Visit Syracuse hires Benn as partner-engagement manager

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In that role, Benn will work on sponsorship sales initiatives and internet advertising sales. She’ll also oversee the tourism bureau’s Preble visitors center on Interstate

An Epic Decision for Employers on Employment Class Action Waivers

Law, Accounting & Taxes, Subscriber Only

In a close 5-4 decision in Epic Systems Corp. v. Lewis, the U.S. Supreme Court recently ruled that the Federal Arbitration Act unequivocally provides parties the ability to enter into arbitration agreements requiring individual arbitration proceedings, such that employees waive their ability to bring or join a class action. Likewise, the Court rejected the employees’

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So, what does this mean for employers? Obviously, many employers are thrilled that they are able to prevent the spectre of a class action by requiring employees to enter into agreements for individual arbitration proceedings as a condition of employment. But employers should consider two things before doing so.

First, are you prepared to conduct multiple individual arbitration hearings? Class actions were created as a device to allow plaintiffs to band together to bring claims as a group, when a single plaintiff had little or no incentive to bring a claim individually. A plaintiff with a $100 claim probably won’t bring suit. But, if an employer’s arbitration agreement with an employee requiring individual arbitration provides that the employer will pay the expense of an arbitrator, an employee with a minor claim has nothing to lose by seeking arbitration — and hundreds or thousands of individual arbitration proceedings can drive up costs just as easily as potential class-action liability.

Second, if you do wish to have employees waive class claims in favor of individual arbitration proceedings, make sure the arbitration agreement actually contains such a provision. It’s possible for an arbitrator to handle class claims — the rules of the American Arbitration Association provide for it, for example — so it is not sufficient simply to state that employees agree to arbitration; the agreement would also need to state that arbitration proceedings would be on an individual basis, with employees waiving class claims. Of course, an employer may decide that a class-wide arbitration is preferable to multiple individual arbitration hearings, and draft the agreement accordingly.

Bottom line, the Supreme Court majority found that arbitration agreements are enforceable as the Federal Arbitration Act intended — a result that turned out to be quite epic for employers.

Michael D. Billok is a member (partner) in the law firm of Bond, Schoeneck & King PLLC. He regularly represents employers in state and federal court, defending against actions alleging violations of employment laws, including class actions, as well as collective and class actions under the Fair Labor Standards Act and New York Labor Law. This viewpoint article is drawn from a May 22 posting on the law firm’s New York Labor and Employment Law Report.

Six months in, impact of tax reform open to interpretation

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“We may not get it this year,” says David Ayoub, CPA, a partner in Bowers & Company CPAs, PLLC. With no regulations providing guidance as to how to apply the tax changes passed by Congress and signed by President Trump at the end of 2017, accountants are going to be left to interpret the law

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“We may not get it this year,” says David Ayoub, CPA, a partner in Bowers & Company CPAs, PLLC.

With no regulations providing guidance as to how to apply the tax changes passed by Congress and signed by President Trump at the end of 2017, accountants are going to be left to interpret the law themselves, Ayoub says. “It’s not the worst thing in the world.”

For most in Central New York, the biggest impacts of the new tax law will be the reduction in rates of taxation, the limit on how much in state and local taxes can be deducted from federal taxes, and the loss of what had been a $4,150 personal exemption, Ayoub says.

In a high-tax state, such as New York — where the average property tax bill on a home was more than $7,000 last year, and where the state income tax top rate exceeds that of all but six other states — that will reduce allowable deductions for many filers.

Thomas Kamide, CPA, partner at The Bonadio Group in Syracuse, has run comparisons for his clients and has found that most who don’t work for themselves will end up paying more — largely because of the reduction in how much in state and local taxes can be deducted and the loss of the individual exemption.

But both CPAs caution that every case is different. For some, the increase in the federal tax credits for children will more than offset smaller state and local tax deduction. For others, the cut in tax rates will save so much that some will come out far ahead.

Sharing a chart of new rates for married couples filing jointly, Ayoub notes that for households with incomes between $156,150 to $165,000, tax rates will drop from 28 percent to 22 percent. That 6 percent reduction on $165,000 is almost $10,000.

The tax-rate drops from 33 percent to 24 percent for those with incomes between $237,951 and $315,000 — a 9 percent cut. That’s worth more than $28,000 for someone at the top of the range.

While there are many variables to be weighed, Ayoub offers a simple formula that may work for many: “If you have less than $24,000 in deductions, you should take the standard deduction.”

The standard deduction jumped for tax payers of all classes. For singles it went from $6,350 to $12,000; for married filing jointly, it went from $12,700 to $24,000; for married filing separately, it went from $6,350 to $12,000; and for heads of household it rose from $9,350 to $18,000.

