READ THE B&H RESPONSE TO LAWSUIT: AG Letitia James Says They Owe “Tens Of Millions In Taxes”

42

the EARLIER ARTICLE IS BELOW – FOLLOWING THE STATEMENT FROM B&H TO THEIR EMPLOYEES:

Date:   November 14, 2019
From:  Human Resources
To:       All B&H Employees

Dear B&H Employee,

Today the NY Attorney General filed suit against B&H claiming that we should have collected sales tax from customers on instant savings discounts.  We obviously believe these claims are without merit, especially since the entire consumer electronics retail industry takes the identical approach that we do.  B&H will fight these allegations aggressively.  It’s unbelievable to me that the Attorney General has singled out B&H and is misleading the public about our company, while ignoring the identical practices from much larger competitors.

We issued the following statement to the press:

“The Attorney General is flat wrong – and is trying to create a tax on discounts in order to make New Yorkers pay more.  B&H is not a big box store or a faceless chain; we are a New York institution, having operated here for nearly 50 years with a stellar reputation. The tax department has done countless audits and never once – not a single time – mentioned this widespread industry practice.

“B&H has done nothing wrong and it is outrageous that the AG has decided to sue a New York company that employs thousands of New Yorkers while leaving the national online and retail behemoths unchallenged. The Attorney General wants to charge New Yorkers a tax on money they never spent. It’s wrong and we won’t be bullied.”

We regularly offer customers instant savings discounts.  This is an industry wide practice.  On a camera that regularly sells for $1,000 that has an instant savings offer of $200, the net selling price is $800 and we collect and remit sales tax on the $800.  The Attorney General is claiming that we should collect tax based on the $1,000 and thus have underpaid sales tax for 13 years.  Common sense, legal precedent, and years of sales tax audits approving our practice say we have done everything right.

I want each of you to know that B&H acts with the highest standards of integrity in everything we do, and I find this action offensive and very disappointing.  I look forward to having our day in court to defend ourselves and our customers against these absurd allegations.

If you have any questions or receive any outside inquiries, please direct them to Jeff Gerstel or David Eisenberg.

Let’s make sure we commit 100% of our energy to serving our customers, as we always do, and exceeding their expectations every day.  Please do not allow this frivolous lawsuit to create any distraction from our mission of treating our customers right.

Thank you,

Menashe Horowitz
CEO

ARTICLE PUBLISHED EARLIER BY YWN:

Attorney general of New York, Letitia James announced on Twitter that she has filed a lawsuit against B&H Photo, the famed New York electronics retailer.

Her tweet reads: We’ve filed a lawsuit against B&H, the photo & electronics store, for allegedly failing to pay sales tax on tens of millions of dollars they received from manufacturers for “instant rebate” discounts to customers. In New York, no company is above the law.”

The state of New York is suing for allegedly failing to pay sales tax on tens of millions of dollars.

Fox5NY reports that the Attorney General’s investigation and subsequent lawsuit came from a whistleblower complaint.

“Today’s lawsuit, filed in New York State Supreme Court, concerns B&H’s failure to pay taxes on money from are point-of-sale discounts the company offers its customers, for which it receives reimbursement from manufacturers.

New York State sales tax is required on that money but the state claims that B&H never paid the tax, despite its repeated and explicit acknowledgments — internally, to outside vendors, and externally, to a competitor — that under New York tax law, it owed sales tax.”

(YWN – World Headquarters – NYC)




42 COMMENTS

  1. the tweet reads ‘…pay sales tax ON tens of millions of dollars they received from manufacturers…’ It does not say the amount THEY OWE is tens of millions in taxes, big difference – your headline is inaccurate.

  2. I suspect it is more likely a dispute about calculation (is sales tax owed on the amount of the rebate, or how the tax is calculated on exempt sales). It would be too blatant to simply not collect the tax.

    And of course, doing business while frum is not something the current Democratic Party is likely to approve of. B&H should consider relocating to a state that is friendlier for businesses, as well as frumkeit. There is no inherent reason that the mail order (internet) part of their business should be domiciled in New York.

  3. I hope that they are innocent and that they are exonerated.
    I also hope that our community does not make the mistake of justifying the type of conduct alleged in this lawsuit.
    I especially hope that our community does not accept the erroneous assertion that such conduct is sanctioned by the Torah, or that someone’s philanthropy (or other virtues) somehow negates their crimes.
    אני ה’ שונא גזל בעולה, “I, Hashem, despise theft used for Korbanos.”

