OCTOBER 2013 NEWS FROM SULLIVAN & ASSOCIATES, PC

As we enter Day 15 of the federal government shutdown, things are getting interesting as the clock is ticking on a possible default. Well, at least the IRS has decided to cease the issuing of liens and levies during this time. This just seems like the right thing to do. While here in the Empire State, our esteemed governor has decided to take away the drivers licenses of taxpayers who owe, according to the state, more than $10,000 in back taxes. Not quite sure how those two are related, but I guess scare tactics are in vogue these days. You have to just love state government. Enjoy the rest of your October.

Federal – All Taxes – IRS Ceases Issuing Liens and Levies During Shutdown

The Internal Revenue Service is putting the brakes on tax liens and levies during the federal government shutdown. The IRS said in a web posting that it is not sending out levies or liens, either those generated systemically or those manually generated by employees, during the government shutdown. This contradicts a position previously announced by the IRS. http://www.irs.gov/uac/Newsroom/IRS-Operations-During-The-Lapse-In-Appropriations.

Connecticut – All Taxes – Amnesty Program Continues Until November 15th

Connecticut’s Amnesty marches on for persons and businesses owing any tax for any taxable period ending on or before November 30, 2012. This tax amnesty program ends November 15, 2013. If qualifying participants pay their tax and interest due in full on or before November 15, 2013, 75% of the interest due shall be forgiven and any related civil penalties will be waived.

Qualifying persons that fail to participate in this amnesty program (i.e., persons owing any tax for a qualifying taxable period for which a tax return was required by law to be filed with the department and for which no return has been previously filed by such persons, and such persons fail to file a timely amnesty application under this program with respect to such taxable period) are subject to a non-waivable penalty equal to 25% of the tax owed for qualifying taxable period(s). H.B. 6704.

New York – Personal Income Tax – Trips to Provide Care for Relative Counted as Days in State

A recent New York case held that days spent in New York for the treatment of a serious illness for a relative should be counted in determining whether a non-domiciliary is a state resident for income tax purposes However, the individuals were not subject to tax as residents of New York City. There was credible testimony, supported by credit card statements, telephone records, and affidavits, establishing clear and convincing evidence that on each of the days in question the individuals were not in New York City. Knoebel, New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 824117.

New York – Various Taxes- Driver License Suspensions Begin for Tax Delinquents Owing Back Taxes

Under a new initiative, New York announced that the state will suspend New York State driver licenses of taxpayers who owe more than $10,000 in back taxes. The program is the result of legislation introduced as part of the Executive Budget and signed into law earlier this year. http://www.governor.ny.gov/press/08052013Tax-Delinquents

New York – Sales and Use Tax – Hosted Software Services Taxable

The New York Division of Taxation recently held that a taxpayer’s sales of a hosted software solutions system that assists law firms in the management and organization of their law offices, provided via the Internet, constitutes sales of prewritten computer software that are subject to New York sales and use tax because the taxpayer grants its customers a license to use its software. This is true even if no “copy” of the software is downloaded or transferred to the customer. Prewritten software remains taxable even if it is enhanced or modified for a specific purchaser. However, if the charge for custom modification or enhancement is separately stated on the invoice or bill, the charge for custom modification is exempt.

The situs of the sale for purposes of determining the proper local tax rate and jurisdiction is the location associated with the license to use (i.e., the location of the customer’s employees that use the software). TSB-A-13(32)S.

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