NY Sues B&H for Unpaid Taxes on $67M It Collected In Vendor Reimbursements

Retailer B&H Foto & Electronics owes New York State at least $7.3 million in unpaid sales taxes on the more than $67 million it collected in instant-rebate vendor reimbursements since 2006, alleged New York Attorney General Letitia James in a complaint Thursday in State Supreme Court in Lower Manhattan. B&H is “the largest non-chain photo and video equipment retailer” in the U.S., with 2018 sales exceeding $3 billion, said James. Its Ninth Avenue Manhattan store “sells cameras and other electronics to shoppers from around the globe,” she said. The vendor reimbursements B&H took in were “taxable receipts” under state tax law, but the retailer hid the reimbursements from state auditors, and continued doing so through the first three quarters of 2019, she said. B&H failed to declare the reimbursements it collected and accounted for them "as reductions in cost of goods sold,” she said. "This approach minimized the possibility that a Tax Department audit would detect the omission of such reimbursements from B&H’s taxable receipts.” The complaint seeks recovery of the unpaid taxes, plus triple damages for violations of New York’s False Claims Act. B&H thinks the attorney general is "flat wrong," and trying to "create a tax on discounts in order to make New Yorkers pay more," emailed spokesperson Jeff Gerstel. "B&H is not a big box store or a faceless chain," he said. "We are a New York institution, having operated here for nearly 50 years with a stellar reputation." The retailer "has done nothing wrong," said Gerstel. "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."