taxes

Press release:

Congressman Chris Jacobs (NY-27) cosponsored the Protecting Family and Small Business Tax Cuts Act to make the 2017 Trump tax cuts permanent. 

“Following the implementation of President Trump’s tax cuts, our nation witnessed an extraordinary period of economic expansion, wage growth, and job creation,” Jacobs said.“Businesses were bringing manufacturing back from overseas, employers were using savings from the federal government to hire additional employees, and our nation saw our output and productivity increase.” 

The legislation co-sponsored by Jacobs most notably: 

• Make permanent the doubled standard deduction of $12K for those filing single and $24K for jointly filed returns
• Make permanent the doubled child tax credit of $2K including full refundability of $1400
• Maintains the mortgage interest deduction at $750K
• Maintains the Medical Expense Deduction to allow the deduction of qualified expenses that exceed 7.5 percent of an individual’s AGI
• Provides a 20 percent tax deduction for small businesses

“Since taking the White House and majority, Democrats have made clear they want to undo these successful policies and force through policies that waste trillions of dollars and raise taxes on Americans,” Jacobs said. “We have already seen the disastrous impact of their policies on our economy. I am proud to join this legislation to ensure a successful Trump policy is made permanent so it can continue to help families and small businesses in the future.” 

From Sen. Ed Rath:

It is no secret that New Yorkers pay some of the highest taxes in the nation. Unfortunately, it does not look like there will be any reprieve in our 2021-22 budget, despite the influx of aid coming from the latest round of stimulus funding.

A report recently found that New York State has the third highest tax rates in the nation. New York continually ranks as among the worst states for taxes and for business climate. This needs to change!

News of the Federal aid coming to New York as part of the American Rescue Plan, seemed promising for residents. However, the Governor has made it clear that tax increases are not off the table. In fact, the Governor's budget proposal includes eliminating the State income tax reduction for the middle class. 

Now is not the time to be raising taxes on hardworking New Yorkers. Many businesses and families are feeling extreme financial pressure and raising taxes will only make these matters worse. We should be working to jump start our struggling economy by helping businesses reopen and rehire.

I will continue to keep you updated on the progress of the New York State budget and will continue to fight for policies that make New York more affordable for hardworking families and small businesses.

Genesee County is outperforming many other municipalities in New York when it comes to getting the highest possible return on tax dollars, a financial consultant told members of the Legislature this week. 

Over the past year, the county has earned almost $1.6 million by adroitly managing cash flows and placing cash reserves in investments with the best returns while minimizing risk and complying with state regulations.

With a $32 million tax levy, that return is about 4.77 percent, which means lawmakers can keep the property tax rate lower. If they wanted to generate an additional $1.6 million in property tax revenue, they couldn't do that without violating the state's tax cap.

The reason: "The county treasurer is willing to step out of the box and do whatever it takes to help the taxpayers," said Garrett Macdonald, a Genesee County resident who is vice president of Three+1, a financial consulting firm based in Pittsford.

Also, Macdonald said the county is "looking at data more intuitively and making sure that we're really looking under every stone to earn more. A lot of times (with) public entities, it's not the first priority to earn more on taxpayer dollars.

"The first priority is to make sure it's safe, to make sure that it's in deposit, that the money gets somewhere that it's recorded. And then budgeting is important. Treasury always is kind of a second priority.

"But in Genesee County's case, they're able to accomplish all the above. So looking at data, working with their banks, really putting treasury and earnings at the top of the priority list, along with safety, legality, liquidity."

Because there is money coming in before it's needed for public services, and because the county is required to maintain a cash reserve, there is always cash on hand.

What a government agency can do with it is regulated by the state, and among the things the county can do is buy treasury bills -- place it in money market accounts or certificate of account registries, or other safe and liquid investment vehicles. There are about seven options in total.

Treasurer Scott German spends time every week looking at the data and working with Macdonald on what the county's portfolio should look like based on market conditions and cash flow needs. 

"I want to get the biggest return I can for the taxpayer," German said. "Therefore, using his information that he is able to provide, his negotiations with other banks, we are able to maximize the returns for the taxpayers.

"I mean, you compare me to probably any other county in the State of New York, I'm probably doing probably double or triple in interest rates, percentage-wise."

Macdonald said the county's return is well above the 1.5-percent benchmark local agencies should try to achieve, and that most municipalities struggle to get a 1-percent return.

