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Tips & New Initiatives for Health Care Plans from the Federal Department of Labor

Mary Rosen, the Associate Regional Director of the United States Department of Labor for New England including Upstate New York gave a presentation Wednesday on common issues with health care plans. She also described six tips for common plan errors and three new initiatives the DOL is working on.

This seminar hosted by Anthony Stevens was a very good opportunity to hear what issues the Federal DOL is focused upon.

Based upon common errors seen by the DOL the six tips for health care plan fiduciaries to consider are:

1. Carefully select and monitor service providers

  • Document the process of selecting the service providers; include the data that was reviewed;
  • Confirm the fees and expenses paid a plan are reasonable;
  • Monitor plan service providers.
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Where Do The Presidential Candidates Stand On Estate Taxes?

Many Americans vote based on how a candidate’s position affects their wallets. Election 2016 has a wide range of proposals that may drastically impact the estate taxes of many citizens. This blog provides a brief overview.

Currently there is a Federal estate tax of 40% imposed on estates in excess of $5,450,000 ($10,900,000 for couples). At death a decedent’s property receives a stepped-up (or stepped-down) tax basis equal to fair market value at the date of death. This means that there is no capital gains tax on estate property sold shortly after death since the selling price is most likely equal to the fair market value as of the date of death.

The presidential candidates have released details of their tax position. Let’s look at how they would change the estate tax.

Hillary Clinton’s original proposal increases the estate tax rate to 45% and decreases the threshold for taxation to $3,500,000 per person. A single person with an estate of $5,450,000 which currently is nontaxable would incur an estate tax of $877,500 under that Clinton proposal.

More recently Clinton has revised her tax plan to impose higher taxes for the super—rich. For taxable estates over $10 million the rate of tax would be 50%. Estates over $50 million would incur taxes at a 55% rate. A third bracket rate of 65% would apply to estates exceeding $500 million. These higher rates were initially proposed by Senator Bernie Sanders during the Democratic primary.

Clinton’s new proposal, announced September 22nd, also changes the income taxation of property following the property owner’s death. The proposal would repeal the step-up in basis rules which eliminated capital gain on the sale of inherited property. Under the new proposal the transfer of property at death or by gift during life would trigger the taxation of the appreciation in value prior to death or gift. Note that Clinton’s tax proposal changes the current capital gains tax. She proposes a capital gains rate of 43.4% if the asset was held for 2 years or less. For assets held 2 years to 6 years the rate is lowered incrementally. While there likely will be a generous exemption against the amount subject to tax the Clinton plan is certain to lead to significant increases in death taxes.

Donald Trump proposes to eliminate the estate tax. However, he would also change the tax basis rules. Estates of $10 million or less would still enjoy the stepped-up tax basis thus avoiding the capital gains tax on appreciation prior to death. For estates greater than $10 million capital gains would be subject to tax at the current rates which are generally 15% or 20%.

Neither Clinton nor Trump address the generation-skipping tax of 40% which is imposed when a gift or bequest is made to a grandchild. The House Republican Tax Reform Plan of 2016 calls for the elimination of both the estate tax and generation-skipping tax.

Gary Johnson, the Libertarian presidential nominee and former Republican New Mexico Governor supports a flat-rate consumption tax on purchases. This tax would replace all federal taxes including the estate tax. It is estimated that this consumption tax (referred to as the “Fair Tax”) of 23% roughly equates to the lowest current income tax rate of 15% plus payroll taxes.

Estate Planning – Much More Than Signing a Will

In the age of the internet, there is a growing trend amongst the American populace who decide they need a Will to avoid the cost of a lawyer and use a legal services website like Legal Zoom® or use some free Will form found on the internet. However, there are many dynamics that go into estate planning beyond executing a “simple” Will.   First, you may have family dynamics or complex assets such as a closely-held business that require something more than a “simple” Will. In fact, a Will may not even be the best vehicle to address some of these issues and a prenuptial agreement or a revocable living trust may need to be considered. There are also various assets that are generally not governed by the terms of a Will at all, such as life insurance, joint bank accounts and retirement accounts. Your DIY Will form may be perfect in every respect but it has generally no authority over these types of assets.

