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NY Proposal on Estates, More Time for Portability, Employer Tax Liability

Scott Ditman, CPA/PFS | Marco Svagna, CPA | Saul Brenner, CPA, J.D., LL.M. 03.04.2014 | eVisor
  • Proposed NY Law Changes May Impact Your Estate and Gift Planning
  • More Time to Elect “Portability” of Estate Tax Exclusion
  • Employees Working in Multiple States May Increase Employer Tax Liabilities
  • US Crackdown on Swiss Banks and Insurance Products

NEW YORK STATE TAX

Proposed NY Law Changes May Impact Your Estate and Gift Planning

Part of NY Governor Cuomo’s 2014-15 proposed budget is aimed directly at a key cause of flight from the Empire State — the estate tax. Cuomo proposes to increase the estate tax exclusion from $1 million to $5,250,000, phased in over four years and indexed for inflation afterwards. Going further, the top estate tax rate would drop from 16% to 10% over a 3-year phase-in.

One proposed change is a signal for NY residents with large estates to consider accelerating their gifting plans. The change would increase the gross estate by the amount of any taxable gifts made by a NY resident on or after April 1, 2014. Since NY has no gift tax, these gifts currently escape the state estate tax.

There is a further proposal to tax distributions of accumulated income made on or after June 1, 2014 to NY beneficiaries of nontaxable NY resident trusts and nonresident trusts.

Questions? Contact Scott Ditman at 212.331.7464 | sditman@berdonllp.com or Marco Svagna at 212.331.7644 | msvagna@berdonllp.com.

FEDERAL TAX

More Time to Elect “Portability” of Estate Tax Exclusion

Executors of estates in 2011, 2012 and 2013 who did not file timely estate tax returns have been granted more  time to transfer the deceased spouse’s unused estate tax exclusion to the survivor.¹ This only applies to estates that would not otherwise have had to file timely estate tax returns to make the portability election. The executor will be given until December 31, 2014 to make this “portability” election if it can be established to the IRS’s satisfaction that the executor acted reasonably and in good faith. Previously, the executor would have had to file a “letter ruling request” to obtain an extension of time to make the election.

Questions? Contact Scott Ditman at 212.331.7464 | sditman@berdonllp.com or Marco Svagna at 212.331.7644 | msvagna@berdonllp.com.

1Rev. Proc. 2014-18

Employees Working in Multiple States May Increase Employer Tax Liabilities

Cash hungry states are looking into employees who perform their work in different states as a source of revenue. Employers whose payroll systems are not set up to track, collect and pay the appropriate taxes for employees who travel to multiple jurisdictions may be liable for the tax.

State auditors are more inclined to audit the employer to uncover these revenue opportunities rather than auditing individual employees. It can get complicated. Some states with income taxes have thresholds for money earned and time spent by the employee working in their particular states. Other states tax the employee starting from the first day of travel in the state.

Questions? Contact Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com.

INTERNATIONAL TAX

US Crackdown on Swiss Banks and Insurance Products

The Senate Permanent Subcommittee on Investigations has issued a report alleging that Credit Suisse Group AG has helped more than 20,000 US taxpayers hide billions of dollars in assets offshore. Subcommittee Chairman Carl Levin was disappointed that years of DOJ investigations have netted only 238 names for US authorities and is urging more aggressive action.

Separately, the Justice Department and IRS are looking into US citizens using Swiss insurance products to hide assets. These citizens use private placement life insurance (PPLI) which blends banking and insurance by linking the value of the individual’s policy to assets in a Swiss bank account.

Questions? Contact Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com.

 

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