There's one government agency, he said, that has a tax levy $26 million higher than Genesee County's and is generating $600,000 in investment income, less than half of what Genesee County is generating. And that's the next largest total dollar return in the comparison group.

"The biggest point that I will hone in on again and just reiterate: our goal is to maximize the value that the public creates through tax dollars," Macdonald said. "If we can do that through generating new revenues, that doesn't include increasing taxes, that's a big win."

Among economists, there has been a lot of talk about the inverted yield curve (a graph tracking returns on long-term and short-term bonds; when the economic outlook is good, long-term rates are higher than short-term rates; when the curve inverts, it's a sign investors have lost confidence in long-term returns). The curve inverted last quarter, which is a possible sign of a coming recession.

Macdonald believes the bond markets are correcting and he doesn't see a recession on the two-year horizon (in the past, when the yield curve has inverted, there has been a recession within 18 months). That said, if there is a recession in the next year, because of the money management practices of German, Genesee County's funds should be protected.  

Financial markets are always cyclical, Macdonald noted, which is why it's important to stay on top of what is going on every week.

"If we have a recession in two years, I think the impact is yet to be known because we don't have money invested for two years," Macdonald said. "The longest we have money invested for the county's about one year.

"But when I can tell you is, looking into 2020, even though rates have gone down three times -- once in July, once in September and then once in October -- it's because we've been proactive and because Scott's been proactive at investing early before those decreases.

"We're still going to beat benchmarks going into 2020. So, where most counties are being reactive, Genesee County is proactive."

A proposal to reduce funding from the state for towns and villages, known as AIM (Aid and Incentives for Municipalities) could wind up as just another cost burden for Genesee County, County Manager Jay Gsell told the Ways and Means Committee at its meeting Wednesday.

If the funding cut goes through, the County could make up the $230,000 in difference for towns and villages from its own revenue.

Gsell said the governor’s office is being somewhat disingenuous about how cuts are being presented to municipalities.

What the state says it will do and what it actually does will be two different things, Gsell suggested.

The governor’s office is proposing a new sales tax on products sold digitally, an e-commerce tax, and that new revenue stream -- the theory goes -- will allow counties to share a portion of sales tax with municipalities.

Genesee County is one of the few counties in the state that currently shares sales tax but the proposal by the governor would mandate an obligation, perhaps above current revenue sharing, and force the rest of the counties to start sharing sales tax.

But there’s no guarantee New York will be successful in instituting an e-commerce tax – something state officials have sought for years, and it would certainly be difficult, Gsell said, to institute before the state’s new fiscal year starts April 1.

That could leave the counties, including Genesee County, with another unfunded mandate.

Under the governor's budget proposal, only municipalities that use a lower percentage of AIM for their annual budget would have funding cut. If that holds, neither the Village of Le Roy nor the City of Batavia, which receives more than $1 million in AIM funding, would have that funding cut.

The Legislature will be asked to vote on a resolution opposing the proposed cut to AIM.

Press release:

Genesee County Treasurer Scott D. German is pleased to announce that Genesee County residents (outside the City of Batavia) now have online access to their Town/County property tax information. This website:  http://genesee.go2gov.net  can be used to inquire on the status of their taxes, review payment history or make payments online with credit or debit cards or an e-check. A convenience fee will apply for online payments.

Tax information can be looked up by: the property owner’s name; property address; mailing address; or by tax ID number. The site is very easy to navigate and can provide very useful tax information.

Everything on the website is information already available to the general public.

As always, anyone with any questions can contact my office at 585-815-7803.

The commander of the Veterans of Foreign Wars in Alexander is on a mission to get the Alexander School District to reconsider implementing a tax exemption for Cold War veterans.

Eric Radder spoke at Wednesday's school board meeting.

"I notice we’ve got all four service flags up here, so obviously Alexander supports its veterans," Radder said. "I’m here to discuss and implement it and bring it back as a point of discussion."

Several tax jurisdictions in the county have adopted the exemption, including the Town of Alexander and the Village of Alexander. 

Qualified veterans who apply can get an exemption on a small portion of the assessed value of their property. The typical exemption is 10 percent off the accessed value with a maximum of $6,000 exempt from the jurisdiction's property tax. In Alexander, both the town and village adopted the higher tier exemption, which is 15 percent off the accessed value with a maximum exemption of $12,000.

