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Archive for the ‘tax’ Category

A few summers ago, my wife and I marked our ten-year wedding anniversary with a three-day getaway to Block Island. Our first night on the island, we went out to dinner, and while we awaited the arrival of our food, my wife shared the story of friend who had recently gotten a new job, and when she and her husband arrived at the restaurant that night to celebrate with dinner, the husband had thoughtfully arranged to have a bottle of champagne waiting at the table with a note that read, “Congratulations!”

Maybe my wife meant that as a hint; maybe she didn’t. That’s when it dawned on me: Ten years is a big deal. There are expectations involved. I should probably live up to them.

In recent days, President Trump found himself in the same uncomfortable situation I endured at that table in Block Island. Soon to mark his 100th day in office, he realized that he had done nothing to fulfill his promise to deliver a “phenomenal tax plan.” So as I did during dinner with my wife, the President scrambled for the best solution he could: a rushed, half-hearted gesture meant merely to meet his minimum obligations. There was no plan. There were no details. There was, quite literally, a one-page release with a handful of bullet points, that only served to raise more questions than answers.

But before we get to those questions, let’s take a quick look at the “plan.”

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Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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The flames had not yet cooled on the American Health Care Act — the GOP’s seven-years-in-the-making plan to repeal and replace Obamacare — before Republican leaders had moved on to its next top priority: tax reform. And from that emphatic pivot was born a golden moment for people like me; after all, it’s not often that tax law rises to the forefront of the public consciousness. But that’s where we’re heading…maybe for mere weeks, but possibly for months or — dare I say it? — years. A time where discussions of deductions and talk of tax brackets will dominate newspaper pages, Facebook timelines, and Twitter feeds.

Sure, these rare moments serve as career validation for people who have made the ill-advised choice to spend their lives in the bowels of the tax law, but debates over reform of those laws shouldn’t be preserved solely for us. Everyone should get in on the fun, and to that end, here’s a little primer for you: five headlines you’re sure to read about tax reform as the process unfolds.

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Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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There is one clear victor in the 2016 President Election results and that is those who loathe the current tax law and long for reform. President-elect Trump’s tax proposals align nicely with those previously posited by Republican tax writers like Paul Ryan and Kevin Brady, and with last Tuesday’s events resulting in a consolidation of power in the hands of the Republican party, it has been said that tax reform within Trump’s first 100 days in office is a “priority.”

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Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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Donald Trump was elected the 45th President of the United States last night, and while I allow that to sink in for a bit, it’s also worth nothing that Republicans retained control over the House and Senate. As a result, the GOP has unfettered control over the future of tax policy, meaning we may be in for some big changes. What can you expect?

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Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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I’ve got a confession to make. While I love to sell myself as a connoisseur of all things tax law, the truth is, I can’t stand dealing with state taxes. I’ve spent my entire career avoiding it at all costs. I find all the nexus and credits and allocation versus apportionment to be incomprehensible and largely annoying.

But I’ve got another confession to make. When a state tax court case contains the terms Larry Flynt, Hustler Club, and Beaver Bucks; well, it’s enough to make me drop whatever I’m doing on a Saturday night (read: nothing) and get writin’. So here goes…

Yesterday, the New York Supreme Court ruled that the state’s 4% “Amusement Tax” — which serves as a sales tax on strip club “purchases” among many other things, is not unconstitutional. Clearly, we’re going to need some background here. First, the facts.

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Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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If you’ve worked in the tax preparation world for any measure of time, you’ve assuredly run into the following conundrum:

My client is a member in an LLC. Is his/her share of the LLC’s income subject to self-employment income?

At that point, you went one of two directions:

  1. Opened up your tax research software/hard copy Code/Google machine, or
  2. Said “screw it, I’ll exclude it,” and went on with your life. (Ed note: this is the option you took).

Continue reading on Forbes.com.

 

Authored by Tony Nitti, Withum Partner and writer for Forbes.com.

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Snapshot of NBCUniversal Settlement

This past month NBCUniversal, which is a unit of Comcast Corp, settled $6.4 million dollar class-action lawsuit with a number of unpaid interns who had worked on Saturday Night Live.  Specifically, the allegation was that NBCUniversal violated labor laws by misclassifying the plaintiffs as “non-employee interns” rather than “employees”, thus denying benefits such as minimum wage, overtime pay, social security contributions, and unemployment insurance.

The settlement still must be approved by a judge, but of the settlement amount: $1.18 million would go to the plaintiffs’ attorneys; $10,000 would go to lead plaintiff Monet Eliastam as a service payment; five other plaintiffs would receive service payments; and the remaining interns would receive an average settlement payment of $505.

Fair Labor Standards Act

Pursuant to the Fair Labor Standards Act (“FLSA”), internships in the for-profit private sector will most often be viewed as employment, unless certain requirements related to “trainees” are met.  The distinction is that interns in the for-profit private sector who qualify as “employees” typically must be paid at least minimum wage and provided overtime compensation, whereas qualifying internships or training programs may be offered without compensation.

The determination of whether an internship or training program meets this compensation exclusion depends upon all of the facts and circumstances of each such program, but the following six criteria must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern. 

Recent Trend in Litigation

There has been a recent trend in this type of litigation.  Last June a New York Federal Court held that unpaid interns of Fox Searchlight Pictures Inc. were “employees” pursuant to the FLSA.  The court reasoned that the functionality of NBCUniversal’s internship program was not that of a unique education to the intern.  Instead it was the employer who received the immediate benefit of the interns’ work, while the interns’ experience mirrored that of any other employee of the company (simply providing them knowledge of how a production office functions).

Additionally, a number of similar class-action suits have been brought against other large companies such as Atlantic Recording, Bad Boy Entertainment, Condé Nast Publications, Donna Karan, Fox Entertainment Group, Gawker Media, Sony, Universal Music Group, Viacom, and Warner Music Group.

What the Future Holds

The ultimate result could be these larger companies having to weigh the costs of: (a) creating policies, supervising, and operating an appropriately qualified internship program where pay is not required; versus (b) simply classifying interns as employees and paying them at least minimum wage.

However, with certain companies already believing in compensating interns and looking at them as potential future assets, those employers who have been taking advantage of free labor may be forced to compete fairly if they want to attract young talent.

If the threat of litigation and a cracking down in FLSA compliance results in paid internships becoming the norm rather than optional, why would interns seek out positions where the only benefit they receive is on-the-job training and exposure to a certain industry?  Many companies have exploited interns for free labor, while said interns, craving experience and resume firepower, have had to endure paying expenses such as commuting, local housing, meals, or course credit out of their own pockets.  The bottom line is that interns deserve to be adequately compensated for the work that they perform, and it appears that enforcing this notion just might come to fruition.

Authored by CJ Stroh

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