Written by: Theodore M. David, Chair, Tax Law Committee

  1. The Sleep Test
  2. Estate Tax Going?
1.

They say if you become a teacher by your students, you will be taught. I subscribe to that homily. I spent 32 years teaching at the University ending up a tenured full professor in law and taxation. One of the most satisfying parts of being a tax professor and tax practitioner was having the opportunity to mentor a new tax lawyer. I had such an opportunity in the early 1980s when I encountered in my class Scott Novak. Many years later I think he would agree I helped him get on the path of practicing tax law. So it is with much pride that I cite for this bar bulletin a chunk of his recent article which appeared in the Bloomberg publication called Tax Management Memorandum dated April 28, 2025. The Article is entitled: Businesses are facing financial headwinds – a Practical Guide. The article is a long one and extremely helpful but one part of it draws my attention. Scott asked the question that many lawyers, accountants and I am sure clients as well probably have had over the years: When do you hire a tax lawyer? Needless to say, there are many intricate and complicated issues which suggest the answer but a simple version Scott has set forth in his article: “it often occurs to me that the best service that I can provide to a client is to help the client sleep better at night. When speaking to accountants, I will sometimes get asked the question, how do we know when it’s time to refer a client to a tax attorney. There are several answers to that question, but first and foremost, send them to an attorney when their tax issues keep them up at night.” Easy to use and on point. But this is a tax bulletin, and the rest of the Article I here summarize and excerpt:

Many of my clients make decisions when faced with tough times that haunt them for years to come. What follows are some thoughts from experience in the trenches. One caveat – neither my firm nor I condone the nonpayment of taxes, or unfiled returns. But we do understand the realities that businesses might face in the difficult times ahead and would like to help you make the best decisions possible.

Trust Fund Taxes — Always Pay These! There is a reason why this comes first, ahead of the topics that follow. The moment that you collect sales tax, you are personally responsible to turn that sales tax over to the state.

Filing Tax Returns Late or Not Filing Them at All — Federal. Your business is struggling, maybe you’ve fallen behind a bit and you’re very distracted with the minute-to-minute issues that you are faced with. Wouldn’t it be simple to just not file your tax returns right now, especially if paying the tax might be impossible at the moment or might force some hard decisions that you would prefer to put off? When a client comes to me with the question of whether or not to file, here is what I tell them. The penalties for failure to file a tax return on time are far greater than the penalties for failure to pay on time.

Annual Business Registration Fees Many smaller entities neglect to register and pay the annual fees required by the state that they were organized in. While the annual fees are not onerous, if you ever want to terminate that business, and those fees have not been paid along the way, it is likely that all of those fees will all have to be paid, in addition to a penalty in some states. Better to stay on top of those fees and to terminate a business as soon as possible when it no longer serves a purpose.

W-2 or 1099? Some business owners opt to treat certain workers as independent contractors (1099) rather than employees (W-2). Why might they do that when facing financial hardships? Two primary reasons. First, the burden of state and federal employment taxes is fully shifted from the employer to the worker. Second, the employer’s workers’ compensation burden may be reduced if the individual is not the employee of the employer. What some may not realize is that the question of employee vs. independent contractor is not a simple matter of choice or preference. There are tests at both the state and federal level that are used to determine the status of a worker. There also exists an entire body of law generally called “employee misclassification.” If reading that title leaves you with the impression that there is a bias towards classifying workers as employees, you are correct. And the states are much more invested in this than the IRS. Almost no one comes out of a state employment tax audit unscathed.

I am sure if you ask, Scott would be glad to send you the complete article that you may want to share with your business clients. He’s at a Scarinci Hollenbeck. PS He got straight A’s in my class.

2.

From Martin Shenkman this note: US representative Randy Feenstra, a Republican from Iowa introduced a bill called the Death Tax Repeal Act. It was introduced February 13, 2025 with more than 170 representative signing on. Senator John Thune introduced companion legislation in the United States Senate. Marty comments: “Tax seers have a batting average well below that of local weather forecasters and that it’s just not possible to predict what this Congress may do.” I add or anyone else in this current government.

Questions or comments should be emailed to Tdavidlawyer@gmail.com.

Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

  1. What is the Matter Alice?
  2. Just Do It
  3. New NSA Man at IRS

1. I’m late, I’m late, for a very important date! No time to say Hello, Goodbye, I’m late, I’m late, I’m late. If you care to remember your childhood, somewhere in your gray matter you will recall the White Rabbit in Alice in Wonderland whose obsession with time is a prominent symbol in the story. Read More

Dear Members,

The Bergen County Bar Association leadership meets with the Bergen County Assignment Judge quarterly to discuss issues of mutual interest to the judiciary and our membership. For matters of general importance that you believe should be raised at our next meeting, please email the BCBA.

