Now in the heart of tax season, we are reminded about many of New York’s tax credits and deductions still available to taxpayers despite federal deductions being eliminated with the passage of the Tax Cuts and Jobs Act (TCJA) in December 2017. Over the past year, there has been a flurry of activity as New York legislative bodies and federal regulations drafters have offered up various SALT “workarounds,” to deal with the $10,000 SALT cap. But recent reporting out of the New York budget office (from New York State Comptroller Thomas P. DiNapoli’s February 27 report on the proposed executive fiscal budget for 2020 (the “Report”) (see page 25-26)) suggests that these workarounds aren’t really working.
A few months ago, we wrote about the recent guidance that the Tax Department issued about itemized deduction decoupling (TSB-M-18(6)). The guidance addresses New York State’s decoupling from the federal treatment of deductions for individuals, but it was not initially clear whether these changes also apply to trusts and estates.
As reported here last month, a recent purchase of a $238 million apartment in New York City has re-sparked a debate among New York officials about taxing second homes owned by nonresidents. As New York’s lawmakers look to finalize a budget by April 1st, and to find new ways to fund New York City’s subway system, the pied-a-terre tax is viewed as a new quill in the arsenal. (The Assembly Budget Proposal is A. 2009-B).
Public relations firms often advise clients to release controversial or negative news late in the day on Friday. People are less likely to pay attention to such news over the weekend and by the time Monday rolls around, the news cycle has typically moved on. That might have been what the New York State Department of Taxation and Finance had in mind when, at 4:39 PM on Friday, March 9th, it released its first sales tax advisory opinion of the year. In TSB-A-19(1)S, the Tax Department announced for the first time that an online marketplace can be held liable for the sales tax due on transactions that the marketplace facilitated. In other words, the Tax Department can hold both the individual vendor using the marketplace infrastructure and the marketplace itself liable for tax due on sales made through the marketplace. This is a dramatic, and we anticipate controversial, change in Tax Department policy.
This article originally appeared in Law360 and is reprinted with permission.
The past month was a busy one for New York tax updates, but don't worry, we have the highlights, and, as always, we're delivering the month's news in a way that's made for New Yorkers. Fast.