The Attorney General of New York, Letitia James, filed a lawsuit charging landmark New York City retailer, B&H Photo and Video, has intentionally underpaid sales taxes on millions of dollars in the sale of cameras and other products. The retailer, in a statement, refutes the claim.
The lawsuit claims B&H Photo, over the course of 13 years, failed to pay $7 million in sales taxes on instant-rebate reimbursements received from manufacturers. The action was started in 2016 through the actions of a whistleblower.
The lawsuit states:
B&H knew that it should have been paying the tax. B&H has repeatedly and explicitly acknowledged—internally, to outside vendors, and to a competitor—that under New York tax law, it owed sales tax on these reimbursements … And, even after B&H learned that the State was investigating it for failing to pay the sales taxes due on these reimbursements, B&H continued to underreport its sales taxes while simultaneously admitting to others that it knew the sales tax was, indeed, due.
New York is seeking repayment of the back taxes, interest, penalties, and damages related to the alleged tax fraud.
In the company’s response, CEO Menashe Horowitz states:
“The Attorney General is flat wrong – and is trying to create a tax on discounts in order to make New Yorkers pay more. B&H is not a big box store or a faceless chain; we are a New York institution, having operated here for nearly 50 years with a stellar reputation. The tax department has done countless audits and never once – not a single time – mentioned this widespread industry practice.
“B&H has done nothing wrong and it is outrageous that the AG has decided to sue a New York company that employs thousands of New Yorkers while leaving the national online and retail behemoths unchallenged. The Attorney General wants to charge New Yorkers a tax on money they never spent. It’s wrong and we won’t be bullied.”
“We regularly offer customers instant savings discounts. This is an industry-wide practice. On a camera that regularly sells for $1,000 that has an instant-savings offer of $200, the net selling price is $800 and we collect and remit sales tax on the $800. The Attorney General is claiming that we should collect tax based on the $1,000 and thus have underpaid sales tax for 13 years. Common sense, legal precedent, and years of sales tax audits approving our practice say we have done everything right.”