This is a summary of the March 11, 2025, meeting with the Hon. Carol Novey Catuogno, A.J.S.C.

Judge Catuogno opened the meeting by extending her appreciation for the cooperation between the Judicial Bench and the Bar. Read More

Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

1) Call the Midwife?
2) The Dirty Dozen, Again?
3) IRS Side Gig

1) Now, I am not going to ask you what you did last week. Heaven knows I didn’t do much myself, but certainly, there has been a swirl of activity affecting our tax administration system and the rest of the world. I’ll take it back: if you are a practicing lawyer, you probably do know what you did last week and at least who you will bill for all that time. The old tired joke goes that the young lawyer dies prematurely, goes to heaven, and meets St. Peter at the pearly gates. St. Peter says to him, “We were expecting a much older person.” The lawyer says, “I’m barely 45.” St. Peter responds, “Oh, we were judging from your billing time records.” If you are one of the hundreds of thousands of federal employees, you may have a tougher time deciding whether you are staying or going and what you did last week. And the IRS is no exception. Apparently, the same offer has been made to the Internal Revenue Service to trim the fat of our bloated government. Helping the trimming, the former Commissioner took off on January 20, 2025. And of course, the question then came up of who would replace him. Now, there is no cause for alarm because we now have an Acting (soon to be fired, retired, let go or downsized) Commissioner. IRS Chief Operating Officer Melanie Krause will become the Acting IRS Commissioner. The deputy commissioner who could have become Commissioner “retired” two weeks ago. What a coincidence. So Krause has moved into the new acting position. She is relatively new to the IRS, having joined in October 2021. But no matter, she spent 12 years in the federal oversight community in the Government Accountability Office.

Now, all of this would be ordinary, except that Krause also maintains an active license as a registered nurse. That is just perfect. Everyone knows these days that nurses are far more important than doctors. If you don’t believe me, catch the PBS series called “Call the Midwife.” It will make you glad that you went to law school instead of medical school. Someone at the IRS has realized that the system is currently sick. So, it’s time to call the midwife or at least a registered nurse. By the way, IRS employees have been prevented from skipping and grabbing eight months of free pay until the end of tax season. Come May 15, I am sure thousands, some with great relief, will find employment elsewhere. What effect this will have long-term on tax administration remains to be seen. Thousands of robots coming?

2) Annually, the Internal Revenue Service publishes the Dirty Dozen list. The IRS warns that these things are common schemes that threaten taxpayers’ tax and financial information. It is not a formal listing of agency enforcement priorities. But it has become somewhat of a tradition. So I list here the notorious dozen: email scams of all varieties; bad social media advice: online account help from scammers; fake charities; false fuel tax credit claims; credits for sick leave and family leave; bogus self-employment tax credits; improper household employment taxes; overstated withholding scam; misleading offers in compromise; ghost tax return preparers and lastly, new client scams where cyber criminals impersonate new potential clients to trick tax professionals into responding to their emails. Be on alert as well for those false emails asking what you did last week. IRS would like taxpayers who have been involved as a victim in any of these to file form 14242 with the Internal Revenue Service at 24000 Avila Rd., Laguna Niguel CA 92677.

3) The US District Court for the Southern District of Florida issued a permanent injunction against a Miami tax return preparer named Jean-Lewis. It appears Mr. Lewis had simply started a side gig involving filing tax returns for taxpayers. It was simple: he would prepare a tax return for the clients and give them a copy. He would then create a phony tax return file it with IRS requesting a larger refund. When the refund was received he would make sure the client got that which was set forth on the return he had provided. The difference was Jean-Louis’ profit. So he has been banned from doing most anything having to do with federal income tax returns and has been ordered to pay up $245,275 in ill-gotten gains from his side gig. He has also declined the position of Acting, Acting Commissioner of Internal Revenue as he said, “it is not my type of gig and besides, it lacks job security.”

Questions or Comments   should be sent to:    Tdavidlawyer@gmail.com

In June, the BCBA joined the NJSBA and several other local and affinity bar associations in a Petition for Review of Opinion 745 of the Advisory Committee on Professional Ethics. That opinion addressed the long-standing practices of trial attorneys who are certified pursuant to Court Rule 1:39, et seq. Specifically, Opinion 745 provided that New Jersey-certified attorneys could not pay referral fees to out-of-state attorneys who referred cases for their specific area of expertise.

