Tax Liaisons Meet with State Officials

Tax Liaisons Meet with State Officials
Committee Discusses Tax Changes and Ideas for the Future

By Patricia P. Galley

Recently, I had the honor to attend a tax liaison meeting in Albany. At this meeting, New York state tax officials updated representatives from various organizations about current or proposed changes in tax law, and addressed systematic problems and concerns that have been brought to their attention. It would be impractical to review everything discussed, so I’ve highlighted what I feel would be of most interest to everyone.

1. The budget bill had the following items (the full bill can be found by going to www.senate.state.ny.us):

A. Changes in collection after notice and demand:

21 calendar days for amounts equal to or greater than $100,000.

10 business days for amounts less than $100,000.

The formal prepayment hearing is no longer available.

B. Sales of co-ops that were previously treated as a sale of intangible property will in 2004 be treated as a gain on the sale of shares of a co-op (residential property):

For nonresidents of NYS, requires remittance for tax within 15 days of delivery of shares.

C. Changes to estate tax:

Repeals article 10 of the tax law.

Current article 26 postpones the date interest is due for estates on or after Feb. 1, 2000.

Amends the formula used to calculate resident and nonresident estate tax

D. Empire Zones have been extended to March 31, 2005.

E. The NYC Earned Income Credit is a refundable credit against New York City tax of 5% of the NYS Earned Income Credit.

2. New tax forms:

A. IT-2664 (co-op sales). Form is to be sent to the tax department with estimated tax on form TP-584 within 15 days of the transaction. Effective for transactions on or after Nov. 18, 2004.

B. IT-248 (film credit)

3. The long-term care insurance credit has been increased from 10% to 20% of premiums paid.

4. Forms redesign program (proposals):

A. Eliminate form IT-100 and IT-200 and replace with form IT-150.

B. Convert two-page form IT-201 to a four-page form. Itemized deductions would be incorporated into the main body of the form and no longer need a separate attachment.

5. Higher LLC fees expire at the end of Dec. 31, 2004. Smaller fees will still apply and will be due by Jan. 30, 2005.

6. New York State Tax Commissioner Andrew Eristoff discussed the following issues:

A. The main strategy objective of the tax department is voluntary compliance enhancement.

B. New audit guidelines for nonresidents (includes 14-day diminitus rule).

C. Tax shelters: a multistate application vehicle to share information across states and with the IRS.

D. Electronic filing: looking at making electronic filing mandatory for tax practitioners.

E. Streamline sales tax project: New York state has not yet conformed to the unified sales tax laws. Waiting for legislation pending in Congress that would overturn the Quill decision.

7. Sales tax:

A. Working to increase voluntary disclosure. Usually have around 300 cases; would like to increase to 400 cases. The department will work with taxpayers to have penalties abated.

B. Voluntary disclosure process is administered by the audit department. If a client wants to participate, contact Peter Bazar, Room 333, Building 9, WA Harriman Campus, Albany, NY 12227.

C. New sales tax vendors should not register for sales tax any earlier than 90 days before starting business.

8. Brownfields Credits (effective April 1, 2005):

A. New tax credit for developers:

Remediation credit.

Real estate taxes.

Redevelopment credit.

B. To get credits, the developer must be a party to a Brownsfield clean-up project with the Department of Environmental Conservation (DEC).

C. To take credit, the developer needs a “Certificate of Completion” from the DEC.

D. Credit can also be taken on tangible personal property with a life of four years or more.

E. 150 new zones; most are located on Long Island.

9. To dissolve a corporation, call 1-800-EASY-OUT.

The tax liaison meeting is held once a year in Albany. Questions are forwarded in advance by tax practitioners and addressed at the meeting. If anyone has any issues during the current year or suggestions that they would like addressed at the next meeting, to be held in September 2005, please e-mail me at pgalley@dopkins.com.

Patricia P. Galley, CPA, Dopkins and Company LLP, Williamsville, N.Y., is a former chair of the Buffalo Chapter’s Cooperation with Educational Institutions Committee.