Not Paying NY Sales Tax is a Crime [ 3 Must Know FAQs ]

NY Sales Tax Violations 

Ignorance of the law is not an excuse.

You are required to know the laws if you are operating a business in NYS. 

Not paying sales tax by an owner, shareholder, or other responsible person may rise to criminal tax fraud or sales tax evasion in New York State.

Ignorance of the law is not an excuse.

You are required to know the laws if you are operating a business in NYS.  

Per the New York State Department of Taxation and Finance, tax evasion or fraud occurs when taxpayers intentionally try to avoid taxes they owe. 

New York State points to 3 very common issues that rise to possible tax evasion or fraud that we see on a daily basis as tax attorneys: 

• failing to file a return; or
• failing to report total income; or
• failing to remit monies collected ( not paying sales tax)

Most sales tax violations begin as a civil  back tax liability issue. Your business has fallen behind perhaps due to a slow down in business.

Your business now owes sales tax and perhaps you are waiting to catch up.

However, many business owners are walking a thin line by not filing sales tax returns or paying these “trust fund’ taxes.  

Your sales tax problem may begin as a monetary problem but you must be careful that it does not morph into something else. 

As a first step, your sales tax liability may be assigned to NYS tax agent for civil enforcement ( i.e. NYS wants THEIR money ).  

SInce these are taxes that you are collecting for NYS, it belongs to them and since you are not turning it over, NYS looks at this issue as “stealing.” 

You need to be careful what it is said to the NYS Tax Department agent as your sales tax matter can be referred for criminal investigation ( if deemed serious enough ).

If your matter is referred for criminal investigation  iIt will then be up to the District Attorney to determine whether she will prosecute your sales tax violation. 

Given the aggressiveness of the Tax Department on not  paying NYS sales tax, you should always have a tax attorney represent you on the civil  back tax matter so that it does not become a criminal sales tax matter.

NYS Sales Tax Evasion & Fraud

New York State takes the enforcement of tax crimes seriously.  

There is a separate financial investigation and tax crimes unit that handles such tax crimes, as sales tax evasion. 

You will see a number of arrests by the district attorneys of Nassau County, Suffolk County as well as those in the boroughs of NYC throughout the year, but especially during “tax season.”

With the use of sophisticated technology, the investigation unit can trace the transactions of your business.

it is more difficult for business owners to hide their money.

The best practice is to report your income as the consequences are severe.

There are different categories of tax fraud in New York State. Criminal tax fraud can start as misdemeanor and go up to a Class B felony. Serious monetary penalties as well as jail time.

Not Paying NY Sales Tax

If you owe back taxes to the New York State Department of Taxation and Finance for not paying NYS sales tax, New York sales tax attorney Charles Rosselli can protect you and your business. 

We can help you establish an agreement with the New York State Tax Department; protect you from criminal prosecution; and possibly have NYS waive the penalties ( in certain circumstances).

Before not paying NY sales tax becomes something more serious, give us a call to see if we can be of help.