The Supreme Court of New Jersey agreed with the Petitioners and vacated the Opinion. Thank you to BCBA Past President Michael J. Epstein for representing the BCBA in this matter.

Click below to read the opinion.

OPINION

Written by: Theodore M. David, Chair, Tax Law Committee

Current Items:

  • IRS Gone?
  • Tax Season Internal and External?
  • IRS “Buy-Out”

1) This is going to be a short bar bulletin. In fact, I’m getting this ready even before our new President takes office on January 20. Those who know me realize I am a first-class procrastinator but this time I hope to have my feet in the sand when this bar bulletin actually gets sent. So, I thought I’d take the time right now on a rainy, chilly, dismal kind of New Jersey day to bring you some frightening news about the likelihood of a mess in tax administration about to happen. Now, you may recall that Congress actually funded the Internal Revenue Service in a meaningful way after many years of delay. But now that is one of the areas the President will be looking at to cut and if rumors are to be believed, eliminate. Now, your guess is as good as mine as to what will actually happen after January 20. Tax law is wed to politics. It’s not like a science with immutable rules and results. Even the great Einstein said he couldn’t make sense of it. The problem is, it is whatever Congress says it is. If the Congress is married to the Executive branch, the potential for disruption is present. It’s a shame as the IRS has recently gotten its computers working reasonably well, and its website is simply first class. But any plan to reduce funding and make the IRS and DOJ an arm of the executive is complicated, messy, as well as, I’d guess unconstitutional. “If they can’t follow the agenda, they should leave.” And they have started to do just that. The Commissioner of IRS, Dan Werfel, announced the other day that he will resign on January 20. His term was to go until 2027. IRS top brass always stay through at least a year or two to ease a transition. So, the world of tax administration that we lawyers and accountants contend with will be something as yet unseen. The promise to eliminate the income tax is more concerning but highly unlikely. All this does not seem to add up to a successful Trump term in office with pandemonium in tax administration. So, cutting and firing senior officials at the Internal Revenue Service and losing senior lawyers at DOJ makes no sense and claiming to eliminate the agency altogether sounds truly ridiculous. Or does it? See Item #3. Needless to say, 2025 will be an interesting year.

Among tax ideas floated these days are: eliminate the income tax; make tips tax free; acquire Canada and Greenland (will they be tax havens?); restore the Salt deduction (We in NJ would love that one). Once details seem “real”, if there will be any, I will be glad to let you know. These are strange times in many ways and the tax world is no exception.

By the way, far from being early this Bull ended up late. Typical.

2) An annoying fact of life is that tax season starts in January. But not to fret. You can always visit the IRS website at the Get Ready Page to view key information such as steps to make filing easier, gathering and organizing tax records and life changes that could affect a refund. Or instead you could simply board a plane to somewhere warmer and put this stuff off until the very last minute. Oh, by the way, we will have a brand-new Federal agency on Jan 21. That will have all kinds of fun things to do. The External Revenue Service. It will collect all the Tariff money from Canada and Mexico and the rest of the world too without passing any cost to us citizens, so there will be another tax season coming. An External Tax Season. I’ll let you know when.

3) Where will the ax fall at IRS? The federal “buy-out “may result in whole sections of IRS deciding to grab 8 months of severance and run. You may want to get your 2024 tax return in asap. The idea of eliminating the IRS as an agency sounds beyond the realm. But why not just privatize it? Have a bidding for the job. Like what NASA did to the space race. Maybe even let that high bidder get a cut of the action as well. It’s not a new idea just another complicated and messy one.

Questions or Comments should be sent to:  Tdavidlawyer@gmail.com

 

The Bergen County Bar Association’s Diversity in the Profession Committee, jointly with Women Lawyers in Bergen, is soliciting nominations for the Annual Diversity in the Profession Award.

Please complete and return this form with your nomination by February 21, 2025, by emailing Jackie Guénégo at jguenego@bergenbar.org or by mailing to BCBA, 15 Bergen Street, Hackensack, New Jersey 07601.

Nominations Due Friday, February 21, 2025.

2025 DIVERSITY IN THE PROFESSION AWARD APPLICATION

The Bergen County Bar Association leadership meets with the Bergen County Assignment Judge on a bimonthly basis to discuss issues of mutual interest to the judiciary and our membership. For matters of general importance that you believe should be raised at our next meeting, please email the BCBA at info@bergenbar.org.

This is a summary of the January 14, 2025, meeting with the Hon. Carol Novey Catuogno, A.J.S.C.

