Of all the tools in the estate planner's toolbox, life insurance is the most widely used and least understood tool. In Part 1 of a two-part series, Barry Flagg of Veralytic shows how New York's new Best Interest Rule defines a “client's best interest” to make it more consistent with other fiduciary rules. Flagg focuses on understanding misleading illustrations and alternatives to illustrations. In Part 2, Rebecca Ryan of BNY Mellon Wealth Management will focus on options and corrective measures for failing premium financing strategies.

It's just about a year since the U.S. Supreme Court ruled on what many tax professionals have deemed the "tax case of the millennium," but legal challenges may start arising soon as state online sales tax programs get underway in earnest.

This week we take another look at the challenges of crypto tax compliance, the deduction of inventory costs charged by foreign suppliers, unfortunate tax advice to a best-selling author, self-correction options for employer-sponsored retirement plans, and the ethical implications of the New York best interest rule for life insurance.

The Justice Department backed Treasury Secretary Steven Mnuchin’s refusal of House Democrats’ demand for President Donald Trump’s tax information, setting the stage for a widely expected lawsuit that will test the limits of Congress’ powers to investigate the president.

The Alabama Governor June 10 signed a law concerning the non-renewal of vehicle registration for failure to pay a toll violation or assessed administrative fees for excise tax purposes. The law includes measures: 1) requiring the toll authority, Department of Transportation, or private toll entity to share failure to pay a toll citations with the Department of Taxation; 2) providing that electronic toll collection data may be shared by the Department of Revenue (DOR) with other states with whom it has an information sharing agreement; 3) authorizing a public or private toll entity in this state to enter into an agreement for data sharing with another public or private toll entity; and 4) requiring the DOR to provide vehicle registration information to the transportation department or the toll authority at no charge. The amendatory language of the law takes effect Jan. 1, 2024. [S.B. 347, enacted 06/10/19]

The Alabama Tax Tribunal June 10 held that a sales and use and excise tax audit was properly conducted by the Department of Revenue (DOR). Taxpayer operated a convenience store in Alabama. The DOR audited Taxpayer and requested that it provide records to compute and verify its tax liability. However, Taxpayer's records were insufficient. The DOR performed a purchase mark-up audit to determine Taxpayer's tax liability. Taxpayer protested. The tribunal observed that: 1) Taxpayer's records didn't provide evidence of a lower mark-up percentage used; 2) Taxpayer failed to keep complete and accurate records whereby the correct tax liability could be ascertained; and 3) the DOR used the best information and employed a reasonable audit method to compute Taxpayer's remaining tax liability. Therefore, the tribunal held that the DOR's audit was properly conducted and affirmed the DOR's final assessments. [Ala. Tax Trib., Admin. Law Judge Ruling Docket No. S. 18-149-LP, 06/10/19]

The Alabama Governor June 7 signed a law exempting the Alabama Wildlife Center from payment of state, county, and municipal sales and use taxes until Sept. 30, 2024. The law takes effect Sept. 1. [S.B. 141, enacted 06/07/19]

The Arizona Governor June 7 signed a law modifying the vehicle license excise tax for alternative fuel vehicles. The law includes measures: 1) valuing an alternative fuel vehicle registered in this state prior to Jan. 1, 2022 at one percent of the manufacturer's base retail price; 2) valuing an alternative fuel vehicle registered in this state between Jan. 1, 2022 and Dec. 31, 2022 at 20 percent of the manufacturer's base retail price; 3) stating a vehicle license tax on an alternative fuel vehicle that is purchased from and after Dec. 31, 2022 shall be valued in the same manner as non-alternative fuel vehicles; 4) removing gross weight specifications for the calculation of the vehicle license tax for alternative fuel vehicles; and 5) providing an effective date. The law is effective from and after Dec. 31, 2019. [S.B. 1332, enacted 06/07/19]

The Arizona Governor June 7 signed a law modifying qualification conditions for property tax exempt low-income housing. The law includes measures: 1) exempting property from taxation if it's used exclusively for affordable rental housing pursuant to the IRC or another recorded restrictive covenant imposed by financing for affordable housing; 2) requiring that the property is owned and operated by a corporation that is tax-exempt pursuant to the IRC, or by a limited partnership or limited liability company owned by tax exempt non-profit entity; 3) providing that the acquisition, rehabilitation, or property development is financed with tax-exempt mortgage revenue bonds or is financed by local, state or federal loans, and the amount of rent paid doesn't exceed the amount that is prescribed by deed restrictions; and 4) providing a definition of eligible nonprofit corporation. The law takes effect Aug. 27. [S.B. 1300, enacted 06/07/19]

The Arizona Court of Appeals June 13 affirmed the tax court's decision, finding Taxpayer not entitled to relief because Taxpayer failed to file a timely protest, pay the outstanding individual income taxes, and seek a refund. Taxpayer earned federal adjusted gross income but didn't file the state return. The Department of Revenue (DOR) conducted an audit and issued a proposed assessment, and Taxpayer failed to timely file a protest. The tax court granted the DOR summary judgment because Taxpayer: 1) failed to timely protest the assessment; or 2) failed to pay the outstanding assessment and seek a refund. Taxpayer appealed, arguing that the administrative process featured no hearing commensurate with any notion of procedural due process. However, the appeals court found that there was no disputed issue of fact relevant to the grant of summary judgment. Accordingly, the appeals court affirmed the tax court. [Dep't of Revenue v. Wendtland, Ariz. Ct. App., No. 1 CA-TX 18-0004, 06/13/19]