The near doubling of standard deductions is expected to cause many filers to forgo itemizing on their federal returns. The loss of some deductions may contribute to that, Kamide says. For instance, he says, salespeople who claimed unreimbursed business expenses won’t be able to do so under the new rules. “That’s gone,” he says.

Is there anything to be done about the new limits on state and local tax deductibility? Federal regulators appeared to shut the door on discussed workarounds that would made on taxes above the $10,000 limit charitable donations or payments to entities that could be used as credits toward their tax bill.

No go, the IRS said in a May 23 release, “federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.”

However, Ayoub says those with second homes, camps, beach houses, or other properties might consider turning them into rental properties. Tenants would help pay the property taxes and a portion of taxes could be deductible as a business expense. “You get it off your itemized deductions.”

Or, he says, a camp or other property could be put into trust or a partnership of family members or even given over to family member who can make use of the property tax deduction.

Those are decisions that go beyond tax concerns, he says. However, “you can’t get the best tax benefits without giving up some control.”

A 400-page document when introduced in the House of Representatives, the Tax Cut and Jobs Act of 2017, affects many other aspects of taxpaying, including raising the exemption phaseout for the Alternative Minimum Tax, doubling the tax credit for children (and raising the phaseout for that credit from $110,000 in income to $400,000) as well as limiting the deductibility of home equity loans.

While Kamide’s analysis finds most of his clients will pay more under the new rules, Ayoub says he thinks individuals who don’t own their own businesses but do own their own homes will see a benefit, “however slight.”

Then he adds, “those at the upper end are also making out fairly well.”

How the New Tax Law Affects Small Businesses

Business Mentors, Subscriber Only

The Tax Cuts and Jobs Act of 2017 is the most comprehensive tax reform within the last 30 years. While the primary focus of the changes has been geared towards individuals and large corporations, the opportunities and added complexities for small-business owners are significant and should be explored. Whether your company is incorporated or held

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How have things changed for C Corporations?

The top corporate tax rate has fallen. C corps now pay a flat 21 percent tax. For most C corps, this is a big win; for the smallest C corps, it may be a loss.

If your C corp or LLC brings in $50,000 or less in 2018, you will receive no tax relief — your firm will pay a 21 percent corporate income tax as opposed to the 15 percent corporate income tax it would have in 2017. Under the old law, the corporate income tax rate was just 15 percent for the first $50,000 of taxable income.

In addition, the 20 percent corporate Alternative Minimum Tax (AMT) is no more. The tax reforms permanently abolished it. Not only does this repeal simplify tax reporting for businesses, it also now permits businesses to take advantage of certain tax incentives that were previously lost under the old AMT regime.

What changed for S corps, LLCs, partnerships and sole proprietorships?

Previously, the tax rate on income from pass-through businesses to the owners could be as high as 39.6 percent. The TCJA has created the Qualified Business Income (QBI) deduction also known as the Section 199A deduction. This deduction allows many owners/shareholders to reduce the net income received from the business by 20 percent.

Many LLCs report as partnerships and are therefore pass-through entities which are not subject to the corporate tax rate; only LLCs subject to the corporate tax will be affected by the new law.

There are, of course, certain limitations based on the type of business, capital gains, and wages. Specific service businesses (such as law, accounting, health, consulting, financial services) also have personal taxable income thresholds — at which point the deduction is phased out. The phase-out begins at $315,000 for a married couple filing jointly and $157,500 for an individual. After $415,000 for a married couple and $207,500 for an individual, the QBI deduction is not permitted. This deduction applies through at least 2025.

How might these changes affect how business owners keep track of their expenses?

• Increased options for accounting methods — Businesses with revenue not exceeding $25 million may now take advantage of the more straight-forward cash method of accounting, as opposed to the accrual method. This allows businesses to recognize income and expenses in the year in which they are actually paid.

• Elimination of certain deductions — Meals, entertainment and membership dues for social or business clubs and many transportation costs are no longer deductible.

• et operating loss carryforward —The new law limits the net business losses for both C Corporations and the owners of pass-through entities. The losses for the owners of pass-through entities are limited to $500,000 for married filing jointly and $250,000 for all others. The new law for C Corporations provides for an indefinite carryforward period (as opposed to the prior 20-year limitation) and limits the net operating loss (NOL) for those losses incurred after Dec. 31, 2017, to 80 percent of the corporation’s taxable income within a given year. This change will require corporations to separately track NOLs for periods on or before Dec. 31, 2017, and those after Dec. 31, 2017.

Who might consider restructuring their business organization in light of these changes?

This decision is highly dependent on the specific circumstances surrounding the business and its owners.

Each pass-through entity has its own method of reporting and paying out or distributing income. Considering the complexities of the QBI deduction, especially as it relates to different levels and types of income and deductions, owners may want to take a look at whether it makes sense to restructure as a different type of pass-through entity to realize a tax savings.

