New York Springs Sales Tax Trap On Passive LLC Members
If the only thing you have to consider is federal income tax, entity choice can still be a fairly complicated matter. This case shows that there are other issues that can sneak up on you that have noting to do with federal income tax. Robert Redford was in the news not long ago about a New York state income tax issue, that probably turned on someone not being aware of how having an S corporation in the chain of ownership affected allocations. Something tells me that when the decision was made to organize Ask 244 as an LLC rather than an S corporation, nobody was thinking about personal liability of members for sales tax.
James Traficant Jr. And The Taxpayer’s Burden
Mr. Traficant’s place in tax history is fairly solid, as the Sixth Circuit decision has been cited dozens of time since it was issued. Most recent was the case of Pitcher v Waldman in which Traficant was cited for the principle that fraud can be inferred from circumstantial evidence. I was surprised that I missed Pitcher v Waldman when it came out in early April since it concerned the ugly breakup of a CPA firm. I was thinking I need to do a late post on it, but it turns out that Joe Kristan covered it quite well.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.