  4. Let’s break this down:
    Company sells product to B&H for $500.
    Manufacturer’ offers $50 instant rebate.
    B&H sells product for $600 (after instant $50 rebate).
    B&H has credit with manufacturer for $50.

    Letitia James claims B&H should have charged the customer tax on the $50 rebate. Now she wants them to retroactively pay tax on the $50 as if they collected it from the customer. This seems like a legal argument as to whether the instant rebate is given from the manufacturer on the wholesale or retail level. Seems like a case of AG trying to make headlines when the case is ambiguous at best.

  5. Huju….don’t over-play the “antisemitism” card. This type of tax-related litigation has grown increasingly common in many jurisdictions for both brick and mortar and online resellers of electronic products and other products where instant rebates have become almost the norm. B&H happens to be one of the largest targets because of their product mix, not because of the ownership.

  6. What I write is not about right or wrong. Justification or condemnation. It is neither. Just a point about taking anything and everything politicians tweet or say with a huge grain of salt.

    Lets put this into perspective. Lets say for arguments sake the “tens of millions” in sales they didnt pay tax on is a nice round number, 100 million. “Owler” estimates thatthe BH annual revenue is 3 BILLION. This would mean they are being sued for not paying sales tax on 3% of their annual revenue. politicians being what they are, would likely have tweeted “close to 100 million”, if the number was anywhere near that, it would generate greater shock value and bigger headlines. Thats what they want. .Tens of million probably means 30 or 40 million at most. NY state is suing them for the sales tax on that revenue. There is no indication that this is a number from last year or multiple years.

  7. huju: It is news since New York was once friendly to frum Jews, and friendly to business. Now it is run by anti-semitic socialists. Note that many industries routinely have exaggerated “list” prices which are expected to be “discounted” by retailers, and historically the tax is collected on the actual amount charged.

  8. My opinion?letitia james hates Trump so viciously that a 5 million dollar party for his re-election organized by B&H ‘types’ would be enough to instigate such a response. Over the years I’ve known many workers at B&H and every single one of them has marveled at how strictly above board ,with yashrus tzu Gott un tzu latt this organization is run. That’s what prompts my seemingly conspiratorial theory!

  9. kotonhador

    why are they singling out b n h and no one else even if a whistleblower complained about b n h if it is a industry practice done by every body they should be going after the taxes from all the companies that do this.

    the answer is she is an anti semite

  10. To all people who are interested in the simple truth here the indisputable facts regarding the B&H sales tax issue.

    Background:

    Its very common for some manufacturers to drop their Map Price of an item with for example $500 and force the retailers to charge the customer with $500less for the item, take for example the Nikon D850 (Searched as Nikon 1585) Camera it currently has an Instant rebate of $500 from $3296.95 to $2796.95.

    So normally B&H would collect Sales Tax on $3296.95but now since the Manufacturer sets the sell price as $2796.95 B&H would collect Sales Tax only on $2796.95

    The Government argues that since the manufacturer reimburses B&H with money for the forced discount it is as if the Sell Price was $3296.95 and not $2796.95.

    Now lets look at the INDISPUTABLE FACTS.

    Amazon does Same:

    https://www.amazon.com/Nikon-D850-FX-format-Digital-Camera/dp/B07524LHMT/?psc=1

    Best Buy does same

    https://www.bestbuy.com/site/nikon-d850-dslr-camera-body-only-black/6084300.p?skuId=6084300

    Samys Camera does same

    https://www.samys.com/p/Digital-SLRs/1585/Nikon-D850-Digital-SLR-Camera-Body-with-MB-D18-Multi-Power-Battery-Pack/214538.html

    The fact is that B&H, Amazon, Best Buy & Samy’s are all right, the sell price was $2796.95 and NOT $3296.95, why should B&H charge Sales Tax on $3296.95 when the customer paid only $2796.95 ?

    Does the AG think that people need to pay Sales Tax on money they have NOT paid for the retailer?

    The 2’nd question is why was B&H Targeted when no one else was targeted?

    It smells no good…

    We the people of NY should contact the AG’s office and let her know what we feel and she should drop the lawsuit immediately.