Moreover, estate planning generally involves more than planning for death but also planning for incapacity. The documents used to address incapacity are commonly referred to as advance directives, which generally include a power of attorney, a health care proxy and a living will. These are also popular with the DIY form websites but you may need an attorney to explain to you the legal significance and consequences of signing these types of documents.

Another dynamic to estate planning is exploring whether you may need to do some elder law/disability planning, which entails not only Wills, trusts and advance directives but looking into longterm care insurance and/or Medicaid eligibility and planning.

The purpose of this blog is not to convince the reader to avoid using DIY websites such as Legal Zoom®. What you should consider, however, is whether your particular personal and financial situation is complex enough to require consulting with an attorney. This is really no different than any other decisions we all make in life – I do not go to the doctor every time I have a simple common cold but I certainly go to the doctor if I break my arm. I can change the oil on my automobile but I prefer the auto shop to do it because they have better tools than I do and I am reasonably certain they will do it correctly.

So if you come to the decision that you need a “simple” Will, you should also give serious consideration if your particular situation is really all that simple before you attempt to do it yourself or use a DIY legal services website.

Summer in the City – SIDA Makes Waves with New Tax Exemption Policies

The City of Syracuse Industrial Development Agency (SIDA) made waves earlier this summer when board members unanimously voted to end the long-standing practice of giving the Syracuse Common Council the ability to vote on all payment in lieu of taxes (PILOT) agreements. As of June 21, 2016, the Council’s PILOT oversight is limited to instances in which an agreement deviates from the Agency’s uniform tax exemption policy (UTEP). While some allege the move reduces government accountability by placing decision making authority in the hands of unelected political appointees, proponents of the change suggest it will enhance government efficiency by removing partisan politics and unnecessary red tape from the approval process. Lost in this debate and the subsequent headlines, however, is the fact that SIDA made a number of other policy changes at the same meeting that will have as much, if not more of an impact on future economic development projects in the city.

Like every other industrial development agency in New York State, SIDA is required to establish a UTEP to provide the framework by which the Agency grants certain tax exemptions and benefits to projects. In addition to establishing the rules of engagement, the UTEP also ensures projects supported by SIDA are aligned with the priorities of the City of Syracuse and the surrounding community. As part of the recent overhaul of the UTEP, SIDA established the following PILOT categories and corresponding exemption schedules*:


Standard Historic Priority Industry Priority Commercial & Residential


100% 100% 100%



100% 100% 100%



100% 100% 100%



100% 100% 100%



100% 100% 100%



100% 90% 100%



100% 80% 100%



75% 70% 100%



50% 60% 100%



25% 50% 100%



40% 80%



30% 60%



20% 40%



10% 20%


15 0% 0%


* The exemption is calculated as a percentage of the increase in assessed value attributable
to the improvements.

While the Standard, Historic, and Priority Industry categories are relatively straightforward and do not represent a significant departure from SIDA’s previous policy, the Priority Commercial & Residential category reflects a considerable shift in the Agency’s approach and warrants further explanation.

In order to be eligible for a Priority Commercial & Residential PILOT, mixed use and residential projects must either be located in a Neighborhood Revitalization Strategy Area (NRSA) or agree to reserve 20% of the project’s residential units to be rented at 65% of the Area Median Income (AMI) rent limits for the City of Syracuse. The NRSA boundaries can be viewed in the City of Syracuse’s Consolidated Plan 2015-2019, and the 2016 rent limits, which are set annually by the US Department of Housing and Urban Development (HUD), are as follows:


1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom 6 Bedroom
$836 $898 $1,079 $1,238 $1,361 $1,483


In addition to some of the more stable neighborhoods on the periphery of the city, notably absent from the NRSA boundaries are the downtown, lakefront, and university hill neighborhoods, all of which have experienced unprecedented growth in mixed-use, market rate, and student housing development over the past decade. In light of recent reports highlighting Syracuse’s chronic concentrated poverty, this new policy is an attempt by SIDA to more equitably target investments throughout the city by incentivizing developers to: (1) incorporate affordable units into what would otherwise be market rate housing in stable and growing neighborhoods; (2) undertake new mixed use and residential projects in underserved neighborhoods; and (3) incorporate a mix of uses into what would otherwise be strictly residential developments.

