Long Island lawyers and accountants are scrambling to help business owners complete deals before the year's end to beat the approach of new taxes.
A majority of the work streaming in -- which has law and accounting firms working through the holiday and weekends -- involves sales of companies, as business owners try to avoid a potential increase in capital gains tax, local lawyers said.
The capital gains tax, which is levied on profit from selling assets such as stocks, bonds or even a company, is set to go up from 15 percent to 20 percent if Congress and the Obama administration fail to reach a budget compromise and the Bush tax cuts expire on Tuesday. In addition, as part of President Barack Obama's health care overhaul, capital gains will be taxed an additional 3.8 percent to fund Medicare.
Before noon Friday, every conference room was full with attorneys and clients at Bohemia law firm Campolo, Middleton & McCormick, said managing partner Joe Campolo. Despite being shut down for a week after Sandy, "November and December have been the two busiest months ever in the history" of the six-year-old firm, he said.
Some business deals that were impossible to close before the end of the year have been called off, Campolo said.
Business owners "are willing to sell their business for less today because they know what the capital gains is going to be," he said Friday afternoon. "If someone wants to buy it in January, it's going to be a lot more because the business owner will have to pay more taxes."
Lance Christensen, a tax partner at Garden City accounting consultancy Margolin, Winer & Evens, said he never takes a vacation the week before a new year starts, because there are always new tax rules taking effect. But this year's deluge of work still caught him by surprise. "I've been doing this for 30 years," he said, and this year there have been "more transactions than I can ever remember."
Although many of the tax changes were expected, the rush of year-end work this year could be due to uncertainty surrounding the November presidential election and last-minute "fiscal cliff" negotiations in Congress.
"People have been holding off doing the transactions until the last couple of weeks," Christensen said.
After the election, business owners who had been "dragging their feet" expecting a different outcome may have had the impetus to look at a business transaction before the new taxes set in, said Alon Kapen, a partner at Uniondale law firm Farrell Fritz.
Kapen, who was sick Friday, was working from home.