Sales and Use Tax as it Applies to Information Services and Bundling
Parsing out what services or bundles may require the collection of sales tax in New York is a complicated endeavor. Many times, the mere inclusion of a single taxable item in a bundle of otherwise sales tax-exempt items results in the entire bundle being subject to the collection of sales tax. Read More….
Harris Chesworth Partner Ted O’Brien Named Head of Rochester Regional Office of NYS Attorney General
All of us at Harris Chesworth join the community in congratulating our colleague, former State Senator Ted O’Brien, upon his appointment to be the new Assistant Attorney General-In-Charge of the Rochester Regional Office of the NYS Attorney General. In this new role, Assistant Attorney General-in-Charge O’Brien will oversee an office that serves the Greater Rochester Region, including on matters related to consumer frauds and public advocacy litigation. Ted follows in the footsteps of partner Eugene Welch, who held the position from 1979-1995.
Harris, Chesworth, O’Brien, which henceforth will be known as Harris Chesworth, Johnstone & Welch, LLP, is a general practice firm with a commitment to listening, attentively; advising, objectively and acting, strategically to further our clients’ mutually agreed upon best interests. With our diverse backgrounds and involvement in government and private practice, we bring our depth of knowledge, common sense and varied experiences to bear on your legal concerns and business decisions. Our attorneys have a wide variety of legal experience in business, banking and finance, estate planning and administration, employment law, environmental matters, aspects of litigation of all types, municipal affairs, real estate, taxation and finance planning.
Ted’s clients should be very confident that they will continue to be well-represented by other attorneys in the firm who worked side by side with Ted, and share his values and professionalism.
“Ted O’Brien brings a wealth of knowledge and experience to our office and he has proven himself to be a first-rate public servant,” said Attorney General Eric Schneiderman. “I am confident that Ted O’Brien will continue to show the same commitment to legal excellence and equal justice under law that he has demonstrated throughout an accomplished career. I am pleased to have him in this important leadership role on our team.”
Prior to serving in the New York State Senate, O’Brien was a founding partner of a law firm, Harris, Chesworth, O’Brien, Johnstone and Welch LLP, founded in 1993. O’Brien was also a member of the Monroe County Legislature from 2004-2012, rising to become the Minority Leader. Most recently he served in the New York State Senate representing the 55th District.
Major Overhaul of New York Estate Tax
Governor Andrew Cuomo has signed into law sweeping changes to the New York estate tax law, effective as of April 1, 2014.
The threshold for taxable estates required to file New York estate tax returns has now increased to $2,062,500 from $1 million. This exemption amount will increase again every year until January 1, 2019, when it will equal the threshold for estates required to file Federal estate tax returns.
The gradual changes being phased in to the New York estate tax are as follows:
Date of Death Exemption Amount Loss of Exemption Amount
4/1/14-3/31/15 $2,062,500 $2,165,625
4/1/15-3/31/16 $3,125,000 $3,281,250
4/1/16-3/31/17 $4,187,500 $4,396,875
4/1/17-12/31/18 $5,250,000 $5,512,500
1/1/19 – Federal amount Federal amount plus 5%
While the new law will gradually eliminate the requirement to file New York estate tax returns for most estates, the change in the law is not all good news for larger estates. If the taxable estate exceeds the exemption amount by five percent, no exemption will be allowed and the New York estate tax must be computed on the full value of the taxable estate. The effect of this phase-out is to tax amounts in excess of the exemption amount at exorbitant marginal tax rates, sometimes in excess of 100 percent!
For example, an estate of $2,062,500 is not subject to New York estate tax because it is fully covered by the exemption amount, but a taxable estate of $2,165,625, which is 105 percent of the $2,062,500 exemption amount, does not receive the benefit of any exemption and is subject to New York estate tax of $112,050. The second taxable estate is only $103,125 more than the first one, so the marginal tax rate on the excess over the exemption amount is 108.65 percent (112,050 ÷ 103,125 = 108.65 percent)!
Another feature of the new law is to require taxable gifts made by a decedent within three years of death to be included in the taxable estate.
