Archive for the ‘New Jersey’ Category

Attorney Gets Tax Lien, Then Allegedly Commits Tax Evasion

Sunday, July 22nd, 2012

Lee Gottesman is a bankruptcy attorney in Toms River, New Jersey. He is also facing a heap load of tax troubles for some of the usual reasons.

According to the Department of Justice, Mr. Gottesman allegedly created a sub account within his attorney trust account after he had a tax lien filed against him in 2002. That account was for his wife…but his wife supposedly wasn’t a client. Then he allegedly ran all his expenses — both personal and business — through that sub-account. Adding to his troubles, from 2006 through 2009 Mr. Gottesman supposedly didn’t file tax returns…while allegedly earning more than $400,000. According to the indictment, Mr. Gottesman had a CPA prepare tax returns; he just couldn’t be bothered to file them. That’s tax evasion. The indictment noted that Gottesman, “…created and began to use the Sub Account to deposit business income and to pay personal expenses after the 2002 Tax Lien due to his belief that the IRS could not levy the Gottesman [Attorney Trust Account].”

But the reason he likely got into trouble is something that I’ve mentioned over and over again: Withholding payroll taxes but not remitting them. If you do this, you will be investigated. The indictment states, “He [Gottesman] knew that he was required to pay payroll taxes to the IRS, but that he had not.” Given that he allegedly collected (withheld) taxes on his employees but didn’t remit them, that’s a huge mistake. That’s another 15 counts to go with the four counts of tax evasion.

I look at the press release and the indictment and have to wonder. An attorney knows (or should know) the rules regarding taxes. He apparently had good advice from a CPA. He practices in bankruptcy, so he knows that there are alternatives to simply not filing and paying taxes. Yet Mr. Gottesman allegedly committed numerous felonies–and apparently admitted doing so to investigators.

Another Survey, Another Bad Result for California

Wednesday, May 30th, 2012

Yet another survey puts California among the worst three states from a tax perspective. Alvarez & Marsal Taxand, a consulting and tax advisory firm, surveyed 800 financial executives (302 responded). Among the questions asked was Which states do you view as most competitive from a tax perspective? The usual suspects finished on the bottom: California, New York, and New Jersey. As Alvarez & Marsal Taxand noted, “…the states generally viewed as having complex tax systems and high tax rates are the three states listed (by a wide margin) as the least competitive states.” Alvaraz & Marsal Taxand Managing Director Don Roverto told the the Orange County Register, “The feedback from clients who do business in California is that it has one of the highest combinations of high rates and complex systems and that’s why it’s at the bottom.”

It’s also not a surprise which states finished at the top: Texas, Florida, and Nevada. These states all feature a tax exclusion or non-income tax based system.

Perhaps California will consider tax simplification, lowering rates, and making businesses feel wanted. Of course not–the Bronze Golden State will have one or two tax hike proposals on the November ballot.

Out of the Swamplands

Sunday, January 29th, 2012

Over the years, I’ve referred to New Jersey as the swamplands. Their politics, corruption, and tax policies left a lot to be desired. But something unusual happened in 2010: Chris Christie, a Republican, was elected governor in the historically Democratic state. This past week Governor Christie decided he’d like to improve on the Tax Foundation’s ranking of New Jersey as the worst state in the country for taxes; he proposed a 10% across-the-board cut to the state’s income tax.

I do need to point out that even with a 10% cut New Jersey’s top income tax rate would be 8%. That’s quite high, but in comparison to the nearly 13% a New York City resident would pay it’s not that bad.

I have no idea if Governor Christie will be successful or not but the Wall Street Journal noted that his proposal has caused Democrats to propose lowering other taxes. Meanwhile, Governor Jerry Brown of California proposes higher taxes. If both Governors are succesful I suspect that next year California and New Jersey will swap places on the Tax Foundation’s rankings so that the Bronze Golden State will truly be tarnished.

