Paul V. May Joins Pastore & Dailey as Counsel

Pastore & Dailey Managing Partner Joseph M. Pastore III announced today that Paul V. May will be joining the Firm as Counsel, concentrating on securities regulatory, enforcement and advisory matters.

Mr. May joins the Firm from ABN AMRO Securities, where he was Chief Compliance Officer of the FINRA member firm and its affiliated entities since 2010. Previously, Mr. May served in various compliance and legal capacities at Cowen and Company, ICAP and Royal Bank of Canada Capital Markets, in the Securities Industry practice at Kelley Drye & Warren LLP, and as founding partner of Steere & May, a boutique financial services practice.

Mr. May began his legal career as an attorney in the Enforcement Division of the U.S. Securities and Exchange Commission in New York from 1990 to 1995. He is a regular speaker at securities industry events including the SIFMA Annual Compliance and Legal Conference on topics including Preventing and Detecting Securities Fraud and Compliance Risk Assessment. He is co-author of Building an Effective Compliance Risk Assessment Program for a Financial Institution in the current issue of the Journal of Securities Operations & Custody.

Mr. May is also a founding trustee of the Holy Cross Lawyers Association and President of the Board of New Yorkers Against Gun Violence – an education and advocacy organization that encourages safe gun ownership and sensible firearms regulation.

Mr. May is a graduate of Brooklyn Law School and the College of the Holy Cross.

Mr. May is admitted to practice in New York, Connecticut, the Southern and Eastern District Courts of New York and the Supreme Court of the United States.

Mr. May can be reached by e-mail at and by telephone at 646-665-2202 (office) or 516-662-7223 (mobile).

Why Tax Reform Will Not Happen Soon

Corporations have been stockpiling cash awaiting promised tax reform. Enterprises have delayed capital investment, hiring, and cash allocation in anticipation of promised tax features such as lower rates. In February of 2017, the Secretary of the Treasury promised comprehensive tax reform before the August recess.

Because tax reform along the lines or scale articulated by some in government to date seems unlikely, I encourage businesses to consider deploying their capital more profitably than holding it in reserve.

I reviewed the circumstances generally present in the environments of each of the last eight significant tax reform acts. I found three factors present in the majority of them and offer here my view of why their presence then, and their absence now, bodes poorly for sweeping tax reform.

  1. Lobbyists need to be kept at a distance or soundly aligned with the reform goals. Thus far, Congress has led with its chin by pushing such things as the Border Adjustment Tax and lower corporate tax rates. Now, K Street is already fully immersed in the process, either for or against. Neither required element of “Fair” or “Simple” is any longer possible.
  2. A government more or less evenly divided, as it was in 1986, is essential so that no one party has to suffer the fallout from substantial tax reform. Division is considered not just by party within the legislative branch, but also as between the Houses of Congress and the president. See the chart below for an illustration of how this has shaped up in years when tax reform has passed. Also, recall that within 20 years after TRA 1986, over 15,000 changes to the tax law, most incrementally rolling back the changes, had already been made.
  3. Revenue neutrality is a necessarily stated goal of tax reform. In 1986, Representatives took turns at the podium declaring their support for a bill that neither raised nor lowered government revenues. With a current budget deficit of about $440 billion, a tax gap of about $410 billion, and the largest income polarization in history, it’s going to be a tough sell to offer revenue neutrality. Without it, there can be no meaningful tax reform.

Given that none of the factors that have been historically required to accomplish sweeping tax reform are now present, I suspect we will not see it this year or in 2018.

This memo is intended only as an illustration of general principles. It is not intended as legal or tax advice. The reader is cautioned to discuss his or her specific circumstances with a qualified practitioner before taking any action.

Tax Changes for Employees Donating Leave time to Harvey Victims

In Notice 2017-48, released on September 5, 2017, the IRS announced that employees who donate vacation, sick, or personal leave in exchange for employer contributions to charitable organizations providing relief to victims of Hurricane/Tropical Storm Harvey will not be taxed on the value of that times as income. Also, employers may deduct the amounts so donated as business expenses.

This Notice is important because it represents a suspension of the normal constructive receipt rules of taxation. Ordinarily, when an employee earns income and has the right to receive such income, he or she is subject to tax on it, even if the employee instructs the employer to give the money, instead, to some other person. The IRS has provided such suspension of the rules before, such as in the cases of Hurricane Sandy (Notice 2012-69) and Hurricane Matthew (Notice 2016-69).

The IRS has now advised it will not assert the constructive receipt doctrine over such leave donations and associated payments so long as the payments are:

  1. Paid to Code Section 170(c) charitable organizations. These are, generally, the organizations often referred to under Section 501(c)(3) of the Code;
  2. For the relief of Hurricane Harvey victims; and
  3. Paid to such organizations before January 1, 2019.

Employees who participate in a leave sharing program, sometimes called a leave “bank,” where the foregone leave is excluded from compensation for tax purposes, will not be able to claim a charitable deduction for contribution of value from such a bank.

As for employers, the IRS states in the Notice that it will allow them to treat donations from leave sharing programs as business expense under Section 162 of the Code rather than as charitable contributions under Section 170. This will allow employers donating value from leave banks to deduct that value without being subject to the several limitations on charitable contributions under Section 170.

The record keeping and reporting rules are also amended in this circumstance. Amounts representing leave sharing donations need not be included in Box 1 (wages, tips, other compensation), Box 3 (Social Security wages, as applicable), or Box 5 (Medicare wages and tips) of Form W-2.

In short, these amounts will be free from income and payroll tax withholding.

This Notice provides relief for both itemizing and non-itemizing taxpayers. A non-itemizing taxpayer who donates $2,000 worth of leave time would be able to take a deduction for $2,000. The same taxpayer would not receive the same tax benefit if he or she had taken the leave and contributed $2,000 in cash to the charity. As well, the reduction in AGI through application of the Notice provisions can make it possible for a participating employee to access a greater tax benefit among the various deductions and credits which decrease as AGI goes up. For example, a participant might be able to take a larger deduction for a contribution to a traditional IRA. On the other hand, participation in donation of leave time could yield a lower retirement plan contribution, if the employer’s plan defines wages to include the donated level and character of donated leave.


This memo is intended only as an illustration of general principles and is not legal or tax advice. The reader is cautioned to discuss his or her specific circumstances with a qualified professional before taking any action. In some jurisdictions, this memo may be attorney advertising.