Is it advantageous to convert from a pass-through entity to a C Corporation?

If you determine that the effective rate of the entity’s taxable income with the QBI deduction (or if your business is unable to take advantage of the QBI deduction) significantly exceeds the corporate flat tax rate of 21 percent, it may be advantageous to convert to a C Corporation. Another consideration is that Section 199A establishing the 20 percent QBI deduction is set to expire at the end of 2025, while the 21 percent corporate rate is currently not set to expire. As we approach 2025, many business owners will likely keep a close eye on whether the 20 percent QBI deduction is made permanent or extended.

Prior to making such a conversion, the business owner will want to think through increased costs involved in converting to a C Corporation. There are additional filing fees and expenses, plus additional compliance costs and double taxation on dividends issued from corporate income. Lastly, as we know, a future president and Congress can change this 21 percent tax rate. If that occurs, converting a C Corporation back to a pass-through entity can be an involved process.

Is there any scenario in which ownership of a company might be changed in order to relieve a new tax burden as a result of this bill?

There are a number of potential scenarios in which a company can be changed or restructured to achieve tax savings:

• The high-earning business owner may want to consider moving real estate or assets owned by the business to a newly created entity. The original business pays rent or leases the property from the newly created entity which decreases the original entity’s profits by shifting them to the new business. This shift may result in a qualification of at least a partial QBI deduction.

• Another idea for the high-earning business owner is the creation of non-grantor trusts for their spouse, children, and even grandchildren. This may be particularly useful for a specific service business whose profits exceed the phase-out threshold for the QBI deduction. The creation and administration of these trusts require careful planning. Also, an important point to keep in mind is that the transfers of the business interest to these trusts are irrevocable gifts.

It’s difficult to distill this sweeping tax reform into a single-most important item. Overall, the Tax Cuts and Jobs Act is generally viewed as a win for businesses. This presents business owners with unique planning opportunities for significant tax savings. As with any new tax law, there are provisions within the law that are highly complicated and will require additional guidance from the IRS.

Tami S. Amici, CTFA, is the VP and trust tax & estate officer for Tompkins Financial Advisors. Contact her at tamici@tompkinsfinancial.com

Author’s note: For informational purposes only. Please consult your tax advisor for specific advice pertaining to your individual situation.

Diocese of Syracuse appoints Breen as CFO

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SYRACUSE — The Roman Catholic Diocese of Syracuse has appointed Stephen Breen as its new chief financial officer (CFO). “Bishop Cunningham is pleased to announce the appointment of Mr. Stephen Breen as chief financial officer and treasurer of the Diocese of Syracuse, effective July 23, 2018,” the diocese said in a June 19 statement. John

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Report finds IDAs continue to grow tax exemptions

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ALBANY — New York State’s 109 industrial development authorities worked on nearly 4,500 projects and granted $1.3 billion in tax exemptions in 2016, according to an annual report from State Comptroller Thomas P. DiNapoli. The $1.3 billion in exemptions was largely granted through payment in lieu of taxes (PILOT) agreements, which allow businesses or other

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The $1.3 billion in exemptions was largely granted through payment in lieu of taxes (PILOT) agreements, which allow businesses or other entities to pay an IDA less than they would in property taxes. According to the report, the net difference between payments made to IDAs and what would have been owed on property taxes was $715 million. That’s an increase of 2.9 percent, or

$20 million, from 2015.

The report said the net tax exemptions granted in Central New York in 2016 were $39.1 million. In the Mohawk Valley, it was $17.4 million. In the North Country, the figure was $5.2 million, and in the Southern Tier, $38 million.

“IDA projects continue to produce new jobs across the state, but the pace has slowed in several upstate areas,” said DiNapoli in a release accompanying the report.

The report found that job growth in the Mohawk Valley and Southern Tier, as well as the Finger Lakes and Western New York, was slower in 2016 than in 2015. The North Country, the report said, “suffered a decline in job creation for the fourth straight year.”

Across the state, IDA-linked projects were credited with helping create 234,038 jobs and retaining 311,166 jobs. In addition, the comptroller estimated the work involved also created more than 40,000 temporary construction jobs.

The cost for every job created varied around the region and across the state. The net tax exemption — the exempted property tax minus PILOT payments made by a project — for each job created in the Southern Tier was $3,079. In Central New York it was $3,334 and in the Mohawk Valley, $4,456. The Mohawk Valley figure is 30 percent more than the state average of $3,424.

Because the North Country lost 799 jobs in 2016, despite net tax exemptions of $5.2 million, there is no cost-per-job figure.

The report also noted that while Downstate IDAs granted $794 million in total tax exemptions and Upstate IDAs just $527 million, “Downstate IDAs had significantly lower net tax exemptions on a per capita basis — $29 — compared to Upstate — $52.”