More than two years ago, the school district held two public forums on the proposed exemption. The first forum, said Board President Reed Pettys, was lightly attended because of a snowstorm. The next forum had 30 to 40 people attend, Pettys said, and the public was evenly divided between support and opposition.

While the perception is that the Alexander School Board voted against the exemption, Pettys said since the community was divided on the topic, the board just never took the issue up again.

Pettys agreed Wednesday night to go with another board member to the VFW's board meeting Thursday to publicly discuss the proposal again.

He said a lot has changed since the board last considered the idea -- there are two or three new board members, including one -- John Slenker  -- who is a veteran and more jurisdictions, including other school districts, have passed it.

"I think we’ll discuss it at the next meeting and see if we can get a public forum," Pettys said.

The exemption, Radder said, would help keep veterans in the community.

"You could retain the veterans who bring a set of values that they learned in their military training experience and then in return benefit the community at large," Radder said.

Press release:

There have been several phone calls to my office regarding the pre-payment of 2018 Town/County property taxes to be paid to the Town Tax Collector before Dec. 31, 2017.

• The new Federal Income Tax Law will only affect an estimated 10-15 percent of the population in Genesee County as far as the SALT deduction. The law allows taxpayers to deduct up to $10,000 a year in a combined New York State income tax and property taxes. So if your deduction of those taxes are less than the $10,000, it probably doesn’t make sense to pay your 2018 taxes early. For example, if your 2018 town/county, school and village taxes are $2,500 and your total New York State taxes paid will be $3,500 = $6,000. Total taxes paid are $6,000 which is less than the maximum $10,000 allowed; therefore your taxes would still be deductible on your 2018 tax return.
• It is unclear whether or not the IRS will allow a deduction of pre-payment of 2018 taxes on your 2017 tax return; please consult your tax accountant for clarification.
• The tax bills are effective for the county fiscal year of Jan. 1, 2018 – Dec. 31, 2018. Payment for these taxes should be made Jan. 1 or after.
• This law has no effect on residents of the City of Batavia since city/county tax warrant isn’t until May.

(Photo: Chris Collins during a meeting today at the Job Development Center in Batavia.)

Rep. Chris Collins thinks he has the proof he needs to label Gov. Andrew Cuomo now and forevermore a pathological liar.

Following a meeting with county employment officials at the Job Development Center in Batavia, Collins took questions for reporters and in response to comments by Cuomo that the recently passed House tax reform bill will cost New Yorkers money, Collins immediately launched into a prolonged attack on Cuomo for claiming he had spoken with Collins about the bill.

"He attributed a quote to me that said that I said the reason I voted for the tax act was that I was pressured by Republican leadership," Collins said. "As I said, and it’s in The New York Times today, 'liar, liar pants on fire.' In seven years, I’ve never spoken to the governor. I certainly did not speak to him on this. Aand the outrageousness of him even fabricating a quote will tell you, if he will lie about something like that, he will not hesitate to lie about our tax plan."

The Batavian reached out to the governor's office for a response and received this statement:

The Governor's point was the Republican congress members he spoke to said they were under pressure from their political leadership‎ to vote yes‎. Collins and the rest of the New York Congress members who voted for their donors and against their own constituents can try to deflect from this irresponsible vote, but it's the Governor who stood up for New York taxpayers and always will.

Contrary to Cuomo's assertions about the reforms, the changes in the tax code will save most of his constitutes money Collins promised.

"I have said I will stake my career, my election next year, on the fact that 95 percent of the folks in GLOW and Erie County will pay less in taxes," Collins said. "If you do, then vote for me, and if you don’t, then don’t vote for me."

He challenged Cuomo to make the same pledge.

"If under our plan you pay more, then the governor was right and you should re-elect him, but next year when 95 percent of my constituents pay less, I would expect them to vote against our governor because he’s lying to them," Collins said.

Why isn't every single taxpayer in the NY-27 saving money? Collins explained it this way: If you're a married couple with no kids, with $80,000 in current state and local taxes, making $300,000 a year, living in a $1.5 million home, then, he said, you might pay $1,000 more in taxes.

Collins said most of his constituents will be quite happy when they get their first paycheck after Jan. 15 if the House bill passes the Senate -- and the Senate has its own ideas about how to change the tax code -- and they see their withholding has gone down.

