Important News on NYS Gift Tax from O’Connor Davies

I received an email last night from O’Connor Davies (http://www.odpkf.com), which provides an important update about possible changes to New York State law for the estate tax.  The changes would add a gift tax and may be approved in this year’s NYS Budget (it could pass by April 1). Therefore, if you were thinking about making a gift this year, you may want to make it very soon. Please see the email below from O’Connor Davies.

James Maisano, Esq.
(914) 636-1621
Jim@JamesMaisanoEsq.com
www.JamesMaisanoEsq.com 

gift tax

New York State Proposed Budget Bill for Estate and Gift Tax Reform

Stuart Stengel
Partner
sstengel@odpkf.com
914.381.8900

Time may be running out to take advantage of the lack of a gift tax in the State of New York. Governor Cuomo has proposed a change in New York State’s estate tax law in an attempt to bring New York’s estate taxes in line with Federal tax law. As part of the estate tax law changes, gifts made after March 31, 2014 will be subject to the New York estate tax.

In essence, the new budget bill proposes a comprehensive overhaul of the estate, gift, generation skipping transfer and trust income tax laws which includes:

  • Increasing the New York State estate tax exclusion over the next five years to coincide with the applicable Federal exclusion—increasing the current amount ($1,000,000) to $2,065,500 on April 1, 2014, $3,125,000 in 2015, $4,187,500 in 2016 and $5,250,000 in 2017* and adjusted for inflation with the Consumer Price Index thereafter.
  • Decreasing the top estate tax rate from 16% down to 10% by April 2017
  • Adding back gifts made by New Yorkers after March 31, 2014 to their New York gross estate on their death.
  • Repealing the New York State Generation Skipping Transfer Tax
  • Taxing distributions of accumulated income to New York beneficiaries of non-resident trusts and exempt resident trusts

The net effect of the change in law means that assets gifted after March 31, 2014 would be subject to New York’s estate tax to the extent their inclusion exceeds the exclusion threshold. Essentially, this is a reinstatement of the gift tax on wealthier New Yorkers upon their demise.

ACTION RECOMMENDED:

Although the time period is brief and this proposed budget bill has yet to be finalized, if you are affected by the proposed new rules, you may wish to contact your tax advisor about making gifts prior to April 1, 2014. Any gifts made under the current New York law will not be included as part of a your New York gross estate and will pass without a payment of gift taxes to the extent you have not exceeded the Federal estate and gift tax exemption of $5,340,000.

For more information, the proposed budget bill can be found by going to Parts 1 and X of this document.

* Exemptions amounts are subject to change pending passage of 2014-2015 executive budget.

Properties Taken Through Kelo Case Sadly Still Sit Vacant!

This would be Susette Kelo's backyardFort Trumbull Street View 1

One issue where my legal and political views align is the use of eminent domain to take private property for private use. I am a vociferous opponent of this misuse of eminent domain and remain outraged that the Supreme Court sanctioned this property owner abuse in the now infamous case, Kelo v. City of New London, 545 U.S. 469 (2005). In Kelo, the Supreme Court held that New London could legally take non-blighted private property by eminent domain, and then transfer it for a dollar a year to a private developer solely for the purpose of increasing tax revenues. In reaction to Kelo, several states enacted laws to restrict the power of eminent domain when used to take private property for private use. I will never vote to allow eminent domain to be used to steal private property from Westchester homeowners for private development as a county legislator.

The last clause in the 5th Amendment to the Constitution states, “nor shall private property be taken for public use, without just compensation.” It is my view that the founding fathers never imagined this clause could be utilized to take private property for private use. At the time of the passage of the Bill of Rights and for the following 150 years, eminent domain was used only for clear public purposes such as building a bridge, highway, public park or government building. I do not believe the original intent of the eminent domain clause was ever to allow the raising of taxes through private development as a “public use.”

