New York Sales Tax Lawyer [ Must Know FAQs ] to Protect Yourself

NYS Sales Tax Filing Requirements

New York sales tax is imposed on the sale of certain goods and merchandise.  You must file sales tax returns no later than 20 days after the end of the period in which it relates.

Typically, you will be qualified as a quarterly filer unless you are receipts are over $300,000 for the quarter.

Here are the four quarters:

1. March 1 through May 31 ( June 20 due date ) 
2. June 1 through August 21 ( September 20 due date ) 
3. September 1 through November 30 ( December 20 due date) 
4. December 1 through February 28  ( March 20 due date ) 

You can file your NYS sales tax online.

Unfiled NY Sales Tax Returns

As a NY business owner or shareholder that has sales tax obligations ( ex .restaurant, bar or deli) , you have four (4)  responsibilities under the sales tax law:

1. You are required to register with NYS for sales tax purposes

2. You must maintain accurate records of sales

3. You must file your sales returns on a timely basis

4. You must pay your sales tax with your returns 

Sometimes a business owner will tell me that they did not file a sales tax return because they were not making any money.

Not making money or ignorance of the NYS tax laws is not an excuse.

Under the New York tax law, registered sales tax vendors must file a sales tax return by its due date, even if they have no tax due for the filing period.

NY Sales Tax  =  Serious Tax Problems

Sales tax is considered a “ trust fund’ tax.

What is a “trust fund”  tax?

If your business is registered to collect sales tax, you become a trustee for New York State to collect the tax on behalf of NY. 

The money ( i.e. sales tax) belongs to the New York State ( not you)  and you have the personal responsibility to collect that sales tax and turn it over to NY on a timely basis when the sales tax return is filed

Why is that important?  

If you fail to turn over sales tax, you are essentially stealing from the state.

Under Section 1801 of New York Tax Law, the willful failure to collect sales tax or pay sales tax collected on behalf of the State is considered a crime and may rise to the level of tax fraud. 

From a civil standpoint, failure to file or pay penalties will apply and you will be charged interest, compounded daily, on the amount that you did not pay.

Are You a Responsible Person ? 

Since sales taxes are trust fund taxes ( see above) , the NYS tax law imposes personal responsibility for the payment of sales tax on certain owners, employees, partners, and directors.

What that means to you is that your personal assets and income are at risk if the business that you own or even associated with has an outstanding sales tax liability.

Regardless if your business was set up as a corporation or limited liability company, you may be “on the hook” for the sales tax if it is determined that you are a responsible person under the tax law.

What does “responsible person” mean under the NYS tax laws?

Generally, New York State is looking at the level of control that you had in the business.

For example…

Did you operate the business as a general manager?

 Did you write checks?

Were you one of the primary shareholders or owners in the business?  

Did you make business decisions? 

Even if you have partners in the business, you may be fully responsible for the sales tax liability if you were found to be a responsible person in the business.  

Let’s say there were two partners in a restaurant and the business owed $100,000 in sales tax. If you were found to be a responsible person,

New York can collect the full $100,000 liability from you and then you would be on your own to collect your share from your partner. 

This is called joint and several liability.

Every situation is different.

New York tax attorney Charles Rosselli can analyze whether there is a defense to the responsible person assessment made against you by the New York State Department of Taxation and Finance.

NY Tax Agent Assigned to Collect

If either you or your business has a sales tax issue, it is highly likely that a tax agent from the New York State Department of Taxation and Finance has been assigned to collect the sales tax liability.

For businesses that are still in existence, the NY agent will visit the business and insist upon extremely high payment terms that the business cannot afford to pay in order to pay off the sales tax liability.

When you advise the agent that your business cannot afford to pay the past due sales tax, 

 NYS will become more aggressive with enforced collection activity, including but not limited to seizure of accounts receivables, merchant accounts, and the eventual seizure and auction of your business assets.

It is imperative that you seek counsel from a sales tax attorney immediately upon contact from an agent so that you are properly represented before the NY Tax Department and the best possible outcome is achieved.

