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On January 24, 2019, Governor Phil Murphy signed an executive order creating a Tax Incentives Task Force to investigate fraud and loopholes in New Jersey’s existing tax incentives system and to address monitoring and oversight. This Task Force was authorized after an audit by the state comptroller found “deficient” oversight by the New Jersey Economic Development Authority, which oversaw the $11 billion incentive programs.
On March 28, 2019, the Task Force learned that Jackson Hewitt, the tax preparation firm, first threatened to leave the state and take jobs out of New Jersey to get a $2.8 million state grant and then falsely claimed it was considering moving out of state in order to receive an additional $2.67 million state grant. It had received these grants while it had already committed to relocate to Jersey City. It has also been disclosed that one company agreed to return $1.5 million in tax credits and the Task Force has collected relevant documents from 100 companies and 20 lobbying firms or consultants. If your company might be concerned that the State could interpret or misinterpret its actions as noncompliant with any of the tax incentive programs overseen by the Economic Development Authority, then we are available to guide you through this process. Guest Blog Post Lauren N. Schwimmer is an associate in Flaster Greenberg's Business & Corporate and Aviation Law Departments representing corporations, airports, individuals and financial institutions in a wide variety of matters.
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This article originally ran in the March edition of South Florida Business & Wealth.
It’s no secret that claiming Florida residence has significant tax benefits, compared to most states in the Northeast, as well as other legal benefits. There is no Florida individual income tax or estate tax. With substantial state income tax and potentially a death tax imposed on New York and New Jersey residents, for instance, not being one carries with it major cost savings. Yet becoming a Florida resident for tax purposes while maintaining a place to live in New York is not as easy as many seem to believe. Ask random individuals with New York homes who claim to have changed residence from New York what they did. They will attest to remaining outside of New York for at least 183 days—the majority of a year. Some might say they took the extra steps of getting a Florida driver’s license, registering the car in Florida and voting in Florida. If only it were that easy. There is a significant chance that that taxpayer would lose a New York audit and pay not just the deficient New York tax but also considerable penalties, potentially going back many years. There is a belief that has run rampant through Florida communities that 183 days is some sort of amulet to keep the New York tax man at bay. While it is true that 183 days is an important number for one aspect of residency testing, the common belief has it somewhat backwards: being out of New York 183 days or longer does not assure inoculation from New York tax; rather, being in New York 183-plus days assures being subject to tax. Put another way, one can be taxed by New York even if out of the state 183 days or more. It is helpful to think of the residency test for those with places to live in New York (and no New York business or investment income) as follows:
In its simplest sense, one’s domicile is the place that pulls him or her back, the place one truly considers home, not just the place where he or she currently lives. There is no question this is a subjective inquiry, a journey into one’s mind and heart. However, the tax auditors and the courts cannot claim omniscience. The only way to obtain these insights is to look closely at what one does and the context of one’s life. Where are one’s substantial ties? What are the general habits of one’s life? Auditors and judges look at factors that fall into broad categories in determining if one truly had the intent to change domicile when he or she acquired the home in Florida. These include whether the taxpayer kept the New York home or was actively involved in business in New York; where the taxpayer spends more time; where the items are that the taxpayer considers special; and where other members of the family are. The chances of getting ensnared by an auditor are fairly good. Perhaps a taxpayer will be the lucky one who escapes scrutiny, but to get from New York residency to Florida residency, taxpayers will have to file a nonresident New York income tax return or a partial year resident/nonresident return. Or die. These are audit triggers. And the statute of limitations might never end. There is great value—in terms of tax savings and other legal benefits—in properly and legally establishing Florida residence. And there is great peril is improperly claiming residency away from New York based only on an absence of 183 days or longer. ↵ David S. Neufeld is the resident shareholder in Flaster Greenberg’s Boca Raton office, and is licensed to practice in Florida, New Jersey, New York and Pennsylvania. Reach him at 856.382.2257 or david.neufeld@flastergreenberg.com. Beginning November 15, 2018 and running until January 15, 2019 taxpayers in New Jersey who owe unpaid taxes of almost all types may pay amounts outstanding and avoid penalties and collection fees and will be subject to a reduced interest rate. This amnesty applies to State tax liabilities for tax returns due on or after February 1, 2009 through September 1, 2017. Some restrictions apply. In many cases the State will have already contacted taxpayers by mail with the amnesty offer and detailed instructions. All requests for amnesty must be filed electronically. To apply, log into the Amnesty Processing Center using the Amnesty ID and PIN printed on your amnesty notice. Once you are logged in, you can:
If you have not received a notice and want to submit a payment or file delinquent returns, visit the Non-Outreach Portal by clicking here. Payments should be made electronically through the Amnesty Processing Center by either e-check or credit card. The State will also accept checks, money orders, and cashier’s checks made payable to “State of New Jersey” in the Regional Information Centers. If you have not filed a tax return for any period, file the return(s) without payment before proceeding through amnesty. Once submitted, return to the Amnesty Processing Center to make the payment and complete the amnesty process. Any tax return submitted by mail must be postmarked by January 15, 2019. Any return or payment received after January 15, 2019 will not qualify for tax amnesty. Penalties and collection fees will be reinstated, full interest will be due on remaining balances, and a 5% amnesty penalty will be implemented for all outstanding balances covered by the eligible period. The amnesty penalty cannot be waived or abated. In order for a tax to be eligible for New Jersey tax amnesty, it must be administered and collected by the New Jersey Division of Taxation. This excludes taxes such as local property taxes and payroll taxes owed to the New Jersey Department of Labor. Questions? Let David know. David S. Neufeld is a member of Flaster Greenberg's Taxation, Trusts & Estates and Business and Corporate practice groups. He advises individuals, entrepreneurs and family offices on sophisticated wealth planning (encompassing income tax, estate tax, executive compensation, asset protection, insurance and investment planning) and fiduciary due diligence. He also advises insurance and wealth management institutions on programs, including "private placement life insurance" and captive insurance companies, that deliver cost-efficient risk mitigation along with tax-efficient investment opportunities. He can be reached at david.nefuled@flastergreenberg.com or by calling 856.382.2257. Alan H. Zuckerman, Managing Shareholder of Flaster Greenberg PC, announces the firm’s expansion into Florida with the opening of a satellite office in Boca Raton. The Boca office expands the firm’s footprint beyond the Mid-Atlantic Corridor, and is a representation of the firm’s strategic growth initiative.