Therefore, I was interested to read an excellent post on one of my favorite legal blogs, The Volokh Conspiracy, that discussed the photos above, which show that the private property taken from the homeowners in New London still sits vacant to this day. It was supposed to be used for a Pfizer office building along with luxury condos, hotels, a conference center and retail stores. The plan fell apart, and the geniuses that ran New London left the city with vacant property producing zero tax revenue. Although, I must note the planned development was a sweetheart deal for Pfizer and developer for which they only had to pay $1 per year – what a disgraceful example of misguided corporate welfare. Here is the post, please visit the link and read it. Join me in opposing any such future abuses of property owners in our state and county.

http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/02/05/kelo-condemnation-site-taken-for-economic-development-still-lies-empty/

James Maisano, Esq.
(914) 636-1621
Jim@JamesMaisanoEsq.com
www.JamesMaisanoEsq.com

5 Major Decisions Expected from U.S. Supreme Court Over Next Two Weeks

It’s been awhile since I have posted here, but it’s been a busy few months with my law practice, county legislator duties and launching my re-election campaign. However, like many attorneys, I’m a U.S. Supreme Court watcher, and June is always the most exciting month at the nation’s highest court. The Supreme Court is expected to release close to 20 decisions over the next two weeks, and we will have the opportunity to read major decisions on issues such as:

Arizona v. The Inter Tribal Council of Arizona, Inc. – Can a state pass a law to require proof of citizenship for voting? This holding may address the larger issue of the degree to which states are limited or preempted in regulating federal elections.  (NOTE:  This decision was released on June 17 – see http://www.scotusblog.com/2013/06/details-arizona-v-inter-tribal-council-of-arizona-inc/#more-165155)

Fisher v. University of Texas at Austin – Do the affirmative action programs of the University of Texas admissions procedures violate the Constitution under Equal Protection Clause for discriminating based on race?

Shelby County v. Holder – Is Section 5 of the Voting Rights Act constitutional? Section 5 does not allow certain states to make changes to voting laws and regulations without approval of the Justice Department.

Hollingsworth v. Perry – Is Proposition 8 (Approved by California voters in 2008 to ban same-sex marriages) Constitutional under the Equal Protection Clause? There is also a question whether the petitioners have standing.

U.S. v. Windsor – Is the Defense of Marriage Act, which bans federal recognition of same-sex marriages, constitutional under the equal protection guarantee of the Fifth Amendment?

James Maisano, Esq.
(914) 636-1621
Jim@JamesMaisanoEsq.com
www.JamesMaisanoEsq.com

Thoughtful link to professor’s legal analysis for this week’s gay rights cases before U.S. Supreme Court

I keep noticing misinformation in the media about the two cases heard this week in US Supreme Court addressing gay rights. The reporters make it seem as if the Supreme Court is some kind of super-legislature. It is not – it is the judicial branch that is supposed to properly interpret and apply the Constitution, federal and state law in reviewing lower court decisions. The Supreme Court is restrained by the facts and law from the cases being appealed.

Luckily, Univ. of California Irvine law professor Erwin Chemerinsky has provided us with a succinct review of the legal issues – not political issues – before the court in the two cases. We all look forward to seeing the decisions in June.

Check out Prof. Chemerinsky’s article from ABA website:  http://www.abajournal.com/news/article/same-sex_marriage_cases_finally_go_before_the_supreme_court

James Maisano, Esq.
(914) 636-1621
Jim@JamesMaisanoEsq.com
www.JamesMaisanoEsq.com

 

Constitutional Standards Post-Heller for Gun Control Under 2nd Amendment

By Jim Maisano

images

With the ongoing debate about gun control legislation in Congress and New York State, it is important to take a closer look at the two recent U.S. Supreme Court decisions interpreting the 2nd Amendment, so that we can establish whether the legislation would be constitutional. This post is not seeking a debate on individual viewpoints on gun control. I only endeavor to remind all sides of this debate that the two recent U.S. Supreme Court decisions interpreting the 2nd Amendment are historically important, and no legislative body should pass any gun control laws prior to ensuring they will pass constitutional muster.

Let’s first be reminded of the text of the 2nd Amendment to the Constitution:  “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.”

