I am pleased to announce that I have recently closed out two federal tax matters on behalf of two distinctly different healthcare professionals. Unfortunately, both cases involved clients who had suffered the extreme emotional uncertainties that exposure to a protracted procedural conflict typically generates. Following initial case review, resolution of each matter was reached quickly at a cost that met the clients’ expectations.
The 2017 Tax Cuts & Jobs Act suspended miscellaneous deductions for individuals. Suspension of the miscellaneous deduction can have particularly harsh results for employees who are reimbursed for work related expenses by their employer. However, there is a remedy available in the form of Accountable Employee Expense Reimbursement Plans. For a detail discussion on Accountable Employee Reimbursement Plans, please refer to the article in our library.
I will speaking on the aspects of estate tax compliance at the Portland Oregon conference on estate administration sponsored by the National Business Institute on December 19, 2018. This promises to be an outstanding seminar for both attorneys and accountants who are involved in the administration of estates and trusts.
I would like to extend my appreciation to the Pacific Northwest Society of Indexers for the opportunity to speak with them about the impact of the 2017 Tax Reform Act on independent contractors. This was a truly delightful group of individuals who strive to excel in their chosen profession while making life easier for all of us who rely on their work product. Thank you for your efforts.
I have been invited to speak at the Seattle seminar on Tax Strategies for Estate, Retirement & Financial Planning on February 27, 2018. I will be addressing Lifetime Transfers to Reduce Taxes and Legal Ethics in Tax Practice. The program will be held at the Courtyard Seattle Downtown/ Lake Union. I hope to see you at this program.
I am pleased to announce that on February 9, 2018 I will be speaking at the 2017 Tax Cuts & Jobs Acts: Rumors, Tips and Traps seminar sponsored by the Clark County Bar Association. The 5 hour program for attorneys and CPAs will address substantially all of the provisions of the Act with the exception of the international and life insurance company provisions. The event will be held at the Warehouse '23 in Vancouver, Washington ... hope to see you there.
The US House of Representatives was introduced to the proposed tax reform bill today (HR 1). We have had an opportunity to quickly review the bill since release this morning. As a general observation, this 429 page bill is anything but simplification. While the bill will be marked-up next week and then amended by both the House and the Senate before Conference finalizes a bill for signature, the tone set by this bill is nothing less than a rouse of superficial simplification for added complexity. Over the coming week, we will be providing a section by section review of the bill with a longer term objective of integrating changes into the conversation.
Of particular importance is that this bill has set many of the effective dates as of December 31, 2017 ... time is short to take advantage of any advantages that may only exist until the end of the year.
I am pleased to report that I will be speaking at a 2-day Estate Planning conference in Portland, Oregon on December 19, 2017. Tentatively, the topics I will be addressing Basic Tax Planning and Business Succession Planning. The conference, produced by the National Business Institute, will qualify for continuing education credit for attorneys and certified public accounts.
Congressional work on H.R. 2887 continues to move forward at a rather quick pace. Yesterday, hearings were held on the bill with three witnesses testifying in favor of the bill while only one witness spoke against it.
At this point, a vote on the bill has not been scheduled, which means that time remains for interested persons to contact their Congressional representatives and voice their support for the bill.
Any business that has had the unfortunate experience of challenging a determination made by either Washington’s Dept. of Revenue or Oregon’s Dept. of Revenue on the question of nexus, in particular, economic nexus, will be interested in a bill that has been introduced in the US House of Representative. H.R. 2887 that would dramatically stabilize a State’s ability to tax interstate business activities.
The bill, if signed into law, would limit a State’s ability to tax or regulate business activity in interstate commerce to circumstances where the business is physically present in the State during the period in which the tax or regulation is imposed.
Under the bill, the term “physical presence” is defined to include the following business activities:
1. Maintaining its commercial or legal domicile in the State;
2. Owning, holding a leasehold interest in, or maintaining real property such as an office, retail store, warehouse, distribution center, manufacturing operation, or assembly facility in the State;
3. Leasing or owning tangible personal property (other than computer software) of more than de minimis value in the State;
4. Having one or more employees, agents, or independent contractors present in the State who provide on-site design, installation, or repair services on behalf of the remote seller;
5. Having one or more employees, exclusive agents or exclusive independent contractors present in the State who engage in activities that substantially assist the person to establish or maintain a market in the State; or