“Although IDAs do not impose taxes, their activities can nonetheless affect taxpayers in their communities,” the report’s executive summary said. “In particular, property tax exemptions can temporarily reduce a local government or school district’s property tax base, which may then increase other residents’ property tax bills. It is therefore important for New Yorkers to be aware of and understand the financial activities associated with IDAs and their projects.”

Four Common Retirement Mistakes & How to Avoid Them

Business Mentors, Subscriber Only

Constructing a smart retirement income plan isn’t easy. Throughout the working years, one has many factors to consider, such as salary, expenses (monthly and unforeseen), debt, and college for the kids — just to name a few. All these factors can affect a person’s ability to, first, devise a consistent plan for her retirement goals,

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All these factors can affect a person’s ability to, first, devise a consistent plan for her retirement goals, and secondly, accumulate the necessary capital to provide ample retirement income. Meanwhile, one can make costly mistakes that will have implications down the road.

A retirement strategy has many moving parts, and each can have a significant impact on the others. Many people often make the same mistakes.

There are ways to avoid them, and much of it is about knowledge. There is more you need to know about retirement today than you did 20 or 30 years ago. It starts with knowing what lifestyle you want to achieve in retirement and the options that will both protect you and enhance what should be the best years of your life.

Here are four common mistakes in retirement planning and how to avoid them:

Investing like you’re still young

Earlier in their working careers, people often have a higher risk tolerance. But approaching retirement, your investment strategy should shift toward preserving capital. Phase out those investments that are subject to wider fluctuations. The gradual move away from riskier investments should begin as you enter your mid- to late-40s in age.

Leaving your nest egg vulnerable to big market drops

Putting your entire nest egg in one basket can be disastrous. Having an excessive amount of market risk in your portfolio, you could find yourself suffering a loss that you won’t have time to recover from before you retire. With stocks having surged for an extended period, beware of the bear market. It would be wise to purge some risk from your portfolio in favor of more predictable methods of capital growth and income, such as annuities, life-insurance policies, or alternative investments such as private lending and real estate.

Not satisfying basic income needs

It has become less realistic for a 401(k) coupled with Social Security to provide the regular income needed for retirement. It’s important to estimate what your yearly expenses will be in retirement and diversify accordingly. Use your investments, insurance policies, or retirement accounts to provide multiple income streams. This allows you to draw from them only what you need to meet your pre-determined budget. Be sure you calculate your Social Security payment and any required minimum distributions, so you don’t incur additional tax liability.

Having the wrong kind of annuity

A crucial component of a comfortable retirement is reliable income, and a common way to achieve that is by using annuities. Unfortunately, some retirees find themselves with an annuity that doesn’t fit their needs. A fixed annuity pays out a guaranteed rate of return, providing less risk compared to variable annuities, but the tradeoff is you get a more modest return. Sometimes a fixed index annuity (FIA) is the best bet. This allows you to protect your principal by shifting the risk to the insurance company selling you the annuity. There are caps on your potential returns, but FIAs are more reliable because they mitigate risk.

With retirement planning, the end goal should be not only to ensure you’ll have enough income to satisfy your retirement budget, but also to provide you with enough to truly enjoy your retirement. Because life goals and the economic climate are subject to change, you need to consult with your financial advisor annually to optimize your strategy.

Jadon Newman is founder and CEO of Noble Capital (www.noblecapital.com). With more than 16 years of experience in the financial-services industry, he specializes in retirement planning, real estate investment, and asset management.

Manlius Pebble Hill leader, Dunaway, to retire after next school year

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MANLIUS — Jim Dunaway is retiring as head of school at Manlius Pebble Hill School (MPH) at the end of the 2018-2019 school year. “By next spring, at my fifth MPH graduation, I will be 70, and it is time to turn over the reins to a younger leader who can guide this great school

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Former North Area Athletic Club building sold for $300K

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SYRACUSE — The former North Area Athletic Club building located at 507-509 Pond St. in the city of Syracuse was recently sold. Masjid Bilal of Syracuse purchased the 21,330-square-foot, 3-story building for $300,000, according to a news release from Cushman & Wakefield/Pyramid Brokerage Company. Don O’Leary and John Sposato of Cushman & Wakefield/Pyramid Brokerage, exclusively

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DeWitt office building sold for more than $335K

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DeWITT — The 8,000-square-foot office building located at 6707 Brooklawn Parkway in the town of DeWitt was recently sold. Bowers Development LLC purchased the 1.5 acre property for $335,500 from Brooklawn Real Estate LLC. Donald O’Leary of Cushman & Wakefield/Pyramid Brokerage Company exclusively marketed the property and represented the seller in this transaction, according to

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