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New York Attorney General Sues B&H Photo for Nonpayment of $7 Million in State Taxes

FOH Staff • News • November 20, 2019

NEW YORK – If you walk into a retail store and buy something worth $500 that’s discounted to $400 with an instant rebate, should you, the consumer, have to pay sales tax on the original, non-discounted, $500 price, or just the $400 you actually paid? In a statement issued in response to a lawsuit filed Nov. 14 by New York State attorney general Letitia James, B&H Photo, a photo and video gear retailer with more than $3 billion in annual sales, doesn’t think so.

“B&H has done nothing wrong and it is outrageous that the AG has decided to attack a New York company that employs thousands of New Yorkers while leaving the national online and retail behemoths unchallenged,” a company spokesperson told Vox Media’s tech website The Verge. “The Attorney General wants to charge New Yorkers a tax on money they never spent. It’s wrong and we won’t be bullied.”

But in court documents alleging that B&H owes the state more than $7 million in taxes on at least $67 million in vendor reimbursements over a 13-year span, for which the state is seeking “treble damages, penalties and interest,” the state argues that instant rebates are really no different than traditional coupons, rebates and other vendor-subsidized promotions: Whether the tax burden is borne solely by the consumer or shared by the manufacturer and retailer, the sales tax that is due is still based on the full, non-discounted price.

The court documents alleged that B&H’s practice of not paying taxes on the vendor reimbursements for goods sold with instant rebates has been going on since 2006, and that the Nov. 14 lawsuit stems from a whistleblower complaint filed in early January, 2016. The documents also cite evidence that a B&H manager alerted executives to the need to pay state sales tax on “the total product price” in 2012.

“B&H deliberately chose not to pay the sales tax it knew was due to New York State in order to gain a competitive edge over companies that chose to follow the rules,” said AG Letitia James, in a statement. “No company is above the law, which is why my office filed this lawsuit, and will do so against any company that tries to skirt its responsibilities by illegally trying to tilt the playing field.”

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