6. Regularly employing in the State three or more employees for any purpose.
The bill provides further guidance stating that the term “physical presence” does not include any of the following:
1. Entering into an agreement under which a person, for a commission or other consideration, directly or indirectly refers potential purchasers to a person outside the State, whether by an Internet-based link or platform, Internet Web site or otherwise;
2. Any presence in a State for less than 15 days in a taxable year (or a greater number of days if provided by State law);
3. Product placement, setup, or other services offered in connection with delivery of products by an interstate or in-State carrier or other service provider;
4. Internet advertising services provided by in-State residents which are not exclusively directed towards, or do not solicit exclusively, in-State customers;
5. Ownership by a person outside the State of an interest in a limited liability company or similar entity organized or with a physical presence in the State;
6. The furnishing of information to customers or affiliates in such State, or the coverage of events or other gathering of information in such State by such person, or his representative, which information is used or disseminated from a point outside the State; or
7. Business activities directly relating to such person’s potential or actual purchase of goods or services within the State if the final decision to purchase is made outside the State.
Finally, the bill would limit a State’s ability to impose a tax or regulation on any person unless the person is wither the purchaser or the seller having a physical presence in the State.
There is much for business to like in this bill in its current form. We are advising our business clients to contact their respective representatives in Congress and urge support for the bill.
As a final observation, the bill confers original jurisdiction with the US District Courts if there is a dispute involving this law. This is a welcome departure in state tax litigation where generally, state courts have jurisdiction over all state tax matters, including the interpretation and construction of federal statutes.
We are currently reviewing tax litigation cases for engagement in US Tax Court and Oregon Tax Court. We are also reviewing tax controversy cases for engagement in Washington's Department of Revenue Administrative Appeals.
North America News is the definitive magazine for CEOs, top tier management and key decision makers across the US. Created to inform, entertain, influence, and shape the corporate conversation across the nation through high quality editorial, in-depth research and an experienced and dedicated network of advisers, North America News provides our readership with the most authoritative and current analysis of the major changes effecting the corporate landscape, and the latest deals and topical issues dominating the corporate universe.
Discussing the awards, Coordinator Nathan Angell commented: “These awards highlight the most respected lawyers and attorneys as well as their fields of expertise and the companies they represent, and focus on the incredible results that come of commitment and passion in the industry. It has been a pleasure to work with each and every one of our deserving winners and I would just like to wish them every success going forward.”
All winners for the awards were the result of months of research and analysis from North America News’ dedicated awards team. As a result, each and every winner was chosen on merit only, and can take great pride from the fact that they were selected for their success.
As such, the 2017 Legal Elite awards celebrates the skill and dedication of firms, teams and individuals, from across the US, who help and support the legal process.
The Bessert Law Firm, established in Clark County Washington in 1992, advises clients throughout the Pacific Northwest on legal matters involving estate planning, tax law and tax planning, tax controversies and tax litigation, and business operations, finance, and transactional matters.
There are now five states involved in litigation over the question of whether sufficient nexus exists to support state sales tax on tangible personal property and service where the sales are made via the internet without the seller having any physical presence in the taxing state. Generally, the states are attempting to justify nexus based solely on economic activity rather than the traditional activities that were identified by the US Supreme Court in Quill v North Dakota. The states involved include Alabama, Indiana, South Dakota, Tennessee, and Wyoming.
Washington's Department of Revenue released ETA 3152.2017 on May 8, 2017 indicating that speculative builders who fabricate components for their construction projects, such as trusses, wall sections, and cabinets, at permanent off-site locations are subject to the manufacturing B&O tax and the use tax on the value of the fabricated items. Items fabricated on-site are only subject to either the use tax or sales tax on the materials used in fabrication.
Oregon's legislature announced today that it would bring its revenue reform bill to the floor for a vote. The commercial activities tax or CAT was modeled after Washington's business and occupation tax. Subject to minor adjustments, Oregon's corporate and business tax system will remain in place until 2019.
Oregon's legislature announced that it is considering an extension of Oregon's corporate income tax, which would include an increase of the corporate income tax rate, through 2018 with implementation of CAT in 2019.
Oregon's Joint Committee on Tax Reform has announced that it is studying a proposal to replace Oregon's corporate income tax with a gross receipts tax imposed on substantially all business tax conducted within Oregon. The proposed tax, a commercial activities tax or CAT, would be similar to Washington's business and occupation tax.
We are pleased to announce that we represented the target in the successful cross species merger of two Portland area companies engaged in the craft spirits industry.
We are pleased to announce that the firm prepared a draft bill for introduction into Congress, advised an association of taxpayers seeking to introduce federal legislation that addresses states' rights to tax certain income, and work with congressional staff members for introduction of the bill.
The firm is pleased to have had the opportunity to address attorneys and certified public accountants from throughout Washington and Oregon at a two-day conference titled "Estate Planning from A to Z".