About This Blog
Noonan’s Notes Blog is written by a team of Hodgson Russ tax attorneys led by the blog’s namesake, Tim Noonan. Noonan’s Notes Blog regularly provides analysis of and commentary on developments in the world of New York and multistate tax law. Noonan's Notes Blog is a winner of CreditDonkey's Best Tax Blogs Award 2017.
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Timothy Noonan
Brandon Bourg
Mario Caito
Ariele Doolittle
Joseph Endres
Daniel Kelly
Elizabeth Pascal
Emma Savino
Joseph Tantillo
Craig Reilly
Andrew Wright
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Day Count Relief from the IRS: Is New York Listening?
The COVID-19 crisis continues to throw off a variety of tax questions and issues that 60 days ago likely would have been unimaginable. In an article we published this month in Tax Notes State, we talked about different types of New York residency and income allocation issues that could arise as a result of shutdown or travel-related restrictions put in place by state governments. A couple of those issues involved some of the strict day counting requirements that arise under New York’s residency rules. For example, the statutory residency test limit certain taxpayers to spending 183 days in New York. Also, the 548-day rule, which is a special safe harbor available to protect certain taxpayers from New York residency taxation, requires that a taxpayer spend 450 days in a foreign country over the course of a 548-day period and also limits the taxpayer’s presence in New York to 90 days. In both cases, we know of taxpayers who will fail these tests in 2020 because of travel-related restrictions.
Comment
New Tax Department Guidance on Digital Signatures in the COVID-19 Era
As taxpayers begin adjusting to these strange times, it seems the NYS Tax Department is trying to do the same. The Department just issued guidance in Notice N-20-3 which temporarily allows taxpayers and their appointed representatives to use digital signatures on various tax forms. This comes on the heels of last week’s Executor Order 202.15 from New York’s Governor Andrew Cuomo, which authorized the Department to “accept digital signatures in lieu of handwritten signatures on documents related to the determination or collection of tax liability” until May 9, 2020, but then punted to the Department to hammer out the logistics and issue appropriate guidance.
Hodgson Russ Client Alert Repost: COVID-19 Federal, State and Local Tax Employer Relief Efforts Update
The unprecedented COVID-19 pandemic has triggered a wide variety of relief efforts from the Federal, state, and local governments. This update will provide insight into several of these relief efforts, and discuss the effect they might have on employers coping with the impact of the Coronavirus on their business operations. Hodgson Russ recently published a State and Local Tax Alert reviewing these developments.
Coronavirus/COVID-19 Update from the NYS Division of Tax Appeals
The NYS Division of Tax Appeals updated its website this morning regarding the agency’s operations.
New Jersey Enacts Pass-Through Entity SALT Cap
The “workaround train” keeps rolling! A New Jersey bill to give small businesses and partnerships a way to diminish the impact of the federal cap on state and local tax deductions (the SALT cap) was signed into law on January 13, 2020 by Governor Phil Murphy (D). The bill (S-3246/A-4807) gives S corporations, limited liability corporations and other business partnerships the option of paying state income tax directly at the entity level, as a business tax rather than at the partner level, as personal income tax. The bill is effective for tax years beginning on or after January 1, 2020 and creates a business alternative income tax (BAIT). As we’ve outlined in the past, the play here arises because while the Tax Cuts and Jobs Act (TCJA) capped federal deductions for state and local tax at $10,000 for individuals, it set no limit on deductions for state and local taxes paid by businesses.
Democratic House Passes Short-term SALT Cap Repeal Bill
Employees nationwide are working to finish year-end business before the holidays and House Democrats are no exception. The U.S. House of Representatives voted 218 to 206 on December 19 to pass H.R. 5377 (the “bill”) which temporarily repeals the SALT deduction cap for 2020 and 2021.
States File Appeal in SALT Cap Litigation
A week or so ago, New York Governor Andrew M. Cuomo and New York Attorney General Letitia James announced that New York, Connecticut, Maryland and New Jersey filed a notice of appeal in the United States Court of Appeals for the Second Circuit to continue litigation against the federal government for its unlawful and unprecedented cap on the deduction for state and local taxes, known as SALT. The SALT deduction was capped at $10,000 as part of President Trump’s Tax Cuts and Jobs Act of 2017 (TCJA). This appeal challenges a September 30, 2019 ruling by Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York stating that the $10,000 SALT deduction cap is not unconstitutionally coercive. Judge Oetken held that the states had not plausibly alleged that the cap meaningfully constrains their decision-making processes. We covered the ruling here. He denied the states' motion for summary judgment in their original suit, State of New York et al v. Mnuchin. The four states argued that the SALT cap is a politically motivated bid to effectively raise property taxes in predominately Democratic states.
Leave the Attorneys & Accountants Out of It: Minnesota Department of Revenue Tweaks Domicile Rules for Individual Income Tax Purposes
Just an observation from the cheap seats about a recent notice issued by the Minnesota Department of Revenue (DOR) (Revenue Notice No. 19-05, referred to as Notice 19-05). This notice clarifies that neither the DOR nor the courts can consider the location of the individual's attorney, CPA, financial adviser, or the place of business of a financial institution where the individual opened or maintained an account for purposes of establishing whether an individual is domiciled in the state.
Another New York False Claims Case in the News
Late last week, New York’s Attorney General Letitia James filed a Superseding Complaint against a photo and video equipment retailer, B&H Foto & Electronics Corp., in New York County Supreme Court. The Superseding Complaint alleges various violations by the retailer under New York State’s Tax Law, False Claims Act, and the Executive Law, spanning the past two decades. A whistleblower actually filed the qui tam civil suit under seal in early 2016, after which New York State was given time to investigate the matter. But it wasn’t until just recently that the Attorney General’s office notified the court of its decision to supersede the whistleblower’s complaint and, in doing so, converted the whistleblower’s complaint into a civil enforcement action by the Attorney General.
Is the Pied-à-Terre Tax Coming Back?
They say that history repeats itself. After seven months of explaining that the proposed pied-à-terre tax did not pass April 1, 2019 as part of New York State Governor Andrew Cuomo’s final budget bill, according to a recent Bloomberg article, the idea of charging a pied-à-terre tax is once again being discussed in political and real estate circles in New York City. Although not actually included in the Governor’s original budget proposal last year, there was much buzz around a potential real property pied-à-terre tax on non-primary residences located in New York City with a market value of $5 million or more. The Senate and Assembly budget proposals included such taxes with tax rates ranging from 0.5% to 4% on properties valued at $25 million or more.
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