New York has published guidance on how it will handle out of state sellers following the Wayfair decision in Notice N-19-1.  The Notice provides:

A business that had no physical presence in New York State but has both made more than $300,000 in sales of tangible personal property delivered in the state and conducted more than 100 sales of tangible personal property delivered in the state in the immediately preceding four sales tax quarters is required to register as a sales tax vendor, and collect and timely remit the applicable state and local sales tax. 1 The sales tax quarters are: March 1 through May 31, June 1 through August 31, September 1 through November 30, and December 1 through February 28/29.

Note that, unlike South Dakota’s requirement to collect the tax if a taxpayer has over $200,000 in sales or 100 transactions, in this case, the seller has to have both $300,000 in sales and more than 100 sales in a year.  However, while New York’s standard is more forgiving here than South Dakota’s, the announcement is not all good news for out of state sellers.

Update (March 22, 2019) - The IRS has now revised this relief to drop the percentage to 80% from the 85% provided in the Notice discussed below. See Special 2018 Underpayment Penalty Relief Expanded to Apply to Those That Paid in At Least 80% of Total Tax Due.

The IRS has announced a somewhat modest waiver of underpayments of 2018 estimated taxes in Notice 2019-11.

Due to changes in the tax law under the Tax Cuts and Jobs Act, the IRS modified the withholding tables and calculations. However, many employees simply used the withholding allowances they had used in the past rather than going through the IRS withholding calculator.  As well, the calculator does not necessary properly take all situations into account.

The US Supreme Court has agreed to look at under what circumstances a state can impose its income tax on a trust by granting certiorari in the case of North Carolina Dept. of Revenue v. Kaestner Family Trust, Case No. 18-457.

Last July the North Carolina Supreme Court decided that the state had no right to impose its income tax on a trust that, while it had a North Carolina beneficiary, was established in New York, did not have a North Carolina trustee and had no property in North Carolina.  (See the prior article on Current Federal Tax Developments that discussed the original case along with another case on state taxation of trusts at Two States Find Their State’s Statutes for Taxing Trusts Violate Due Process Clause.)

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The IRS announced that the agency will reopen the Income Verification Express Program and some user-fee based program (IRS Statement - IRS Reopens IVES, Some Fee-based Programs, www.irs.gov).  These programs had been suspended during the government shutdown.

The IRS statement notes the reasons why the agency is reopening these programs:

While the IRS remains closed during the partial government shutdown, the agency recognizes the immediate hardship incurred if information is not available through the Income Verification Express Service (IVES) program as well as by taxpayers who have been unable to certify their residency in the United States for certain tax treaty benefits or by those who have been unable to obtain photocopies of tax returns.

Photo by Finn Hackshaw on Unsplash

The IRS has issued Notice 2019-9, a 92-page document that gives, in a question and answer format, information on the application of the tax on excess compensation of certain employees of tax-exempt organizations under IRC §4960, added by the Tax Cuts and Jobs Act.

(Modified to add commentary on applicability date of the safe harbor)

In Revenue Procedure 2019-12 the IRS released a set of safe harbor rules that apply to C corporations and certain passthrough entities that receive a state tax credit for amounts paid to organizations qualified under §170(c).

The procedure was issued in response to proposed regulations issued in 2018 that will apply to charitable contributions made by individuals after August 27, 2018. In such cases, an individual must reduce any charitable contribution claimed by any state tax credit received for making the contribution exceeds 15% of the contribution amount.

In the case of Connell v. Commissioner, TC Memo 2018-213, the taxpayer (who was employed by Merrill Lynch) attempted to classify the amount of a loan that was forgiven as part of a Financial Industry Regulatory Authority’s (FINRA) decision in a dispute he had with Merrill Lynch as a capital gain.

The taxpayer had been a financial adviser since 1974.  In 2009 when he discovered that Smith Barney, with whom he was then associated, was going to be acquired by Morgan Stanley, he decided to look for other employment opportunities.  The best offer he received was from Merrill Lynch which he accepted.

In Revenue Procedure 2019-08 the IRS gives information on the following items following the enactment of the Tax Cuts and Jobs Act:

• Qualified real property under IRC §179;

• Alternative depreciation system (ADS) depreciation of real property with the new 30 and 40 year lives; and

• Handling the transition to ADS depreciation for certain property of electing farming and electing real property businesses.