The new law allows a New York Qualified Terminable Interest Property (QTIP) election, similar to that available under the Federal estate tax laws, but unlike the Federal law it does not enable a surviving spouse to take advantage of a deceased spouse’s unused exemption amount, commonly referred to as “portability.”
There are additional changes in the new law, and existing estate plans will need to be reviewed to determine whether changes are appropriate in light of the New York estate tax overhaul. If you believe that the new law may affect you, please contact us to review your estate plan. (download pdf)
Municipal Liability – Defending Police Officers and Deputies
Defending police officers and deputies just got harder. As you know our office defends civil rights suits brought against police officers and deputies. A recent Second Circuit ruling has changed some of the long standing precedent that held a claimant couldn’t sue for a civil rights violation if he was convicted or pled guilty. Poventud v. City of New York , ___ 750 F.3d 121 ___ , 2014 WL 182313 (Second Circuit , January 16, 2014). The en banc decision ruled that the claimant can still bring a civil rights claim against the police for allegedly hiding evidence favorable to Mr. Poventud in his criminal case even though he pleaded guilty to a lesser included offense.
There is language in this new Second Circuit decision that suggests a Brady violation is still actionable even if the defendant is guilty. The court suggested that Mr. Poventud’s guilty plea shows that his alibi evidence was perjured but even so he can sue the police for violating his civil rights for not disclosing in his first trial that the victim identified someone else and not Mr. Poventud.
Mr. Poventud was tried, offered an alibi, convicted and appealed. He served nine years in jail. The conviction was reversed. He then pleaded guilty to a lesser included offense to get a sentence of time served. He got out of jail and then brought this Civil Rights lawsuit. The Second Circuit Court of Appeals has now ruled that he can.
Call me if you would like to discuss how this case might impact your case, Gene Welch 585-899-1458.
Highlights of American Taxpayer Relief Ac of 2012
by Jeffrey M. Johnstone, Esq.
Income Tax Relief for Low and Moderate Income Individuals
The recently enacted American Taxpayer Relief Act of 2012 has extended the Bush personal income tax rates for individuals with income up to $400,000 and couples with incomes up to $450,000. The 15 percent long-term capital gains and qualified dividend rates will continue to apply to individuals and couples below the $400,000/$450,000 income threshold.
For individuals and couples with incomes above the threshold amounts, the top personal income tax rate will rise from 35 percent to 39.6 percent. The long-term capital gains and qualified dividend rates for these higher-income individuals and couples will now rise from 15 percent to 20 percent.
The Act also “permanently patched” the AMT.
Payroll Tax “Holiday” is Not Extended
The Act did not extend the two percentage point reduction in Social Security tax that has been in effect for the past two years. This means that the employee portion of Social Security payroll taxes has reverted to 6.2 percent from the 4.2 percent rate in effect during the “holiday.”
Estate and Gift Tax Relief
The Act extends the inflation-adjusted tax exclusion of $5 million for estate and gift tax and a $5 million exemption for generation skipping transfer tax. It also makes permanent the portability of unused exclusion amounts between spouses. However, the highest tax rate for these taxes has increased from 35 to 40 percent.
The Act also extended a number of popular individual, business and energy tax provisions.
To learn about other provisions of the Act and discuss how the new tax law affects you, please contact Ted O’Brien at (585) 899-1414. (download pdf)
Protect Yourself With Supplemental Uninsured Motorist Coverage (download pdf)
Calling the Ethics Cops (download pdf)
Warrants in Brockport Upheld (download pdf)
A Big Data Approach to Formulary Apportionment, Jason W. Klimek, Esq. Journal of Corporate Tax, Issue: May/June 2014
The APPS Act and how it will impact your privacy, February 11, 2013.
FCC taking up the fight against unlocked cell phone?, March 4, 2013.
Verizon refused to change its stance on Google Wallet, April 30, 2013.
Government surveillance: they’re watching you…but is it legal?,
June 13, 2013.
Judge Issues Preliminary Injunction on NSA metadata collection, but what does that mean?, December 18, 2013.