Understanding not every developer will be willing or able to comply with the Priority Commercial & Residential PILOT requirements, it’s important to note that SIDA is not the only mechanism by which developers can seek property tax relief for mixed use projects. The 485-a New York State real property tax law (RPTL) exemption, for example, is available “by right” to any project in the city that involves the conversion of a commercial property into mixed use with residential. The 485-a provides a 100% exemption on the increase in assessment attributable to the improvements for the first eight years of the project and then phases up to full assessment over the last four years of the 12-year schedule. Again, the intent behind the Priority Commercial & Residential PILOT is to provide an incentive to developers by offering a more generous exemption schedule than the 485-a. It’s also worth noting that mixed use and residential projects located outside the NRSA can still receive mortgage recording and sales tax exemptions from SIDA without being subject to the aforementioned affordability restrictions as long as they are not requesting a PILOT.

In addition to the new categories and schedules, as previously noted SIDA made a number of other recent PILOT policy changes that will impact future projects. A few highlights of these changes, which were intended to both bring the Agency into compliance with new State law as well as provide greater certainty to all parties involved, are as follows:

  • The base (unimproved) assessment used in PILOT calculations will be the greater of: (i) the assessed value at time of application; or (ii) the purchase price of the site or facility. In recent years this value was typically determined on a case-by-case basis by SIDA and the City’s Commissioner of Assessment.
  • The maximum amount of the financial benefit for a project will be agreed upon at the time of Agency approval. The financial benefit was previously impacted by a number of variables including future tax rates, full (improved) assessments, and final construction costs, and therefore often could not be determined until years after approval.
  • PILOT agreements will take effect during the tax year immediately following the taxable status date (January 1) after SIDA acquires an interest in a project. The stage of a project at which the PILOT became effective sometimes varied in the past.

As the 2016 New York State Fair gets underway and summer draws to a close, developers and businesses will soon begin to shift their focus to next year’s projects. In doing so, they should be mindful of how these and other public policy changes may impact their plans.


Pokemon Stop: Gaming Sensation Raises Potential Legal Issues

Authored by Christopher Powers, Summer Law Clerk

As you may have heard, Pokemon Go is sweeping the nation, including Central New York.

Pokemon Go is a downloadable mobile app where players try to find different characters from the popular Japanese cartoon and video game on a virtual map based on a user’s actual surroundings. The app uses GPS and other geolocation features on a user’s smartphone to places the virtual characters at local landmarks. Then, the player then must go to the place and use traditional gaming techniques to “capture” the character. Pokemon Go was released on July 7, and has become a worldwide sensation. Within a week, the game already had been downloaded more than 10 million times, according to CNN.

Pokemon Go is being credited with spurring traditionally homebound gamers to explore their communities while getting exercise and also building impromptu friendships among participants.

But it’s not all fun and games, so to speak. The Pokemon Go phenomenon, and the other similar types of so-called augmented-reality games, implicates multiple legal issues, from the simple to the potentially dangerous. The rapid growth and relative lack of knowledge surrounding the game have prompted numerous warnings from law enforcement and other municipal entities about the dangers of the game. Other examples of how the game raises real legal questions include:

  • Trespass/Nuisance. The game is meant to be played in public spaces, but there is still potential for game pieces to be placed on private property, either by design or by mistake. Such an instance could potentially create issues of trespass and opens up the concept of “attractive nuisance” (which essentially makes homeowners liable if a child is injured by the homeowner’s irresistible property, like a swimming pool or, potentially, a Pokemon Go game piece.) While it may seem far-fetched to the uninitiated, an interesting discussion about this has already spawned in the comments section of this website.
  • Assembly. Even confining the game to public spaces may be problematic in its own way. A blogger for the Hollywood Reporter suggests that the competition for game pieces in augmented-reality games will inevitably spill over into the real world and possibly lead to violence. He also foresees, albeit in the distant future, a time when augmented-reality games will foster First Amendment concerns.
  • Robbery. A group of teens in Missouri used the app to lure unsuspecting players to a particular location in order to rob them, according to USA Today.
  • Distracted Driving. New York Vehicle & Traffic Law (VTL) § 1225-d prohibits the use of an electronic device while operating a motor vehicle. VTL § 1225-d is best known as the no-texting-while-driving law, but the definitions in the statute would clearly apply also to someone playing Pokemon Go (or any other virtual game, for that matter) while driving or stopped in traffic or at a light. In New York, anyone who uses a “portable electronic device in a conspicuous manner” is presumed to be violating the statute, so it’s best to do your gaming outside the car. See VTL § 1225-d(4).