    Again the 2 major questions are:

    1. Why should people pay Sales Tax on $3296.95when the Sell Price was only $2796.95?

    2. Why was B&H Targeted and No one else?

    We need answers.

  11. Seems like a perfectly kosher and legal business transaction by B&H, and the AG is just trying to make political noise and headlines. Of course, N&H being frum Orthodox Jews, makes it all the more tempting and helpful in getting media headlines.

  12. May Hashem grant B&H continued success in all of their endeavors!
    They are a Kiddush Hashem in all of the ways they do business and the honest leader in an industry known for sleight of hand.
    We go to B&H!

  13. Not all, but there is a large segment of employees at B&H (who are high on the chain there) who have no issues being “moser” on other yiddishe companies when they sell items below MAP (manufacturer advertised price). This directly causes other Yidden to lose money. B&H should not be surprised when they have whistlblowers snitching on them.

    Having said that, being in retail, this is a frivolous lawsuit and I hope B&H gets vindicated quickly.

  14. Like a previous post, they should consider leaving NY for a more tax friendly state. The workers could possibly move somewhere where they could buy a home, which is out of reach for a good amount of B and H employees. I know it’s not easy to move but if the company moved, they’d still have jobs, in probably a more pleasant place to live.

  15. B&H is not wrong – this is standard practice in NY. This new argument is being tried by tax authorities everywhere; NY is going after B&H because they don’t have the lawyer power of B**t B*y. This item is not sold for $800 across the board – it’s $800 AFTER the discount; millions of dollars in sales tax revenue are being lost on an item that’s actually $1,000 ($200 difference!). If the item sells for $1,000, pay tax on $1,000: don’t give your “friend” a “discount” and then try to pay Sales Tax on $800 because YOU decided to sell it for cheap! If NY wins, they can apply this ruling to everything that is sold by stores as a “loss leader” or offered for less with a coupon. NOONE pays Sales Tax on that $200 difference: if NY wins, EVERYONE who offers a discount will have to pay tax on the full retail price.

  16. The New York State needs a lot of money to fund free Sunday Funday’d for kids, free Zoo and arractions for kids, free birth control, free birth control classes, free services for illegals, money for “caretakers” of teen pregnancies, …and on and on. The NYS is spending like without any control whatsoever. So they need to milk all large-scale money making businesses dry. And the first vulnerable business is run by Chareidi Jews because they are the easiest target. Yes, I’m repeating that, Jews are the easiest target not only by open anti-Semites, but also by wolves in sheeps’ clothing working for the state of New York.

  17. Honest Guy
    You Want Answers?
    You Cant Handle Answers !!!
    The Rabid Jew Hating New York Politicians (mostly Jews with ties to Charadi community) Have gone like this for almost a decade. The Jews who are running the NY circus (both the frum and crooked politicians feed off each other).
    The frum leadership and Rebbes get favors in forms of that is reported to be silent and the Politicians are as well silence when it come to Anti Semetisim.
    So why would Chuckie Schumer or Nadi Nadler or the rest would need to put effort in anything. The NY JEWS HAVE BE BOUGHT AND PAID FOR.
    Then you get AOC who gangs ups with the Omar and the other filthy Anti Semites and turn around a bill that condemn Anti Semetisim to Anti Islamist.
    And you know what Mr. Honest Guy?
    THE JEWS HAVE NO CREDIBILITY ANYMORE.
    The million Jews living in NY are too comfortable to yell out loud until a Jew with Yamaka gets egged or a poor woman have her Shaitel yanked off. Then The million comfortable Jews have a 3 second air in their lungs to whisper something that no-one will listen to.
    So dear brother, unless a unfathomable calamity (Challia) visit the Jews, The comfortable Jews of NY will not utter a sound and like sheets are lead to what you see happening.
    So Of Course the State Attorney and rank and file want to make a example of the Jews.
    Why Shouldn’t they?
    “No-one is above the law”. Accept Amazon, Best Buy, the industry.
    Jews are again made an example of.
    Rubashkin All Over again.
    Thank you to the Rabbis, Rebbes and “jewish leadership”. A Groise Yashkoach.

  18. Mr. Lost In Lakewood: I can tell you from a manufacturer’s perspective, you signed a contract to become a reseller and to advertise at a certain minimum price. So… who is the one who is making a Chillul Hashem here?