"(The governor) is lying and he’s deliberately lying," Collins said. "He lied again and he exposed himself by talking about this and then attributing a quote to me. That’s beyond outrageous. I think he’s lost it.

"Now, from this day forward I can remind people, he is a pathological liar," Collins added.

Press release:

Congressman Chris Collins (NY-27) applauded legislation to update our nation’s tax code that was released today by House Ways and Means Chairman Kevin Brady. Collins cited the fact that this legislation will provide tax relief to hardworking families across America, create jobs, and grow our nation’s economy.

“Passing comprehensive tax reform will be one of the most important accomplishments we will see under President Trump,” Collins said. “Making America more competitive on the world stage will truly 'Make America Great Again' and allow more Americans to achieve the American Dream. Our nation is struggling and we need to fix the broken, outdated tax system that has burdened hard-working individuals and has crushed our economy.”

The plan outlined by House Republicans will strengthen the American middle class by doubling the standard deduction, and for those who want to itemize deductions to continue to write off property taxes, mortgage interest, and charitable contributions. The legislation also reduces rates for middle-class Americans, eliminates the Alternative Minimum Tax (AMT) and enhances the Child Tax Credit.

“Tax reform is essential in order to grow our economy for our children and grandchildren’s generations,” Collins said. “I am confident that we will get this bill to President Trump’s desk and will see explosive economic growth.”

The framework puts America’s corporate tax rate below the average of other industrialized countries and promotes greater investment in American manufacturing. Collins supports reducing the minimum tax rate for small businesses and corporations in order to increase American competitiveness, create jobs and grow the nation’s economy.

For more information on H.R. 1, Tax Cuts and Jobs Act, click here.

Press release:

Congressman Chris Collins (NY-27) released the following statement applauding Ways and Means Committee Chairman Kevin Brady’s decision to include a state and local property tax deduction in the House Republican tax reform bill.

"I am pleased that Chairman Brady has agreed to keep the SALT property tax deduction in the new tax reform legislation. It goes to show you that leadership does listen to the concerns we as members point out. Now, New York taxpayers are poised for a big victory when federal tax reform provides them with more money in their pockets and better economic opportunity. It’s time for Andrew Cuomo to follow our lead and deliver comprehensive tax reform when it comes to the state income and property taxes New Yorkers pay."

The Ways and Means Committee is expected to release its tax reform legislation on Wednesday. For more information on the unified framework for fixing our broken tax code, click here.

Here's CNN's story on the status of the deductions.

The County Legislature won't take a position on a GOP proposal to eliminate deductions on state and local income taxes after the Ways and Means Committee failed Wednesday to move forward a resolution to oppose the change in the federal tax code.

A draft resolution, written by the NYS Association of Counties and the National Association of Counties, was sent to the County Legislature and after Legislator Marianne Clattenburg made a motion for the committee to send the resolution to the full Legislature, Ray Cianfrini, a member of the committee and chairman of the Legislature, said he opposed the resolution.

"I think it only benefits the very rich and not most of the people," Cianfrini said.

Cianfrini said when practiced law, a portion of his practice involved tax law and he saw very few clients taking the kind of itemized deductions that would allow them to deduct their payments of state and local income taxes.

Congressional Republicans are also talking about increasing the size of the standard deduction and Cianfrini calculates that the first $34,000 earned by a household would not be taxed. That would make it even more impractical for most people to itemize their deductions.

"I don’t pay $20,000 in state income tax, so what benefit is this to me?" Cianfrini said.

Clattenburg said she supported the resolution because New York is one of the highest taxed states in the Union and New York sends more money to Washington than it gets back.

Legislator Andrew Young said he supported the motion only because he thought the full Legislature should get a chance to vote on it but that he would probably ultimately vote against it.

Committee Chairman Bob Bausch opposed the resolution because he said he didn't think the Legislature should be lobbying Congress on tax policy.

With a 2-2 vote, the motion to move the resolution forward failed.

Press release:

“New York’s taxes and spending have reached monumental proportions. It is a shameful reflection of the policies pushed by New York City elites and state leaders that our families must work over four months a year to pay off their collective tax burden.

We have some of the highest property taxes in the country right here in our state, and it is abundantly clear that many businesses and families would rather uproot and relocate to more tax-friendly states than remain in New York.

We need to cut business and income taxes to incentivize families to remain in our state and reinvest in our citizens rather than spending money on programs for illegal immigrants and Hollywood movie producers.”

