New York Is Open for Boating: A Sales and Use Tax Update

Fourth of July has come and gone. This year, nonresidents (more on this later) who brought a new boat to New York for the first time were hit with a breath of fresh air—and I’m not talking about the fresh air from [insert any of New York’s many boater-friendly bodies of water]. In years past, nonresidents who purchased a boat outside of New York and later brought that boat into New York were hit with full New York use tax on the purchase price or fair market value of that boat. As part of its 2015 budget, the New York State Legislature amended the sales and use tax rules applicable to boats.

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The Buzz on the Medical Marijuana Excise Tax

In a few short years, marijuana has gone from being widely regarded as an illicit drug to being legalized for medical purposes in 23 states and for recreational purposes in four states – with others expected to follow suit in short order. New York State jumped on the bandwagon last year with the enactment of the Compassionate Care Act (the Act), a highly-regulated medical marijuana program. In fact, the Department of Health is currently accepting applications from would-be “registered organizations” (ROs) aspiring to be among the five ROs to receive the department’s blessing to cultivate and dispense medical marijuana from up to four locations around the state. 

So why would sophisticated tax bloggers like us care? As tax nerds, we see tax issues everywhere! Indeed, the potential for states to grow tax revenue from marijuana sales has been a selling point on much of the state-level marijuana legislation from the outset. The potential is great: Colorado collected over $50 million in tax revenues and related fees in its first year. New York State, never one to forego a new tax, adds a new Article 20-B to the Tax Law under the Compassionate Care Act. Article 20-B imposes a 7% excise tax on every sale of medical marijuana by an RO to a “certified patient” or “designated caregiver” – both defined terms under the Act. That’s a pretty high tax rate…

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The Intersection Between State and Federal Law: Sales Tax and the New IRS Tangible Property Regulations

It seems I can’t get through a work day lately without some tax alert, webinar invite, article, or tweet addressing the new IRS tangible property regulations. These new rules have caused quite the uproar in the tax community, as outlined by articles here, here, here, and here. These regulations are aimed at questions as to whether expenditures on tangible property are currently deductible, or whether they must be capitalized and recovered through depreciation over time. And the principal question that the final regulations address is whether expenditures relating to the maintenance and alteration of tangible property, including buildings and other fixed assets, are properly treated as repairs, which are currently deductible, or are required to be capitalized as an improvement to the property. That distinction—between deductible repairs and capital improvements—has been mostly developed through judicial decisions, based on facts and circumstances. But in 2003, the IRS issued Notice 2004-6 , announcing that it intended to propose regulations in this area. And with the expediency and speed we have come to expect from our government, final regulations were issued in September 2014, and more recently the IRS announced simplified procedures offering relied to certain small businesses.    

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Sales Tax Issues for Wall Street Firms

One of the more interesting state tax issues we get to deal with as state and local tax practitioners involve questions in the sales tax area. One of the reasons is because the answer to every sales tax question is the same: “it depends.” State sales tax statutes have so many ins and outs, exemptions and exclusions, ifs, ands, ors, and buts that there rarely is a clear answer. And even if there is a clear answer, it often depends on the application of a variety of different facts and circumstances. This usually results in articles every year about the different tax consequences that can arise in silly circumstances, such as the taxability of bagels depending on whether or not they are sliced or not; candy bars being taxable based on whether or not they are in the candy or cookie aisle, etc.

But the other interesting aspect of sales tax is that it touches everybody: every business, every taxpayer, every industry. A couple of years ago, we started to learn this firsthand when a lot of my income tax clients in the Wall Street area started contacting me about sales tax issues. Sales tax on Wall Street? What can that be about? 

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