Attorney General Letitia James (AG) recently accused famous New York camera shop, B&H, of failing to pay its fair share in taxes. The local camera specialty shop is fighting back, stating the AG is unfairly targeting their store.
What was the basis for the tax crime allegations?
The first claim is rooted in allegations the store failed to pay full taxes on products that received an instant rebate from manufacturers. The prosecution states the store would pass these savings on to customers but, according to the AG, did not pay the required taxes on the full price of the product. Instead, the AG states the store only collected tax on the discounted price — something the AG claims is against the law and allowed the store to thwart its tax obligations.
The camera store contends that they, just like other, larger retailers throughout the country who offer similar products, collect sales taxes on the price the customer pays for the item.
The AG has also accused the retailer of understating taxable sales. The prosecution states these false filings reach back to 2006. All in all, the government has accused the small business of failing to pay “at least $7 million in sales tax” obligations.
What does this mean for the small business?
The camera shop will need to defend against these charges. Depending on the details of the allegations, the shop could face serious financial penalties unless it builds a successful defense. The prosecution will likely investigate all involved, including the owners. This could result in allegations against individual owners, particularly if the government can gather evidence to support any claim the owners intentionally avoided their tax obligations.
The camera shop, and others who face similar allegations, can better their chances of a successful defense by having paperwork to support their tax filings. It is also wise to seek legal counsel to review the claims and discuss defense strategies to help better ensure all legal rights are protected during the process.