Taxation Vexation

Divorce Deals

Learning to Network

Lots of Networkers

Speedy Growers

Corrections or additions?

Survival Guide II

These articles by Peter J. Mladineo and Barbara Fox were published in U.S. 1 Newspaper on July 8, 1998. All rights reserved.

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Taxation Vexation

If an ad agency designs a flyer for you to pass out, it is currently subject to state tax, says David J. Shipley, an attorney with Dechert, Price & Rhoads on Lenox Drive. But if the same agency designs an ad to be published in a newspaper or magazine, you pay no sales tax.

This is just one of the puzzles that Shipley will unravel when, with Alan J. Preis CPA, he teaches a National Business Institute course, "New Jersey Sales and Use Tax for Manufacturers," on Thursday, July 16, at 8:30 a.m. at the Holiday Inn on Route 1 South. Cost: $189. Call 715-835-7909.

"For manufacturers there are pitfalls and opportunities, things they might not be aware of that are taxable," says Shipley, who grew up in West Windsor, the youngest of five siblings, and majored in political science and speech communications at the University of Richmond, Class of 1990. He went to Wake Forest for his law degree and now specializes in state and local tax law.

Many of the finer points of sales tax law hinge on whether property is tangible or intangible, personal or real, says Sibley. Canned software is considered by New Jersey to be tangible property. If you can buy it off the shelf, you pay sales tax on it. But if you program software, your client pays no tax.

Sales tax generally applies to the transfer of tangible property. An exception are telecommunications services, which are not something you can see and touch, but are taxed. Service transactions (such as architectural drawings and legal or accounting fees) are considered not tangible and not taxable.

There are some strange exceptions. Plumbing fees, lawn services, photo copy repair, and janitorial services -- all are taxable. (And by the way, the state frequently audits contractors to be sure they are paying correctly.) But dry cleaning is not taxable, nor are carpet cleaning services.

Another odd exception: You can hire a guard service for your property and pay no sales tax, but you pay sales tax on the monthly burglar alarm service charge because the alarm service uses a telecommunications line.

And if the installation of the alarm can be considered a capital improvement, the contractor who installs it is the one who pays the tax on the cost of materials. Otherwise you, the owner, pay the tax on the price of the alarm system.

Because government does not want to tax on every level, no tax is paid on raw materials or products sold at wholesale to a retail store. "You try to tax the last transaction and not everything that went into it," says Shipley. Even on a retail level, clothing and groceries are not taxed, because New Jersey considers them to be necessities of life. Unless, of course, your clothing has fur on it. That's taxed.

With any tax, the legislature wants to encourage certain activities. In most states manufacturers pay no tax on machinery because factories provide jobs. In New Jersey, R&D firms do not pay tax on experimental or laboratory equipment. They will, nevertheless, pay tax on the computers and the paper clips they buy for administrative purposes. They also pay the usual real estate taxes, employment taxes, and taxes on profits.

New Jersey's exemptions, says Sibley, are not as broad as in some other states. For instance, repair services to manufacturing equipment are taxable in New Jersey but not in Pennsylvania.

Though the ad agency's design of the flyer has been considered a taxable service, as is the printer's charge, the design of newspaper ads is not. Why?

"States want to encourage people to read newspapers," says Shipley, who points out that when you buy a copy of a newspaper in New Jersey you pay no tax. Periodicals are also exempt in New Jersey. In Pennsylvania, newspapers are exempt but magazines bought at the newsstand are subject to tax. Those bought by subscription are not.

Ad agencies and their clients can take consolation in the fact that legislation is pending to remove the tax on flyer design and indeed on most advertising services. It passed the Senate on June 29 and is on the governor's desk. Not included in this bill: direct mail.

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Divorce Deals

Alimony may not last a lifetime, says Robert J. Durst II of Stark & Stark, if pending laws are passed. Instead of permanent alimony -- which the husband has to pay until he or his wife dies -- judges might award a limited term alimony that might last three, five, or seven years.

"There has been pressure to allow the courts to fix alimony for a defined term, not renewable," says Durst. The whole concept of alimony -- whether lifetime, rehabilitative, or limited term -- is very much under consideration, he says, because society has changed. "Most of the families we represent are two-income families."

Durst and Laurence J. Cutler, a Morristown-based attorney, are the moderators for the third annual two-day Family Law Summer Institute at the New Jersey Law Center on Ryders Lane. Set for Tuesday and Wednesday, July 14 and 15, the seminar is designed for family lawyers with at least five years experience and costs $195 for one day, $375 for both. Call 732-249-5100.

A Tuesday panel on "Alimony & Child Support," features Durst and Cutler plus Amy C. Goldstein of Cherry Hill; Ronald B. Rosen of Long Branch, Bonnie C. Frost of Teich Groh & Frost; and Mark S. Guralnick. David E. Politziner CPA of Amper Politzner & Mattia, Robert T. Corcoran of Hackensack, and Charles A. Matison of Northfield will discuss "Equitable Distribution" on Tuesday as well.

Wednesday's program features two Superior Court judges, Joseph P. Testa and Vincent D. Segal, plus Springfield-based Elliot H. Gourvitz and Durst in a "practical overview" of evidence. Experts from other fields will weigh in on such topics as "Stress and Divorce: Normal Neurosis vs. Tortable Pathology," given by Morristown-based psychologist Sharon Ryan Montgomery, and matrimonial tax issues, discussed by Bridgewater-based CPA Kalmon A. Barson. Other sessions: "Arbitration," Mark Gruber; "Counsel Fees and Withdrawal after the Feinberg Report," Cutler; "Protecting Marital Settlements from Bankruptcy," by Federal Bankruptcy Court Judge Judith H. Wizmur; and "Ethical Dilemmas in Family Law."