Tax Foundation Releases 2012 Business Tax Climate Index; California, New York and New Jersey at the Bottom

Wednesday, January 25th, 2012

The Tax Foundation released their 2012 State Business Tax Climate Index today. And it was no surprise to see the bottom three composed of California, New York and New Jersey. These states have high taxes overall (California adds high regulatory costs, too; however, the business climate index ignores this). Meanwhile, Wyoming, South Dakota, and Nevada are the top three states. No surprise: These states don’t have high taxes (they don’t have personal or corporate income taxes at all).

Here are the top ten:
1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. New Hampshire
7. Washington
8. Montana
9. Texas
10. Utah

And the bottom 10:
41. Iowa
42. Maryland
43. Wisconsin
44. North Carolina
45. Minnesota
46. Rhode Island
47. Vermont
48. California
49. New York
50. New Jersey

For those who wonder if business pay attention to taxes, I can speak from experience: They do.

Today Is the Day to Prepare (Hurricane Irene)

Thursday, August 25th, 2011

If you are a resident of New Jersey, New York City/Westchester County/Long Island, Connecticut, Rhode Island, or Massachusetts, you need to drop what you’re doing and get prepared for Hurricane Irene. Now.

Maybe we’ll get lucky and Hurricane Irene will veer out to sea. However, the current forecast track map puts Irene directly over the New York metropolitan area on Sunday. Unfortunately, there is no reason to think that Irene will veer away; the recent forecast maps have moved Irene toward the west rather than the east.

Hurricanes don’t strike New York City often, and I suspect residents of the Big Apple think this might be just another storm. The effects, though, of a direct hurricane strike might be truly horrifying: Flooding the subway system for weeks to months, devastation along the Long Island shore, flooding in lower Manhattan, millions without power, etc.

If you reside in a low-lying flood-prone area in the Northeast threatened by Irene, consider taking action today. The moment that government authorities announce possible evacuations, people will panic. Buy your supplies now. The National Hurricane Center has links to preparedness guides.

Again, I am hopeful I’ll be looked at in a week as a fear-monger. I just remember the last time I saw such a map, and the disaster that occurred (Katrina). I also remember a saying from my mother: Better safe than sorry.

Edit:
Some Resources:
National Hurricane Center (Irene Home Page)
Dr. Jeff Masters’ Blog
Ryan Maue’s Twitter Feed
Brendan Loy’s Blog

And, most importantly, your local office of emergency preparedness.

Hopefully, my writing this post is much ado about nothing. I just don’t like what I’m seeing on the maps.

The Giants Face the Taxman

Monday, March 7th, 2011

Football season is over, but the New York Giants are still in a fight. The Giants faced off against East Rutherford, New Jersey in state tax court last week.

The battle is over whether or not the Giants should pay property tax on their practice facility, the Timex Performance Center. According to this story on NorthJersey.com, the issue resolves around the legislation that created the Meadowlands 40 years ago.

Back then, the suspension of property taxes attracted the New York Giants (who used to play at Yankee Stadium in the Bronx, New York) to cross the Hudson River and play in East Rutherford, New Jersey. Now the question is whether or not the law absolves the Giants from paying property tax on ancillary facilities. The news story also notes that it’s possible the Giants could, if the Court rules against them, be forced to pay property taxes on their $1.6 billion replacement to the original Giants Stadium.

In any event, states and localities use taxes to attract businesses. This usually leads to predictable shenanigans, such as the Iowa film credit fiasco. Of course, some states do this in reverse, raising their taxes so that business figure out that the grass is greener on the other side of the fence.

As for the Giants, a loss in state tax court would likely be a loss for their fans as that additional cost would undoubtedly be passed on to their customers in the form of higher ticket prices.

Reality Hits the Swamplands

Thursday, February 11th, 2010

I poke fun at New Jersey. The politics in the Garden State have been high on corruption and low on common sense. But in a shock (a very welcome and surprising shock) last November New Jersey residents said enough. Governor Chris Christie told New Jersey that the state is basically broke and that, “Today, the days of Alice in Wonderland budgeting in Trenton end.”