“The firm’s growth is fueled by its commitment to client service and the firm’s objective to fully meet the needs of our clients. We identified a need in this locale and concluded that opening a physical office in Boca Raton would be a sound business decision for our firm. Having a presence in southern Florida provides the firm’s attorneys an opportunity to better serve local clients in the areas of trusts and estates and tax planning – clients that include family owned businesses and high net worth individuals -- many of whom split their time between Florida and the northeast,” said Zuckerman. “We are thrilled to now be part of the vibrant South Florida community.” Specifically, services provided out of the Boca office will include state tax residency planning and other income tax planning, estate planning and probate services as well as the ability to represent clients in tax controversies. The firm’s full suite of services, including intellectual property, M&A, litigation, healthcare and cannabis consulting, will now also be more readily accessible to Florida clients. “For many reasons, exacerbated by the recent changes in the tax laws, there has been a consistent migration of high net worth individuals to Florida from New Jersey, Pennsylvania and New York, both seasonal and permanent, and we have as a result developed a large client base in Palm Beach County, Naples and Orlando over the years,” said David S. Neufeld, who will reside part-time in the Boca office. “Our existing clients include those with substantial estates, burgeoning entrepreneurial ventures, successful businesses contemplating sale or succession, and individuals with multiple residences. While the firm has historically serviced these clients from the northeast, we are making access more convenient, thereby enabling us to better meet their needs by being where they are. This also provides a base from which we can deliver to Florida clients the same high quality services for which we have become known in the other jurisdictions in which we practice.” Neufeld, Shareholder in the firm’s Corporate, Tax, and Trusts and Estates Groups, has extensive experience as a tax and estate planning lawyer who, over his 34-year career, has built a sizeable client base in the northeast and Florida. He joined Flaster Greenberg this past June, bringing with him a nationally known tax and estate practice. In addition to its geographic growth, Flaster Greenberg announced earlier this month the addition of an Aviation Practice and the expansion of its Corporate and Real Estate Groups through the hiring of three new attorneys – Daniel Markind, Eric Loi, and Courtney Doloway Zeuner. David Neufeld: "Ask-the-Expert" for WalletHub Article...2018's States Most Affected by Tax Reform4/2/2018
In an article published March 28, 2018 discussing the winners and losers from the 2017 tax reform act WalletHub.com cited to David Neufeld. Click below for the article and the "Ask-the-Expert" quotes.
https://wallethub.com/edu/states-most-affected-by-tax-reform/47861/#ask-the-experts
IRS Wants to Know About Your Captive Insurance Company--What Do You Do? This Analysis Tells You11/8/2016 Click Here for the article that appears in the Leimberg Information Service Inc. (LISI) Newsletter, the predominant subscription resource for the estate planning community.The IRS, on November 1, 2016, issued Notice 2016-66 identifying a specified captive insurance company design qualified under Internal Revenue Code section 831(b) as a “transaction of interest.” As such those captive insurance companies have a disclosure obligation that, if not done or not done properly, can potentially lead to significant penalties. Those taxpayers owning and using any 831(b) captive need to be aware of this obligation to determine if they might be covered by it and, if so, what they need to do now and going forward.
David Neufeld, an estate planning and tax attorney in Princeton, NJ, explains the various practical uses of trusts, including how trusts can be used for asset protection, federal and state estate tax mitigation and ensuring that the right people receive assets, in an interview reported in UBS' online Insights Magazine in an article titled "Use a Trust for the Things You Care About."
https://www.ubs.com/magazines/wma/insights/en/estate-planning/2016/use-a-trust-for-things-you-care-about.html
David Neufeld to address the "Private Placement Life Insurance and Variable Annuities Forum 2016"4/13/2016 I'll be speaking at the "Private Placement Life Insurance and Variable Annuities Forum 2016" in Boston May 17 & 18. If you're interested you can use my 15% speaker discount code FKN2476EMSPKLI or click here: http://www.ppliconference.com/FKN2476EMSPKLI
Let me know that you're going. I was again honored with an invitation to discuss tax law matters on Kurtis Baker's radio program, this time to discuss the issues surrounding the ownership of accounts and assets outside the US. Kurt is the principal at Certified Financial Wealth and Investments in Princeton NJ. Listen here: http://rockwebsystems.com/1077Thebronc/MYF_092015.mp3. David Neufeld (R) with Kurtis Baker On September 18, 2015 I had the honor of speaking about the intricacies of captive insurance companies on a panel in Chicago at the annual Joint meeting of the American Bar Association's Tax Section and RPTE Section. The panel included former IRS Commissioner Steven Miller, Jay Adkisson and panel chair David Slenn, all deeply involved with the cutting edge issues surrounding captives. The audience came away with new insights as this quickly evolving field develops. (L-R) Dave Slenn, David Neufeld, Steven Miller, Jay Adkisson |
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David S. Neufeld, Shareholder, Flaster Greenberg PC
1810 Chapel Avenue West | Cherry Hill, NJ 08002 856.382.2257 | david.neufeld@flastergreenberg.com Internationally Recognized Tax and Estate Planning Attorney |