payments for federal income tax purposes and would lose the New York City
deduction claimed, without regard to the addback
provision.
In addition, the partnership’s contributions to retirement plans for the
benefit of its partners had to be added back. The payments to the plan
were made as compensation for services performed by the partners, and it
was inconsequential that the payments were not made directly to the
partners. Finally, with respect to the partnership’s contributions to an
IRC §401(k) plan, the addback modification in
question was not preempted by the Federal Employee Retirement Income
Security Act of 1974 (ERISA). (Proskauer Rose
LLP, New York City
Tax Appeals Tribunal, Administrative Law Judge Division, TAT(H)
01-19(UB), July 11, 2006.)
Multiple Taxes: Transfer To Nursing
Home Not A Domicile Change
The admittance of a taxpayer’s wife to a nursing home in New York would not cause the wife to be considered
a resident for New York
personal income tax purposes because days spent in a nursing facility do
not count for purposes of the 183-day domicile rule. In addition, the
wife’s admittance to a nursing home in New York would not cause her to be
considered a resident for estate tax purposes because she does not
possess sufficient mental capacity to effectuate a change of domicile
either at the time of the admission or afterwards. (TSB-A-06 (6)I,
TSB-A-06(4)M, New York Commissioner of Taxation and Finance, August 28,
2006.)
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