NYS Sales Tax Collection Enforcement

The interests and penalties in a back tax matter can choke the life out of a business.

 If you ignore the collection letters, your business bank account can be levied up to the amount of the tax liability.

Usually, bank levies are the first step.

If you continue to ignore the sales problem, your merchant account will be seized.

If this doesn’t bring you to the table, then expect an agent to visit your business for the purposes of resolution or perhaps even  pre - seizure visit. 

The best way to settle a sales tax liability depends upon the financial circumstances of each business. 

Offers in compromise; payment plans, penalty abatements, conciliation conferences, and voluntary disclosure are tools that we can use to remedy your sales tax liability. 

One size does not fit all.

The first step is determining what will work best for each business and what are the obstacles that we may incur.

The proper foundation to a successful resolution of a sales tax matter hinges on the best strategy given the facts and circumstances of the tax matter,.

Revocation of Certificate of Authority

Once you register to collect sales tax in NY, you receive a Certificate of Authority.

The Certificate of Authority legally authorized your business to collect sales tax on behalf of New York State and you are considered a business for sales tax purposes. 

Since you are considered a business for sales tax purposes, your business must file sales tax returns even if you do not collect sales tax. 

The Certificate of Authority is the lifeline of your business.

If your Certificate of Authority is revoked, you must immediately return your Certificate of Authority to the Tax Department and discontinue makes sales of property or services that require a Certificate of Authority. 

As such, if your Certificate of Authority is revoked, you will likely  need to close your doors or face possible criminal ramifications.

Here are four (4) actions that can jeopardize your NY Certificate of Authority:

1. Failure to file a sales tax return

2. Filing a false tax return

3. Failing to collect, truthfully account for, or pay over any NY state of local tax

4. Wilfully failing to keep adequate records and being convicted of that willful failure

If the New York State Tax Department decides to revoke or suspend your Certificate of Authority, you will receive notice of that proposed suspension or revocation by certified or registered mail. 

The notice will advise you as the basis of the revocation and the date of the revocation.

You will have the right to challenge that assessment during a hearing or conciliation conference.

If you receive a notification of revocation, it is imperative that you contact a sales tax attorney to represent your interests.

New York Sales Tax Audit

You are required to keep accurate and complete records pertaining to the sales made by your business. 

Point of sales systems are important for restaurants, bars, and delis so that if you are ever audited, you have the records necessary to defend the audit. 

Every business is different.

However, a lack of proper record keeping is a common mistake general contractors, restaurants, and other small businesses make in their day to day operations. 

If you are audited by the NYS tax department, you will need to verify the accuracy of your sales tax returns.

If your records are “lacking,” the sales tax auditor  may “visit” your establishment to see what the volume of credit card sales and cash sales are for your business.

This strategy is very common in cash based businesses, such as restaurants and delis.

Often, this is unfair to the business as certain days are busier than others. 

Long Island tax attorney Charles Rosselli represents businesses in sales tax audits and will help formulate a sales tax defense to obtain the most reasonable resolution given the facts and circumstances of your particular matter. 

About New York Sales Tax Lawyer Charles Rosselli

New York sales tax lawyer Charles Rosselli can help protect your rights before the New York State Department of Taxation and Finance. 

Resolving your sales tax matter under the best possible terms  and protect you is our number one goal

Remember : failing to file your sales tax returns on a timely basis;  not remitting sales tax to the New York State Department of Taxation and Finance ; or understating sales tax may result in criminal charges not limited to tax fraud; failing to file a return ; offering a false instrument for filing; or even grand larceny.

Even if you matter is a not a criminal sales tax matter  (owe back taxes, sales tax auditor have not filed a sales tax return), you need the best possible result in reducing any penalties and settling your sales tax problem under the best possible terms.

The first step is developing the right strategy to resolve your sales tax problem. 

Take your sales tax matter seriously because your livelihood depends upon it. 

New York sales tax lawyer represents clients throughout New York State and nationwide with NY sales tax problems.