The alimony and child support panel will refer to Kicken vs. Kicken, last year's New Jersey Supreme Court case involving a child support-paying father who died and a mother who would not take his death for an answer. Most lawyers would have assumed that the support stops when the husband dies, but the child's mother sued his estate and won.

Other topics for the alimony panel are the effect of co-habitation (why should one spouse pay alimony to support the ex-spouse's live-in lover?), the impact of early retirement (can a spouse evade paying alimony by taking early retirement?), and the impact of bankruptcy. Going bankrupt won't necessarily interfere with the husband's ability to come up with alimony and child support payments, says Durst: "I'm going to argue that he can pay more alimony and child support because now he doesn't have all this debt to pay."

One thing will almost certainly interfere with alimony payments: Attempted murder. Durst cites a New Jersey case of a woman who tried to murder her ex-husband, but when she failed, she wanted to continue to collect. She lost the case.

-- Barbara Fox

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Learning to Network

It's called musical chairs. You have 30 seconds to present your spiel to eight people at the table, then you chit-chat for another six minutes, the bell rings, and you change places once again. After four of these switches, you get the chance to introduce two or more people that you have met to the assembled crowd.

Merle Hirschman of the Delta Concept (http://www.deltaconcept.com) will present "Positive Networking Guaranteed to Gain Results" for the Princeton Chamber on Wednesday, July 15, at 7:45 a.m. at the Holiday Inn on Route 1 South. Cost: $21. Call 609-520-1776.

This networking exercise is an encore of what Merle Hirschman has presented to the Princeton Chamber on several previous occasions. Her tips:

Listen, because people like to talk about themselves -- but you will get your turn, she promises.

Use the person's name, because people like to hear their name.

Make notes on the business card to jog your memory when you follow the next tip.

Send a note on the very same day. Not just E-mail, a note by snail mail.

"You would be surprised," says Hirschman, "most people still do not do that. But at least it opens the door for a phone call. You've met them, you sent a note."

Hirschman was a marketing major at Temple University and worked for personnel departments in the area before starting her own consulting firm. Her husband John -- they were high school sweethearts in northeast Philadelphia -- went to Muhlenberg College and earned a Rutgers MBA. He was a product manager at Engelhard and president of Engelhard's joint venture, Heraeus Corporation. Four years ago husband and wife co-founded the new management consulting firm that focuses on expense reduction but also covers general management concepts.

Hirschman says notes do work. "I stayed at a bed and breakfast last weekend and already I have gotten a note. They are building a relationship with me now, and if I get a phone call about a future event there, I will be more open to it."

Her favorite line: "All things being equal, people do business with those they know and trust."

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Lots of Networkers

Join Golf Digest as a sponsor of what is claimed, every year, to be the "World's Largest Networking Party" on Tuesday, September 15, at 5 p.m. The Middlesex County Regional Chamber of Commerce attracts about 1,000 people to this event on the roof of the New Brunswick Hyatt Regency. Some 30 restaurants provide food tasting and the Edison-based golf publication will offer golf tips and a chance to test your golf skills.

WCTC 1450 AM and Magic 98.3 FM will provide live radio coverage, Topaz will do the live music, and chair massage therapists will stand ready to ease tight shoulders. Part of the proceeds will be donated to the United Cerebral Palsy and Delaware Raritan Girl Scout Council.

For sponsorships costing from $400 to $7,500 call Nancy Ostin, the director, at 732-821-1700. Those who are $1,500 sponsors and above receive a list of pre-registered and on-site registered guests. The minimum cost includes four tickets, a one-fourth page ad in the program, and having the business name imprinted on the goody bags. The top level includes 20 tickets, your name on the front program cover and in the radio and cable TV ads, plus an eight-foot banner on the fence.

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Speedy Growers

Fast-growing high-tech companies -- and there are a handful of Princeton-based firms in the bunch -- will be honored on Wednesday, July 15, at a 7:30 a.m. breakfast at the Woodbridge Sheraton in Iselin. For $35 reservations call the New Jersey Technology Council at 609-452-1010.

The NJTC is taking reservations, but the primary sponsor of the "Fast 50 Awards" is the Regional Business Partnership at 973-242-6237. Other sponsors include University Heights Science Park in Newark (973-972-2200), a 50-acre redevelopment effort affiliated with four colleges in Newark, Deloitte & Touche, and the New Jersey Technology Council.

Each of the winners has been notified and invited to the breakfast. Winners with a Princeton affiliation include software companies Novasoft Information Technology Group on Quakerbridge Road, Princeton Softech on State Road and Logic Works (now Platinum Logic Works) on Campus Drive. Electronic R&D firms include Commtech Corporation, a modem firm on Route 130 south; Sensors Unlimited, a semiconductor technology firm at Princeton Service Center; and T/MAC Inc., a maker of microwave power amplifiers at the Jersey Avenue incubator. Another award winner, Simstar Digital Media, is a digital media and engineering design firm at 1 Airport Place.

The Liposome Company on Research Way, Integra LifeSciences Corp. on Morgan Lane, and i-Stat Corporation on College Road are the area biotech firms honored. Two companies that started here but have moved away are also on the list: Sensar Inc., the Sarnoff spinoff that went to Moorestown, and Medarex Inc., the biotech firm that moved to Annandale.

Any company could nominate itself to the list if it met these qualifications:

Be a technology company first. Either produce or manufacture a technology related product, be technology intensive, or use unique technology in problem solving.

Be in business for five years or more.

Have gross revenues that at least doubled in the past five years.

Have gross revenues that were at least $50,000 five years ago and that now top $1 million or more.

Be headquartered in New Jersey.

Several of this year's winners were on last year's list, and last year top 10 winners in New Jersey made it into the list of the 500 fastest growing companies in the nation.


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