The first recent landmark case updating 2nd Amendment law was District of Columbia v. Heller, 554 U.S. 570 (2008).  The plaintiffs challenged the DC City Council’s “Firearms Control Regulations Act of 1975,” which banned handgun possession by making it a crime to carry an unregistered firearm and prohibited the registration of handguns. No resident could own a handgun or automatic or semi-automatic weapon, except for police officers and guns registered before 1976. The law also required that guns be kept inside the home and “unloaded, disassembled, or bound by a trigger lock or similar device,” which made it difficult for home protection.

Here is a brief summary of Justice Scalia’s holding in Heller (5-4 decision):

1.  The 2nd Amendment protects the individual right to possess a firearm unconnected with service in a militia, and to use that firearm for traditionally lawful purposes, such as self-defense within the home.

2.  Like most rights, the 2nd Amendment right is not unlimited. It is not a right to keep and carry any weapon whatsoever in any manner whatsoever and for whatever purpose. Some laws restricting gun usage may be “presumptively lawful.”

3.  The handgun ban and the trigger-lock requirement (as applied to self-defense) violate the 2nd Amendment. The District’s total ban on handgun possession in the home amounts to a prohibition on an entire class of “arms” that Americans overwhelmingly choose for the lawful purpose of self-defense. Under any of the standards of scrutiny the Court has applied to enumerated constitutional rights, this prohibition—in the place where the importance of the lawful defense of self, family, and property is most acute—would fail constitutional muster. Similarly, the requirement that any lawful firearm in the home be disassembled or bound by a trigger lock makes it impossible for citizens to use arms for the core lawful purpose of self-defense and is hence unconstitutional. Because Heller conceded at oral argument that the D.C. licensing law is permissible if it is not enforced arbitrarily and capriciously, the Court assumes that a license will satisfy his prayer for relief and does not address the licensing requirement. Assuming he is not disqualified from exercising 2nd Amendment rights, the District must permit Heller to register his handgun and must issue him a license to carry it in the home.

The Court relied on the “in common use at the time” language from U.S. v. Miller, 307 U.S. 174 (1939) which stated:

“The significance attributed to the term Militia appears from the debates in the Convention, the history and legislation of Colonies and States, and the writings of approved commentators. These show plainly enough that the Militia comprised all males physically capable of acting in concert for the common defense. ‘A body of citizens enrolled for military discipline.’ And further, that ordinarily when called for service these men were expected to appear bearing arms supplied by themselves and of the kind in common use at the time.”

It is important to note that Heller made clear that the 2nd Amendment was not absolute and some gun control legislation is “presumptively lawful,” including longstanding prohibitions already upheld by courts:

  • prohibiting carrying concealed weapons and gun possession by felons or the mentally ill,
  • bringing firearms into sensitive places such as schools and government buildings,
  • use of “dangerous and unusual weapons,”
  • regulating “conditions and qualifications on the commercial sale of arms,” and
  • regulating firearm storage to prevent accidents.

Prior court holdings show that the sorts of weapons that are protected under the 2nd Amendment are those “in common use at the time,” yet this does not extend to the prohibiting of the use of “dangerous and unusual weapons.”

The question remained after Heller whether it extended beyond federal legislation, and it was answered in McDonald v. Chicago, 561 U.S. 3025 (2010), which posed a challenge to a Chicago ordinance that essentially banned private handgun ownership.  McDonald held that the 2nd Amendment was binding on states and that the right of an individual to “keep and bear arms” protected by the 2nd Amendment is incorporated by the Due Process Clause of the 14th Amendment.