Hallelujah! A politician understands that whatever you take in, you must spend less. His entire speech is well worth perusing. Governor Christie announced cuts to 379 programs, including not making a $100 million contribution towards pensions. Of course, expect the public employee unions to yell foul and complain that Governor Christie is harming children, etc.

There’s a simple problem: You can’t spend money you don’t have. Government needs to be limited in scope and size. Unfortunately, most states operate like they have printing presses. And please don’t talk to me about the current administration in Washington.

It will be interesting to see how far and fast budget reality spreads. It will be spreading as there aren’t any other real options. Unfortunately, California figures to be among the last to grasp reality.

Government 2, Democrat 0, Republican 0

Sunday, January 24th, 2010

Roger Corbin was a founding member of the Nassau County (Long Island, New York) Legislature. He was arrested last year and accused of filing false federal tax returns and lying to agents of the FBI and IRS. He allegedly received $226,000 from developers—checks made out to “Cash”—and deposited them in his personal account. He then allegedly ‘forgot’ to include them on his tax return. He compounded this by then allegedly lying to government agents.

His attorney, Thomas Liotti, told the Associated Press that he will plead guilty to tax evasion on Monday. Mr. Liotti, a Democrat, was defeated in his re-election bid last fall.

Across the Hudson River, another politician is in trouble. Leonard Kaiser, the former Republican mayor of North Arlington, New Jersey, and the former executive director of the Bergen County Utilities Authority and the Meadowlands Commission, pleaded guilty to tax evasion. Mr. Kaiser’s wife also pleaded guilty to a similar charge.

Mr. Kaiser’s troubles stemmed from his 2002 re-election bid. Mr. and Mrs. Kaiser wrote checks from their 2002 campaign fund to Mrs. Kaiser for “salary.” However, New Jersey law doesn’t allow personal use of campaign funds, and the payments weren’t disclosed on campaign financing documents or on their tax returns. Given that the total income involved is $30,000, a minimal sentence is likely.

Public servants indeed.

What’s $2 Trillion Among Friends

Saturday, January 9th, 2010

From the Financial Times comes word that there are $2 Trillion worth of unfunded pensions at just the state and local level in the United States. The Financial Times article relies on a study by Orin Kramer of New Jersey’s pension fund.

The estimate by Orin Kramer will fuel investors’ concerns over the deteriorating financial health of US states after the recession. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times.

“If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”

Estimates of aggregate funding requirement of the US pension system have ranged between $400bn and $500bn, but Mr Kramer’s analysis concluded that public funds would need to find more than $2,000bn to meet future pension obligations.

This has huge implications for American taxation, and for residents in states and localities impacted by this (including California):

  1. Would the elected officials attempt to fix the unfunded pensions by decreasing benefits, decreasing eligibility, increasing taxes, or just ignore the problem?
  2. Would local officials declare Chapter 9 Bankruptcy? (Bankruptcy is not allowed for states.)
  3. Would individuals in impact locales move to avoid higher taxes?
  4. What impact will this have on public employee unions?

If you see a mess on the horizon, you’re dead-on accurate. Add in lots of problems on the state level, a very low return on lots of investments (which hurts pension funding), and extreme resistance to higher taxation and you end up with a Grade A disaster.

Some of the time the light at the end of the tunnel is the end of your problems. Here, I think it’s the oncoming train.

Swamplands Looking at a Tax Hike?

Sunday, March 15th, 2009

California isn’t the only state that’s looking to raise taxes during a recession. The swamplands (aka New Jersey) are also looking at this tactic.

Governor Jon Corzine (a Democrat), who coincidentally is up for reelection this fall, is proposing a 0.97% increase in taxes on those who make more than $500,000. The tax would be for just one year, and would help to close a $7 billion budget deficit. Governor Corzine’s budget proposal is $3 billion less than the current year.

Also included in Governor Corzine’s proposal is cutting payments into the New Jersey state pension system by $500 million. That may be problematic: Most state pension systems have funding shortfalls. Cutting payments into the system will only exacerbate these problems.

Severe budget cuts will likely be coming to a state near you, too. It’s not just a California issue.