  19. The question that comes to mind (as implied by another commentator here) is just what shoddy jobs these State inspectors and auditors are doing if this has been going on for over a decade and they needed a whistleblower to point them to the problem. With incompetents like these just fire them all and save the taxpayer the expense, but it sure looks like the taxpayer is not getting back any value by these audits.

  20. The AG is just trying to create new legislation. She’ll find a complicit judge and voila new state revenue. I also agree with some of the other posters. Ever Since the democrats turned hard left, their ain’t be no room for them Jews.

  21. LBJ; Because discounts are generally offered directly by the retailer and reduce the amount of the sales price and the cash received by the retailer, the long-standing practice in almost all jurisdictions is that a sales tax applies to the price AFTER the discount is applied (e..g if the regular selling price is $30 but the retailer itself cuts its margin and offers a 5 percent discount for “first time customers”, the tax base is $28.50. Likewise, if the retailer is offering a fixed dollar discount rather than a percentage discount. The normal price is $30.00 but you are offering a $5.00 discount for returning customers, the tax base is $25.00.

    However, one of the most common tax code issues being litigated in state courts throuighout the country (aside from taxation of internet sales) arises where the discount is sponsored by the manufacturer or the distributor and the retailer is directly reimbursed by either of these parties for offering the discount. In those types cases, as claimed by NYS and most other states, the retail sales tax base should be the full sales price and not the reduced sales price. In the case of anufacturer’s coupons, because the tax base is the amount of receipts you receive for selling the product, the states generally don’t distinguish whether the payment comes from the customer or by some third party. Sales coupons or instant discounts that are reimbursed by a third-party are NOT treated as a sales price adjustment. This tax code interpretation is pretty uniform across the country.
    Was there anti-semitism, poor judgement (or both) in the way the litigation was communicated here, perhaps. However, the tax enforcement gurus in Albany did NOT dream up some wild new theory justto prosecute a bunch of sucessful yiddin.

  22. There needs to be an OUTCRY! this PURE ANTI SEMITISIM!!!

    They started with our Yeshivas and then to the Businesses.. Its sad but interesting to see which of the commentators above, whitewash it or try to be DAN LKAF ZCHUS the AG, and some even blame on the JEW (B&H) SICK
    I’m not shocked that these are the same folks who HATE TRUMP and side with the liberals. Get well soon!!!

  23. anyone who shops at big box stores knows that they pay tax on the full amount before the discount. in a low margin business paying 10-20 dollars less matters to people.

  24. As a consumer I’d be upset if charged sales tax on an amount above what I paid. And I have a pretty good understanding of tax laws.

    I can imagine many customers walking out of the store and leaving the camera they were intending to purchase behind, after noticing such “chutzpah” by the seller.

    Having said this, NYS sales tax laws are vulture like, so this is no surprise.

  25. This is by far the worst case I have ever heard. Shame on the AG! u have nothings better to do with your time then file a useless and wrong suit against a company that is bigger and most trustworthy than you will ever be. Get your facts straight. U can’t charge tax on a msrp price. Only on the actual sale price. Like people have been saying something is worth 2000 and you sell it for 1899 or whatever the tax is on 1899 not 2000 moron. Tax is what you pay for ! Senseless lawsuit and shame on the the AG!!

  26. It just shows us that the world in general is at a breaking point. It’s awful out there and people are struggling with so many things. There are stores like Best Buy target Walmart Costco … to name a few these are the big ones, they don’t get a lawsuit, They are so honest…??!!

  27. Avrumalah: If the store discounts the $100 MSRP by $20 and at the same instant the customer pay the store $80, the manufacturer provides a $20 payment to the store to offset the $20 discount , the tax basis is $100 not $80 since the dollars are fungible and the tax codes in most jurisdictions are agnostic as to the sources of the $100 payment. Obviously, in your example, there is no offsetting manufacturer payment to the store so the tax basis is only the $80 customer payment. Its not rocket science

  28. @Occasional Commenter

    I never said retailers breaking MAP are doing the right thing, I’m just saying, B&H has done plenty of “whistle blowing” themselves, so they should not be shocked when someone goes after them. And B&H snitches on others even when others don’t break MAP.

    I’m going to reiterate, I hope they get vindicated in a big way.