Press release from County Manager Jay Gsell:

As New York State prepares to renew or make permanent the cap on local government property tax levies, a new report by the Pew Charitable Trusts highlights why local property taxes in New York State are so high.  The problem has little to do with local governments and won’t be solved by a tax cap.

The Pew Trust data show that an average state receives about 2 percent of its revenue as transfers from local governments. In New York State, the number isn’t 2 percent. It is 15. Over one-seventh of the State’s revenue comes from local governments.

As the Pew report notes “New York got more of its revenue from local funds (15 percent) than any other state. Among those states that require local governments to pay for part of the health care costs incurred by Medicaid patients within their jurisdictions, New York’s local governments make a particularly large contribution.”

Simply put, New York State has shifted over one-seventh of its costs to local governments, which must then raise property taxes to pay those bills. Rarely has the disparity between New York and other states been so clearly presented, and the mystery of high local property taxes so effectively explained.

Clearly, the problem of high property taxes in New York State will not be solved by a permanent tax cap, or rebate checks, or by Albany conjuring up false images of wasteful local governments.

A real solution depends on the State acknowledging and addressing what is shown with such elegant simplicity by the Pew Charitable Trust's analysis – that the State has shifted 15 percent of its own costs to local governments. When that local property tax subsidy of the State budget ends, so will the era of high local property taxes in New York State. Albany, the next move is up to you!            

The drop in gas prices may be great for your pocketbook, but it's costing Genesee County, and other local governments, a bit of money, though the precise amount of lost revenue is dependent on how the local economy does in other sectors.

County Treasurer Scott German's back-of-the-envelope calculation is at least $500,000 in lost sales tax revenue for the county and another $500,000 distributed among the county's other municipalities, based on current gas prices.

Officials, however, expect much of that drop in revenue to be offset by increased local sales and a seemingly growing local economy.

Since the county already budgeted for a $300,000 drop in sales tax, said County Manager Jay Gsell, any decline in gas sales tax will be a soft blow.

"The level of consumer spending and consumer confidence being up in last quarter of 2014 and new retail opportunities in late 2014 and 2015 could also help stave off fuel sales decline estimated by the county treasurer," Gsell said. "Sales tax projections are not an exact science and statewide figures during 2014 have been all over the map and inconsistent."

German said there are so many variables in sales tax, it makes it hard to predict revenue, even though the sales tax on gas is a nice chunk of change for local governments.

"Who would have thunk back in August that we would be paying less than $3 a gallon for gas around the holidays?" German said.

There is a delay in transfer of sales tax revenue from the state to the county, so determining the exact amount of the revenue decline isn't possible just yet, German said.

Most of the local fuel sales is from travelers on the Thruway and fuel prices could also increase the number of travelers on the Thruway, thereby increasing gross sales tax revenue.

The county -- with its fleet of snow trucks, maintenance trucks and patrol cars -- will realize some cost savings on its own fuel expenditures, but it's too soon to get those numbers, officials said.

Batavia City Manager Jason Molino said that while sales tax accounts for 18 percent of all sales tax revenue, he's planning on either a slight increase or flat sales tax revenue.

"That's got to have an impact when one-fifth of your sales tax comes from fuel sales," Molino said, but there's also an upside to lower fuel prices that will help boost revenue.

"I was out on the west side of town before Christmas and the parking lots were packed," Molino said.

An informal survey of a handful of The Batavian's advertisers found a universal sentiment that these stores had a strong holiday sales season.

German said the impact of holiday sales won't hit the books until April. Before then, it's not possible to put a number on how well the county did in November and December, at least according to sales tax figures.

Molino said the county's low employment rate combined with one of the strongest growth rates in real wages in the state is helping to offset any drop in gas sales tax revenue.

"How long prices are going to stay ... at this low level is the bigger question," Molino said. "There's no real answer to that question. It would be nice if there was some price stability."

Enough robbing Peter to pay Paul. Maybe its time to send a little cash back Peter's way, county legislators suggested during a budget session Wednesday afternoon.

County Manager Jay Gsell's early-stage draft budget calls for a reduction of the county's property tax rate from $10.04 to $9.85 per thousand.

After years of diverting sales tax revenue to balance the general fund budget, maybe the county should replenish the "1-percent fund," Legislator Bob Bausch suggested, followed by words of agreement from legislators Ed DeJaneiro and Frank Ferrando.

