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B&H dodged millions in taxes, New York attorney general alleges
More than $7 million in taxes allegedly owed
By Colin Lecher
on November 14, 2019 12:47 pm
Photo by Bill Tompkins/Getty Images
Photography and video equipment retailer B&H knowingly failed to pay millions of dollars in sales taxes due in New York, according to a lawsuit filed today by the state attorney general.
The suit alleges that, since 2006, B&H has offered ''instant rebate'' deals to customers. Under those deals, a manufacturer offers to reimburse a company that sells its products at a discount, but the company still has to pay taxes on the full, undiscounted price of the item.
MORE THAN $7 MILLION IN TAXES ALLEGEDLY OWED
B&H, according to the suit, offered instant rebates, but failed to pay taxes on the discount. Over 13 years, the suit alleges, B&H received at least $67 million in reimbursements on those deals, and didn't pay more than $7 million in taxes it owed as a result.
The suit claims that the discrepancy couldn't have been an accident. Prosecutors cite internal communications that they say show employees were aware they needed to pay the taxes. ''B&H has a NYS Sales Tax issue with products for which a ve
ndor-sponsored rebate or discount is offered since we are required to collect NYS Sales Tax on the total product price,'' a B&H manager allegedly told ex
ecutives in 2012.
The investigation started after a whistleblower brought the issue to the attorney general, according to the suit. Prosecutors are asking a court to force B&H to pay damages and penalties under New York tax law.
In a statement, a B&H spokesperson denied any wrongdoing and c
haracterized its tax payments as ''widespread industry practice.''
''B&H has done nothing wrong and 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,'' the spokesperson said. ''The Attorney General wants to c
harge New Yorkers a tax on money they never spent. It's wrong and we won't be bullied.''
''B&H proudly claims that it puts principles over profits, but for 13 years, the company actually chose profits over principles by defrauding New York taxpayers out of millions of dollars owed to the state,'' New York state Attorney General Letitia James said in a statement. ''B&H deliberately chose not to pay the sales tax it knew was due to New York State in order to gain a competitive edge over companies that chose to follow the rules.''
upd
ate, 1:59PM ET: Includes statement fr
om B&H spokesperson.
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COMMENTS
they treat their workers like shit too
By covefe&hamberder on 11.14.19 1:15pm
Especially the POC.
By FORESEE on 11.14.19 2:01pm
I've emailed The Verge/Vox about reconsidering their affiliate relationship with B&H in the past, given the numerous reports of labor violations and worker abuse, but I never heard back. \()/
By c0rvus on 11.14.19 2:10pm
Wouldn't surprise me, seemingly all of these NYC institutions cheat the tax man.
By ddhboy on 11.14.19 1:38pm
I wonder how much of their sales dr
opped once they were forced to c
harge taxes for out of state buyers? It was the main reason many people I know bought fr
om them.
By oghowie on 11.14.19 2:07pm
I bought an Xbox fr
om them a week ago and didn't pay sales tax, so this is still ongoing as far as I can tell.
By GoodTroll on 11.14.19 2:39pm
Considering the owners, not shocked at all
By murso74 on 11.14.19 2:11pm
This makes no sense.
Say B&H pays Canon $100 for item "x", and sells for $150. Canon then says, "you can sell ot for $100 now, here's $50 to compensate."
The customer only paid $100. In what world can NY claims sales tax on $150 for that item?
I mean, B&H has to pay tax on overall profit I guess, based on whatever extra income they get fr
om ve
ndors, like an instant rebate, but this is sales tax.
By WishItWas1984 on 11.14.19 2:21pm
Welcome to the world of sales tax, my frie
nd. Making sense isn't the goal, making money is . . .
By Ms. Kwotr on 11.14.19 2:39pm
And I guess the AG sees a whale and decides to strong arm some extra cash. Bet in talks she'll be willing to settle to keep it out of the courts.
By WishItWas1984 on 11.14.19 3:16pm
It's more like the item costs $150, but the manufacturer offers to pay $50 of that for any customer. What the customer actually pays doesn't matter; the price was $150, with a $50 discount paid by the manufacturer.
I'd be curious to know if the receipt actually showed the customer paying tax on the $150. It's unclear if the problem was that B&H collected taxes only on $100 (but owed 50% more), or if they c
harged customers correctly for the taxes, then just pocketed the difference.
By ayebeapirate on 11.14.19 2:54pm
[oops]
By Ms. Kwotr on 11.14.19 2:38pm
So their defense is that we did it but lots of other people are doing it too? Good luck with that.
By NigelTufnel on 11.14.19 3:12pm
To me it all depe
nds on how their accounting treated the manufacturer's rebate.
If the item cost them $125 fr
om the manufacturer, they normally sell it for $150 to the customer, and then the manufacturer credits the them $50 so they're able to sell it to the customer for $100, then the customer IMO should only pay tax on $100 but they should be paying $75 in income tax. I would imagine the state would rather them pay income tax on $75 than sales tax on $150…
If they simply pocketed the manufacturer's reimbursements then that's definitely a problem.
By nStyle on 11.14.19 3:13pm
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