1. Judicial Tenure: Hon. Carol Novey Catuogno, A.J.S.C. and Hon. Mitchell Steinhart, J.S.C. received tenure.

2. Newly Appointed Judges:
• James M. Doyle – Assigned to Bergen Criminal Division.
• Michelle J. Marose – Initial Judicial Assignment – Passaic Family

3. Judicial Retirement: Hon. Edward A. Jerejian, P.J.Ch. to retire effective February 1, 2025.

4. Judicial Reassignments:
Hon. Darren T. DiBiasi will be assigned as Presiding Judge of the Chancery Division
Hon. Nicholas Ostuni will be reassigned to the Chancery Division
Hon. Kevin Kelly was reassigned to the Civil Division.

5. Division Information

A. Family Division – The Family Division will have several upcoming dates specifically designated for settlement/resolution purposes. There will be an FD Blitz on January 31, 2025, and February 25, 2025.

The Family Law Committee will host a CLE and mixer on March 26, 2025, and a State of the Family Bench on May 19, 2025.

B. Criminal Division – Central Judicial Processing Court is now being conducted virtually on Saturdays/holidays.

The Criminal Division is # 1 in pre-indictment resolutions in the 21 counties and #10 in the 21 counties in post indictment resolutions.

A settlement blitz took place last week.

Each Judge in the Criminal part will hold mini settlement blitzes – Dates TBD by each judge.

Attorney conducted Voir Dire Pilot Program (ACVD) is continuing in the criminal part.

C. Civil Division–  Civil Trials, including Med-mal, are being conducted. If attorneys are ready for trial, you will be sent out for trial.

Carrier Days:
USSA: 1/21/25
Geico: 2/4/25
Plymouth Rock: TBD
Farmers 4/6/25

D. General Equity Division – General Equity filings are to be made via ECOURTS, not JEDS

E. Municipal Division – By way of a memo dated January 9, 2025, Judge Grant reminds municipal courts of the October 27, 2022, Supreme Court Order regarding in-person and virtual court in municipal court proceedings.

Effective October 1, 2024, the Judiciary resumed enforcement of penalties, including suspensions of driving privileges, for individuals with parking ticket violations.

6. AOC Visitations: AOC visitations have been conducted for Bergen’s DV Unit, and the Criminal Dvision for which we await the final report. A Civil Division visitation team will be in Bergen in March.

7. Bergen Vicinage Court User Resource Center: Bergen County Law Library is in process of being converted to a Bergen Vicinage Court User Resource Center with an in-person Ombudsman Office window for court users.

8. Construction: The Courthouse Dome remains under construction.

9. In-person Appearances- If attorneys prefer an in-person appearance for a particular case or court event, please contact the Judge’s chambers in advance.

10. Expungement Clinic: BCBA will host the 3rd Expungement clinic on April 11, 2025. The court truly appreciates the BCBA’s effort, as well as those of other Criminal Division stakeholders, in providing this service to our community.

11. Miscellaneous: New Free-Standing Monitors with Digital Signage to be installed at the entrances of the courthouse. Each Division will have its own page to assist with movement throughout the courthouse.

 

GENERAL EQUITY DIVISION – EFFECTIVE FEBRUARY 1, 2025
Superior Court Judge Darren T. DiBiasi is designated as the Presiding Judge of the General Equity Division of the Superior Court for Bergen County.

https://www.njcourts.gov/notices/order-superior-court-judge-darren-t-dibiasi-designated-bergem-general-equity-presiding

Superior Court Judge Nicholas Ostuni, Sr., is assigned to the General Equity Division of the Superior Court in Bergen County. Judge Ostuni is assigned to Room 424.

https://www.njcourts.gov/notices/order-superior-court-judge-nicholas-ostuni-sr-reassigned-bergem-general-equity-effective

CIVIL DIVISION – EFFECTIVE JANUARY 6, 2025
Superior Court Judge Kevin P. Kelly is assigned to the Civil Division of the Superior Court in Bergen County. Judge Kelly will be assigned to Room 324 as of January 14, 2025.

https://www.njcourts.gov/notices/order-superior-court-judge-kevin-p-kelly-reassigned-bergen-civil-division

CRIMINAL DIVISION – EFFECTIVE JANUARY 2, 2025
Superior Court Judge James M. Doyle is assigned to the Superior Court, Criminal Division, Bergen County (Vicinage 2). Judge Doyle will be assigned to Room 312 by January 17, 2025, Chambers # 201-221-0700 ext. 25505.

https://www.njcourts.gov/notices/order-new-superior-court-judge-james-m-doyle-assigned-bergen-criminal-division