  29. B&H cannot move out of NY, Which is known to be very heavy handed when it comes to tax collection, because alot of their business is tourists and walk-ins. They can only get that business by being in Manhattan

    Alot of their back offices are in NJ (Their Mail order business)

    Most stores dont give the “Instant Rebate” like B & H does, they just lower the price directly and BTW if you have a “Mail in Rebate” you do have to pay the tax. So If you have an item that costs $20 and there is a $20 mail in rebate (Making the item Free) You still have to pay the $1.70 in tax, but had the store just given you the item for free, you wouldnt pay any taxes

  30. The AG’s statement is very telling. “No company is above the law.” She is implying that Jewish businesses are seen as above the law. She is a pure antisemite.

  31. B & H should get out of NY! There is nothing in NY that Lakewood can’t offer. Lakewood is classier and almost every frum business knows to either open a second store in Lakewood or close the NY one altogether. There is no draw to living in NY anymore. Come to Lakewood and you will see how business will boom. Compared to NY, the quality of life is way better anyway.

  32. If the AG wanted to use B & H as a test case to challenge tax rates with rebates in the electronics industry that’s one thing. But the tone of the AG’s tweet sounds to me like she used her position to foment anti-Semitism.

    Hey-hey. Ho-ho. Le-ti-tia James has got to go!

  33. First of all this is nuts. It seems every major retailer when selling high value items like cameras only charges sales tax on the net amount charged to the customer and not on the amount before the manufacturer rebate (although without seeing the actual books it may be impossible to know, as the vendor may be remitting the tax out of their own pocket). But let’s look beyond that.

    It is clear that the tax department’s position is that rebates issues by a manufacturer which are passed on to a customer are not deductible for sales tax. I believe with automobiles this is very clear and there is actually a decision where someone wanted a refund of sales for the portion paid on the rebate and they lost.

    Then there is the text of the law itself.

    “Receipt. The amount of the sale price of any property… taxable under this article…, valued in money, whether received in money or otherwise, including any amount for which credit is allowed by the vendor to the purchaser, without any deduction for expenses or early payment discounts and also including any charges by the vendor to the purchaser for shipping or delivery,…”

    This case will depend on what “including any amount for which credit is allowed”, means and applies here. I am not sure if NYS issued a regulation regarding manufacturer credits but they definitely have with regard to coupons and they have a tax bulletin that extends the logic of coupons to manufacturer rebates.

    I think what B&H will try to argue is that the extension of the regulation that coupons are not a reduction of the sales price for sales tax does not apply to manufacturer rebates (in other words the tax bulletin has faulty reasoning). The argument I can think of is that a coupon would be something issued to a customer who when presented to a store would be entitled to a reduction in price. The store can’t take that coupon, not give a discount, and collect from the manufacturer. In effect you have an item that a customer who has the coupon is telling you, some third party (maybe the manufacturer) will pay the difference. With a manufacturer rebate as the customer has no control over this right, it is really a discount issued to the store and not equivalent to a coupon. Clearly unlike with a coupon, B&H will pass on this discount to all its customers to have a more competitive price. With a coupon you would have to go find that yourself and present it. If you don’t present it you would pay more.

    In effect I think B&H would argue that there is no credit to the customer here. It is simply a discounted price. The presentation of MSRP less credit to get the selling price is no different than any other sale that a store offers.

    As to the other claims that B&H knew about this and tried to have their vendors modify contracts to avoid this issue, I would think that consistent with the above, they are going to say, they did not believe it was an issue, however they were aware that NYS may still raise the issue and in order to place themselves in a better position where the standing is stronger they sought to modify the contracts. Regardless, even without the modifications, they were still in the right.

    I suspect that B&H will lose this case in their initial trial, but it will be appealed. I don’t want to surmise what the appellate court will rule on this. I guess a lot will hinge on showing what actual practices are followed in NYS and so on. I think this, because if no one pays tax this way the court might be more inclined to rule against NYS and tell them to have the legislature clearly write this is taxable and hope it passes into law (to rule for NYS in such a case would possibly create a tremendous uncertainty for many businesses as NYS will now try going after taxes on these rebates). On the other hand if significant taxes are collected each year by NYS on these rebates the court will probably be more inclined to rule against B&H.

    Sorry a bit long and I did not review for grammar or clarity.