All things considered, though, Pokemon Go and other augmented-reality games are just forms of entertainment. Since augmented reality is new, most of these issues are speculative and nowhere near settled. For now, enjoy the game, be careful, and be courteous. But don’t be surprised if the continuing evolution of the augmented-reality industry leads to new, unprecedented legal issues.

Even if You’re Eligible for a Ticketmaster Refund, That Doesn’t Mean You’ll Get It

Authored by Christopher Powers, Summer Law Clerk

This week, the new Lakeview Amphitheater in Syracuse, N.Y., hosted one of the biggest concerts of the summer in these parts. The sold-out Dave Matthews Band concert was the first show of the season, and first ever sellout, at the new venue, which opened in 2015.

The kickoff of concert season coincides perfectly with the settlement of a major legal dispute that has implications for concert-goers, here in Syracuse and across the country, for months and possibly years to come.

Earlier this week, the parties in Curt Schlesinger et al v. Ticketmaster,  settled their 13-year-old class-action lawsuit. The suit was filed in 2003 when two music fans who had purchased concert tickets through the online ticketing platform Ticketmaster complained that the service’s fees were excessive and misleading. In 2011, the parties agreed to a settlement whereby Ticketmaster agreed to return money to fans. The logistics of those refunds were finally agreed to, and that’s what made headlines this week.

As part of the agreement, anyone who bought tickets using Ticketmaster’s website between Oct. 21, 1999, and Feb. 27, 2013, is eligible to receive vouchers for free and/or discounted tickets. Depending on how many tickets a person bought via Ticketmaster during that time frame, a person may be eligible for anywhere from 1 to 17 vouchers. The number of vouchers customers are eligible for will appear when they log in to their ticketmaster.com account.

Three types of vouchers are possible: (1) a $2.25 discount on any ticket; (2) a $5.00 discount toward UPS delivery of any ticket; or (3) two free general admission tickets at venues owned or operated by Live Nation Entertainment, the entity that owns Ticketmaster. The first two types apply to any ticket purchased through Ticketmaster, while the free general admission vouchers only work for a select list of concerts provided by Ticketmaster. Some of the more well-known performers for whom the Live Nation vouchers may possibly be used range from Keith Urban to Duran Duran to Darius Rucker to Steely Dan to Kool & the Gang and many others.

You may have received an email from Ticketmaster alerting you that you are eligible for a discount. However, actually redeeming that discount is where it can get tricky for consumers. The company has indicated that vouchers will be redeemed on a first-come, first-served basis, so the first movers will have the advantage. The terms of the settlement dictate that Ticketmaster is obligated to pay out $42 million in discounts over the next four years. At first blush, that seems like a substantial amount of money. Upon further inspection, however, it doesn’t equate to significant, if any, savings on future ticket purchases. According to The New York Times , Ticketmaster already has sent an estimated $386 million worth of discount codes to nearly 57 million people. If each person who claims a voucher only claims the $2.25 option, that means that only 18,666,667 people, at most, would get a discount. Almost certainly, the number will become far less than that as more expensive options are redeemed. Additionally, the list of eligible shows where the general admission vouchers may be redeemed currently includes zero shows in Upstate New York, making redemption for local consumers even less likely.

The bottom line is that, yes, you may be eligible for a discount, but unless you act fast and are willing to travel, you may not ever see it.