The 1-percent fund was created following an increase in the county's share of the sales tax in 1996 to help fund the county court complex.

From that point forward, that 1 percent cut of sales tax was supposed to go to a capital reserve fund -- money in the bank for roads, bridges and other infrastructure.

But in recent years, as a stagnant economy caused tax revenue to sag and out-of-control state mandates put unrelenting pressure on the county's ability to fund basic programs, a portion of that 1-percent fund has been diverted into the general fund.

Meanwhile, roads and bridges continue to age and deteriorate.

"If we have some more money this year, I would kind of like to see that replenished and do some more capital projects, because as the residents of the county know, between the highways, bridges and roof and general capital budget items, we have fallen somewhat behind," Bausch said. "...if at all possible, I would like to see us address some of those issues if we have some extra revenue."

Through the typical budget process, department managers from throughout the county submitted their funding requests for 2015. 

Requested spending topped $27 million, which would have required a tax rate of $9.96 per thousand of assessed property value.

Gsell made cuts and reduced the recommended levy to $26.8 million, requiring a tax rate of $9.85.

The reduction in proposed spending is possible, Gsell said, because of sound fiscal management over the past 20 years, negligible staff growth the past couple of years, and the state capping how much it expects the county to contribute each year to mandated programs.

Mandates still eat up 82 percent of the county's revenue, but at least the figure isn't growing the way it has in years past.

"The state has capped Medicaid at $9.9 million, and that's great, but in every other state but one, counties don't pay anything for Medicaid," Gsell said. "If I could take $9.9 million and tell the State of New York, 'you pay for Medicaid, you control the program, you write the rules, you tell us (what) we can't do as far as reforming a local version that doesn't exist,' then I could say our tax rate goes down by 38 percent. It's not going to happen, at least (not) the way the State of New York is thinking at this point."

With less spending pressure on the county budget, though, Bausch and other legislators are saying, let's review capital funds a little further.

"We can't keep telling people your bridges are going to fall down, but we're going to cut your taxes," Bausch said.

DeJaneiro said he knows it's not an issue in his district (a portion of the City of Batavia), but he knows there's been an issue elsewhere with school buses and fire trucks being unable to pass over bridges because of structural deficiencies. Andrew Young and Bausch both said those have been issues in their parts of the county.

"Bridges are reality and people not getting an ambulance on time or a fire truck on time because of a bridge is something we should be concerned about," DeJaneiro said.

Ferrando agreed with the general sentiment.

"We should replenish the fund when we have a year where we have an opportunity," Ferrando said. "We should consider it."

Gsell was asked to prepare a report on the fund and provide more information to the Legislature.

Also discussed during the budget session was female prisoner transport. It's an expense that is continuing to rise and also takes a deputy or two off patrol at a time.

Gsell said options including having corrections officers transport female inmates, or hiring a private contractor who can provide licensed and bonded security officers for transport.

A few years ago, the Sheriff's Office would have seven or eight female inmates housed at the jails in Orleans, Wyoming or Monroe counties. Now there are 19 or 20 women in the county's inmate population at any one time, all needing transport occasionally to and from the county for court appearances or meetings with attorneys. But adding to the cost burden is the fact that some inmates are now housed as far away as Allegheny County and Wayne County.

Because of behavioral issues, certain inmates are no longer accepted by closer, neighboring counties.

Nothing was settled Wednesday on how to resolve the issue.

On July 2, we published, Aviation school owner says NYS Taxation and Finance driving him out of business. At the first opportunity the next morning, we sought comment from the NYS Taxation and Finance. After much unnecessary wrangling, we received answers to the following questions from the department's spokesman, Geoff Gloak.

Is Miller's general assertion true that the state has reinterpreted rules regarding sales tax on planes leased to flight schools? 

No. Any charge that DTF has suddenly reinterpreted rules regarding sales tax on planes leased to flight schools is inaccurate. There hasn’t been any recent change in the Tax Law on this matter, nor any court decisions we’re aware of that affects the matter. We have always taxed aircraft rental for flight training.

Is it true that over the past 40 years, there has been no sales tax on private planes used by students at flight schools and now there is?

No. An aircraft purchased for flight school training is not, and has not been, exempt from New York State sales tax. There has been no change in practice here.

Is it true that auditors are demanding payment of back taxes from plane owners for up to five years?

