On April 14, 2011, the New York Department of Taxation & Finance (the "Department") issued a new policy under which certain limited partners and limited liability company members will be provided relief from per se personal liability as a responsible person under the New York sales and use tax law (the "Tax Law"). TSB-M-11(6)S. The policy was effective March 9, 2011.
Under the Tax Law, a responsible person includes any partner of a partnership or member of a limited liability company regardless of whether the partner or member is under a duty to act on behalf of the business. The Tax Law imposes joint and several personal liability for the payment of sales tax on responsible persons of a business with an outstanding sales tax liability. As such, the Department can use a responsible person's personal assets to satisfy the sales tax liability of the business even if the business is a corporation or a limited liability company.
The Department's new policy provides relief for a limited partner of a limited partnership and a limited liability company member with less than a 50% interest who can demonstrate that he or she was not under a duty to act in complying with the Tax Law on behalf of the limited partnership or limited liability company. In addition, the limited partner or limited liability company member must cooperate with the Department in providing information regarding the business. A person who qualifies for relief will not be responsible for any penalty owed by the business, and such an individual's sales tax liability will be limited to his or her percentage of ownership or share of profits and losses in the business.
The policy includes the following example: An LLC owes $10,000 of sales tax and interest. Member X is a 4% passive member of the LLC and receives 4% of the profits and losses of the LLC. Member X has also been assessed the $10,000 on the grounds that member X is a responsible person of the LLC. If qualified for relief, member X would be expected to pay $400 ($10,000 x 4%) to settle his or her responsible person liability.
Dina Kapur Sanna and Carl A. Merino co-authored an article, "Long Arm of the Law: The Risk to U.S. Practitioners of Prosecution for Facilitating Foreign Tax Offenses," (subscription required) in the June 2017 issue of Trusts & Estates Magazine.
On June 15, Dina Kapur Sanna and Carl A. Merino moderated a discussion panel at the Cambridge International Wealth Advisors Forum 2.0 held in Lisbon about the role of wealth advisors as "gatekeepers" to the financial system and measures being implemented by different jurisdictions to combat money laundering and tax evasion, including obligations imposed on lawyers and other advisors.
Angela Titus McEwan and Stacey Valentine Fielding authored an article for Bloomberg BNA's Daily Tax Report entitled "A Death Sentence for the Federal Estate Tax? States Watching Closely," in which they considered the repeal to the Federal Estate Tax and how it may impact, if at all, individual states.
On May 25, Dina Sanna and Carl Merino were panelists at an event hosted by Citco.
Day Pitney Alert
Von Sanborn was featured in an article, "Five Questions: Von Sanborn on Art Law, Insurance and the IRS," published in the Connecticut Law Tribune.
Stephen Ziobrowski was quoted in an article, "How Bermudians can be exposed to US taxes," in The Royal Gazette. The article is a recap of an International Tax and Planning Seminar at an AFL Investment sponsored event held in May 2016, in which Ziobrowski participated.
Stephen Ziobrowski was quoted in an article, "10 states millionaires might be fleeing," in LifeHealthPro. In the article, Ziobrowski discusses how several states—including Massachusetts—are considering raising their taxes on their wealthiest residents. He says that the concern with taxing the wealthy is that it causes them to leave.
Stephen Ziobrowski was quoted in an article, "7 Tips For Simplifying Tax Writing," in Law360. The article outlines best practices for tax lawyers to draft contracts and court documents. "Tax law is a foreign language, so you have to do some translation if you’re putting it into written documents," said Ziobrowski in the article. "If you’re aiming for a particular tax result in a transaction, it won’t do any good to have all the right magic words on the document and then people don’t understand what they’re supposed to do."
Chris Stracco was quoted in an article,"Will Veto Spark Litigation Over Nonprofit Hospitals' Tax Status?" in New Jersey Law Journal. In the article, Stracco discusses Governor Chris Christie's veto of S3299 in connection to the controversial New Jersey Tax Court decision of AHS Hospital v. Morristown. Stracco says the decision in the case, in which Morristown Memorial Hospital lost its tax-exempt status because it had for-profit business attributes, is unique. Given that case's uniqueness, he expects that the ruling and Christie's veto of S3299 will not likely result in a flood of nonprofit hospitals being hit with tax bills and suits to challenge them.