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Sales and Use Tax Deficiency Assessment Against Two Dealerships Upheld by Judge

December 13, 2016
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In a recent decision, a New York administrative law judge has upheld the Division of Taxation's sales and use tax deficiency assessments against two Long Island car dealerships and determined that the taxpayer is personally responsible for those outstanding taxes. Certain discrepancies found during the course of a civil audit led to the matter being referred to the Division’s Revenue Crimes Bureau, which resulted in a criminal complaint and indictment being filed against both companies. During the criminal trial, the taxpayer entered into a plea agreement acknowledging he was an officer and responsible person of both companies and deliberately failed to remit the sales and use tax on their behalf. As a result of his guilty plea, the judge stated that the taxpayer was prohibited from challenging the Division's responsible person finding, because the responsible person finding was already decided in the criminal trial.

Tax Law § 1133(a) imposes upon any person required to collect the tax imposed by Article 28 of the Tax Law personal liability for the tax imposed, collected or required to be collected. A person required to collect tax is defined to include, among others, every vendor of tangible personal property or services, and corporate officers, directors and employees who are under a duty to act for such corporation in complying with the requirements of Article 28.  The mere holding of corporate office does not, per se, impose tax liability upon an office holder, however in this matter, the dealership owner was admittedly an officer and person responsible for collecting the taxes for the tax period in question. The full determination can be found here.