Changes Coming in the Archaic New York State Alcoholic Beverage Control Law

Governor Cuomo announced this past week that he is advancing legislation to “modernize” the State’s Alcoholic Beverage Control Law (“ABC Law”). As someone that has spent years of my life ensuring license applicants comply with the law, first as an employee of the Liquor Authority and more recently as counsel to individuals and entities appearing before the Liquor Authority, this is a welcome announcement. While we don’t yet know all of the exact details and language, we do know some of the areas the Governor is proposing to change. They are as follows:

Expand Sunday Sales – Current law prohibits sales of alcoholic beverages for all on-premises locations (e.g., bars, restaurants, taverns). The Governor has proposed a special permit that licensees can apply for to allow them to serve patrons between the hours of 8 a.m. and 12 p.m. on Sunday mornings.

“Two Hundred Foot Law” – ABC Law currently prohibits on-premises licenses from operating within two hundred feet of a building that is exclusively used as a school or place of worship. The current proposal would do away with the outright ban and provide the Liquor Authority with discretion on this matter and also provides for input from the local municipality and school or place of worship. Often times a local church would have no objection to a business opening nearby and now that can be considered in determining whether or not to grant the license.

Reduce Paperwork for Craft Manufacturers – Anyone that has ever completed a liquor license application in New York can appreciate this proposal. Craft Manufacturing (breweries, wineries and distilleries) has seen enormous growth and change In New York State over the last decade. According to the Governor’s office, this portion of the industry, combined with distribution and retail, accounts for more than $27 billion in economic impact and supports tens of thousands of jobs statewide. Prior to 2012 manufacturers could not hold more than one manufacturing license. So if an entrepreneur wanted to make both wine and beer they would have been required to have a separate facility for each. In 2012 the law changed so that a manufacturer could hold more than one license in the same location. The current proposal would combine craft manufacturing licenses into one application considerably reducing the burdensome paperwork for these small businesses.

Authorize the Sale of Wine in Growlers – We’ve all seen growlers of craft beer for years so why not wine too? Current law requires that wine sold at retail for off-premise consumption be kept in their original sealed containers. The Governor’s proposal would change that law allowing customers to go to their favorite wineries and fill a growler with their favorite wine. The legislation would also authorize wineries to allow customers to take home partially finished bottles of wine.

Reduce Fees for Craft Beverage Salespeople – Currently ABC Law requires that any salesperson employed by a manufacturer or wholesaler must obtain a “solicitor’s permit” in addition to a bond. Recognizing that all manufacturers are not created equal and vary greatly in size and that there is a financial hardship imposed by unnecessary fees on small business the Governor has proposed reducing the fees for a solicitor’s permit and eliminating the bond requirement.

I think most New Yorkers will agree that reducing the bureaucratic burden on small business is a positive development for our local economies and these proposals will encourage growth within the industry and add to the already great choices of New York manufactured alcoholic beverages. Stay tuned for more updates on the changes to the ABC Law as we learn more of the specifics.

U.S. Department of Labor Issues Final Rule on FLSA Overtime Regulations

On May 18, 2016, the U.S. Department of Labor published its long-awaited final rule amending the federal Fair Labor Standards Act (“FLSA”) overtime regulations regarding the executive, administrative and professional exemptions (the “FLSA White Collar Exemptions”).  The outside sales and computer professional exemptions are not subject to the new amendments.

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NYS Real Estate Transfer Tax on Conveyances of Real Property

In New York State, sellers who convey an interest in real property are required to pay New York State real estate transfer tax. In the usual sale of real property, the real estate transfer tax is computed at a rate of $2 for each $500 of consideration or fractional part thereof. For example, in a transaction in which the consideration paid is $100,000, the real estate transfer tax will be $400. The transfer tax is due when the instrument effecting the conveyance, which is a deed in the case of an interest in real property, is delivered from the grantor/seller to the grantee/buyer in the transaction.

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Federal And New York State Tax Advantages Of Long Term Care Insurance

If you have looked into purchasing long term care insurance, you know that it is an expensive proposition. However, there are some tax advantages related to the premium payments for long term care insurance.

If you are an employee and itemize your deductions you can deduct a portion of your long term care insurance premium as a medical expense on Schedule A of your 1040, itemized deductions.

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Disclaimer: This blog is for educational purposes; to provide readers general information and a general understanding of the law, not to provide specific legal advice. By using this blog all readers understand that there is no attorney client relationship between the reader and Mackenzie Hughes LLP, the publisher of this blog.

Prior results do not guarantee future success.

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