So here is the key question:  besides the legislative restrictions that Heller approves as not violating the 2nd Amendment, what other restrictions would be constitutional? Let’s turn to the recently passed NY SAFE Act (from Gov. Cuomo’s website) for a review of its restrictions:

  • Bans possession of any high-capacity magazines regardless of when they were made or sold. The maximum capacity for a detachable magazine is reduced from ten rounds to seven. Magazines owned before passage of the SAFE Act able to hold seven to ten rounds can be possessed, but cannot be loaded with more than seven rounds. .22 caliber tubular magazines are exempt from this limit. Previously legal “pre-1994-ban” magazines with a capacity of 30 rounds are not exempt, and must be sold within one year to an out-of-state resident or turned into local authorities. The magazine limit takes effect April 15, 2013.
  • Ammunition dealers are required to do background checks, similar to those for gun buyers. Dealers are required to report all sales, including amounts, to the state. Internet sales of ammunition are allowed, but the ammunition will have to be shipped to a licensed dealer in New York state for pickup. Ammunition background checks will begin January 15, 2014.
  • Requires creation of a registry of assault weapons. Those New Yorkers who already own such weapons would be required to register their guns with the state.
  • Requires any therapist who believes a mental health patient made a credible threat of harming others to report the threat to a mental health director, who would then have to report serious threats to the state Department of Criminal Justice Services. A patient’s gun could be taken from him or her.
  • Stolen guns are required be reported within 24 hours. Failure to report can result in a misdemeanor.
  • Reduces definition of “assault weapon” from two identified features to one. The sale and/or transfer of newly defined assault weapons is banned within the state, although sales out of state are permitted. Possession of the newly-defined assault weapons is allowed only if they were possessed at the time that the law was passed, and must be registered with the state within one year.
  • Requires background checks for all gun sales, including by private sellers – except for sales to members of the seller’s immediate family. Private sale background checks will begin March 15, 2013.
  • Guns must be “safely stored” from any household member who has been convicted of a felony or domestic violence crime, has been involuntarily committed, or is currently under an order of protection. Unsafe storage of assault weapons is a misdemeanor.
  • Bans the Internet sale of assault weapons.
  • Increases sentences for gun crimes, including upgrading the offense for taking a gun on school property from a misdemeanor to a felony.
  • Increases penalties for shooting first responders to life in prison without parole.
  • Limits the state records law to protect handgun owners from being identified publicly.
  • Requires pistol permit holders or owners of registered assault weapons to have them renewed at least every five years.

While much of the NY SAFE Act restrictions are similar to ones cited in Heller as acceptable, two do present possible constitutional concerns:  the ban on assault weapons and ban of high capacity magazines.  Since these restrictions impact guns and magazines “in common use at the time,” they could run into problems under Heller’s reliance on Miller.

There issue with legislation directed at banning assault weapons is that terms like “assault weapons” or “military-style assault weapons” are not defining an objectively agreed upon group of weapons.  There is tremendous debate on exactly which guns fall into this classification.  For example, the federal bill proposed by Senator Feinstein allegedly bans 157 specific guns and exempts 2,248 guns she claims are commonly used for hunting and sports shooting, although many of the 157 guns to be banned may be deemed as “in common use at this time” and are semi-automatic guns, which many experts believe are not “assault weapons.”  There is widespread agreement that automatic rifles are properly labeled as assault weapons.  It appears the NY SAFE Act does not provide the requisite detail in its ban on assault weapons.  However, Heller does state that restrictions on “dangerous and unusual weapons” would pass constitutional muster, and this may include semiautomatic types of “assault weapons.” It would be helpful if those drafting legislation banning assault weapons better demonstrate that the guns being banned are truly “dangerous or unusual” and not simply guns “in common use at the time,” since Heller indicates that restrictions on the 2nd Amendment must pass some level of heightened scrutiny under either strict scrutiny or intermediate review. This requires proof that the legislation is genuinely seeking to achieve reasonable and important societal goals, while minimizing unnecessary impacts on lawful gun owners.

The Congress is currently considering bans on both assault weapons and high capacity magazines, and since I believe these restrictions may raise red flags under the 2nd Amendment post Heller, if such legislation is passed, it would need to be narrowly tailored to avoid vagueness and overbreadth.  The NY SAFE Act has already been challenged in court, and you can expect any law passed by Congress to be challenged under Heller And of course, the U.S. Supreme Court will certainly revisit the 2nd Amendment in coming years to provide us with more guidance.

James Maisano, Esq.
(914) 636-1621
Jim@JamesMaisanoEsq.com
www.JamesMaisanoEsq.com
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