Your question seems to suggest that there’s some systematic campaign against people who own airplanes – and any such charge is categorically false. Our focus when it comes to audits is always exactly the same: Was tax due, and was it paid? This is the case for any business, in any industry.

Is it true that auditors are systematically going around to the state's flight schools and looking at whether sales tax has been paid on student's flight hours?

No. That's incorrect. There hasn’t been any change in our audit procedures, which is to examine in some form every tax return filed with the State – whether it’s personal income, corporation, or sales tax. That has been and continues to be our standard audit posture. 

If these assertions are true, what is the rational by taxation and finance? Not applicable.

Is taxation and finance concerned that private plane owners are choosing to end their association with flight schools because of this allegedly new enforcement?

There isn’t any “new enforcement.” Our goal is and always has been to help taxpayers understand the laws and regulations and to enforce those laws and regulations across the board in a fair and equitable manner.

The way Bob Miller sees it, before long, if you want to learn to fly, you will need to go to Pennsylvania or Ohio because there will be no flight schools left in New York.

"The state is holding all the cards on this," Miller told members of the Ways and Means Committee on Tuesday.

Within the past year, NYS Taxation and Finance has started auditing the owners of airplanes that are used as rentals for flight school students.

The state is demanding payment, Miller said, of taxes that were once exempt.

According to Miller, he can't legally charge students tax for their flight hours, but when private plane owners rent their planes to flight schools, the state is now demanding the owners pay sales tax on those fees.

As a result private plane owners who have been audited by the state will no longer rent their planes to flight schools.

More than two months ago, plane owners in Lancaster were audited and Miller was forced to close his school there. Now the state has gone after Batavia plane owners and he must shut down his aviation school here.

"It's not a new law," Miller said. "It's a new interpretation. The executive branch is holding all of the private airplane owners hostage to their interpretation of the code."

According to Miller, this hasn't been an issue in New York for 40 years, and certainly not during the 20 years he's been involved in aviation instruction.

"The state is so desperate for sales tax revenue they're going after everything," Miller said.

Currently, according to Miller, investors buy airplanes without sales tax if they are renting the planes to flight schools. If the planes are rented to private pilots who are not students, then the owners must pay sales tax; if the owners take the planes on a flight for their own private use, they must pay a portion of sales tax for the usage, but for 40 years, there's been no sales tax, he said, on student rentals through flight schools.

The state is requiring plane owners to pay for past unpaid sales taxes going up to five years back.

As a result, Miller said, the plane owners are just ceasing rental services to aviation schools in the state.

Miller has a lease for hangars and office space in the Genesee County Airport through 2015 and he's being asked to be let out of the lease because he's now out of business as a result of the state's actions.

Highway Superintendent Tim Hens recommended the Legislature require Miller to pay rent for 90 days, giving the county time to find a new tenant.

Hens said he isn't worried about filling the hangars -- there's a waiting list for hangar space, but he isn't sure the office space in the terminal will be filled, especially since it will be hard to find another filght school under the current circumstances.

The county will lose about $2,400 a month $2,700 per year in revenue with the flight school closed, due to a decrease in aviation fuel sales.

The language of the proposed law that would create "Tax Free New York" has been released. It articulates how tax free zones would be created on SUNY campuses, as suggested by Gov. Andrew Cuomo.

Genesee Community College would be among the state's colleges that could potentially host tax-free zones.

In order to foster entrepreneurial businesses, especially in tech fields, Cuomo hopes the proposal will lead to start-ups and business expansions on college campuses.

Highlights:

• Colleges would apply for use of vacant space on campus or on property owned by the college and within one mile of the campus with space allocated to business not to exceed 200,000 square feet.
• The state could also select up to 20 strategic locations of currently vacant or soon to be vacant state buildings for tax-free zones.
• The college must demonstrate how a business located within a zone would align with or further the academic mission of the college.
• In its application, the college must discuss whether the business in the tax-free zone would compete with a business in the community, but outside the tax-free zone.
• Businesses would be required to create new jobs and pay employees prevailing wage in accordance with the Labor Law.
• The tax exemption would last for 10 years and in order to maintain tax-free status, a business must retain the new jobs it created or face sanctions.
• Businesses that cannot participate: retail, real estate and professional services.
• The state will not reimburse local governments for any tax revenue loss.

The state Legislature has this week to either pass or reject the proposal.

Documents (PDF):

• Bill Analysis
• Legislation