B&H PHOTO - FOR IMMEDIATE RELEASE
November 21, 2019
Contact: John Collins – 917-496-4587
NEW YORK - B&H Photo spokesperson Jeff Gerstel today released the following statement rejecting the New York Attorney General’s attempt to burden consumers with a new tax on discounts. The Attorney General alleged in a November 14th lawsuit that B&H should have collected additional sales tax when customers received discounts on certain purchases:
“The Attorney General is trying to create a new tax on discounts to make New Yorkers pay more. The Attorney General wants consumers to pay sales tax for what they actually pay plus an additional tax on discounts they receive. This makes no sense and there is no law that requires consumers to pay this tax on discounts.
“These claims are without merit; the entire consumer electronics retail industry takes the identical approach that we do.
“B&H has done nothing wrong and it is outrageous that the Attorney General is attacking 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 will fight these allegations aggressively.
“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 New York State Department of Taxation and Finance has done countless audits and never once – not a single time – mentioned any issue with this widespread retail industry practice.”
B&H is represented by Baker & McKenzie LLP. Scott Brandman, the New York Managing Partner at Baker McKenzie, stated, “We are disappointed with the Attorney General's decision to file this lawsuit, which is trying to effectively raise the sales tax rate through litigation. New York law is clear that B&H's treatment of ‘instant savings’ is correct. Even if the Attorney General is successful, the consumer is the one bearing this cost as they will be paying sales tax on an amount more than the price paid.”
Below are examples of how much additional sales tax consumers could pay on popular items with the Attorney General’s new tax on discounts:
|
Item |
Regular |
Discount |
Selling Price* |
Sales Tax |
Additional |
|
Nikon AF-S |
$2,797 |
$650 |
$2,147 |
$190.55 |
$57.69 |
|
Apple iMac |
$2,299 |
$700 |
$1,599 |
$141.91 |
$62.12 |
|
Canon XF100 |
$1,999 |
$500 |
$1,499 |
$133.04 |
$44.38 |
|
Sony a9 |
$3,998 |
$500 |
$3,498 |
$310.44 |
$44.38 |
|
Bose L1 |
$2,699 |
$405 |
$2,294 |
$203.59 |
$35.94 |
|
LG C9PUA |
$2,497 |
$1,000 |
$1,497 |
$132.86 |
$88.75 |
*Price information based on BandH.com on 11/18/19
The Attorney General’s new tax on discounts could also affect many household purchases:
|
Item |
Regular Price |
Discount |
Selling Price* |
Sales Tax |
Additional Attorney General Tax |
|
Mattress |
$1,699 |
$452 |
$1,248 |
$110.78 |
$40.12 |
|
Sofa |
$1,350 |
$721 |
$629 |
$55.82 |
$63.99 |
|
Refrigerator |
$1,799 |
$501 |
$1,298 |
$115.20 |
$44.46 |
*Price information based from leading online retail websites on 11/19/19 (assumes discounts are funded by manufacturers)
Pay Tax on What You Pay, Not on What You Save
Consumers pay sales tax based on what they actually pay. If you buy a $150 item on sale for $100, you pay $100 and pay tax on $100. If the Attorney General’s office has their way, customers could have to pay sales tax on the $100 actual sale price, plus an additional tax on the $50 discount that they received. Common sense, and the law, says that this new tax on discounts makes no sense. That’s why virtually the entire consumer electronics industry takes the same approach to sales tax collection that B&H does.
Widespread Industry Standard
Here are some examples of tax collected by the largest nationwide retailers on the identical item shipped to New York City. The popular camera kit below regularly sells for $650 and is currently on promotion for approximately $499:
 |
Retailer 1 Regular Price $650 Sale Price $499.99 Sales Tax $44.37 Rate 8.875% |
 |
Retailer 2 Regular Price $650 Sale Price $499.00 Sales Tax $44.27 Rate 8.875% |
 |
Retailer 3 Regular Price $650 Sale Price $499.95 Sales Tax $44.37 Rate 8.875% |
 |
Retailer 4 Regular Price $650 Sale Price $499.99 Sales Tax $44.37 Rate 8.875% |
 |
Retailer 5 Regular Price $650 Sale Price $499.99 Sales Tax $44.37 Rate 8.875% |
 |
Retailer 6 Regular Price $650 Sale Price $499.95 Sales Tax $44.37 Rate 8.875% |
 |
B&H Photo Regular Price $650 Sale Price $499.00 Sales Tax $44.29 Rate 8.875%
AG’s New Tax on Discounts $13.31
The Attorney General is accusing B&H of wrongdoing for not collecting the extra $13.31 that none of its competitors collect. |
*All information from retailer websites as of 11/18/19
As shown above, retailers who sell consumer electronics collect New York sales tax in the identical manner as B&H, following the rule of both the law and common sense. New York State tax auditors have approved B&H’s practices through countless closed state tax audits.
Retailers collect and remit tax, they do not ‘charge’ tax. Any increase in the sales tax that retailers are obligated to collect will result in a charge that would be passed through to customers.
47-Year Track Record of Honesty and Integrity
B&H prides itself on conducting business with honesty and integrity in all of our dealings. We are a service company, not a sales company, and we have built our reputation customer by customer for 47 years.
Our customers always come first. That’s why we have earned over 150,000 5-Star Reviews on Google – more than any competitor, larger or smaller. We have been named by Newsweek as one of America’s Best in Customer Service and by Forbes as one of America’s Best Mid-Size Employers. Honesty is rule #1 at B&H.
It is truly disappointing that the Attorney General seeks to undermine our reputation as part of their attempt to create a new tax on discounts. We employ thousands of New Yorkers and have done so for decades. Many employees have been with B&H for decades. We have similarly partnered with our key suppliers for many years. We simply don’t understand why the New York Attorney General decided to target B&H, and B&H alone, after a multi-year fishing expedition to pick apart an uncontroversial and near universal industry standard.
Crystal Clear Tax History
B&H promptly pays all sales tax due to the state tax authorities and has done so for many years. For the Attorney General to imply otherwise is simply wrong and an unfair smear campaign.
- B&H Photo has operated in New York State for 47 years and has been audited by the New York State Department of Taxation and Finance regularly. The Department of Taxation has never – not once – raised this issue.
- B&H complies with state sales tax requirements in all 50 states and collects and remits sales tax in every state where it is required to do so.
Level Playing Field for New York Businesses
B&H has proudly operated in New York City since our start in 1973, despite a sometimes-hostile environment for businesses. Today, New York is aligned with most states on a consistent approach to sales tax. If the Attorney General succeeds in creating this new tax on discounts, and then tries to enforce it only against New York companies, local businesses will be at a competitive disadvantage against out-of-state competitors, and more businesses will be driven out of the state. B&H proudly competes against many fine retailers, and only asks for a level playing field.
Where is the State Tax Department?
The New York State Department of Taxation and Finance – the agency responsible for sales tax – is not part of this case. Why not? The tax department has audited B&H for years and has approved our tax reporting for many years.
Strange Contingency Structure
In the most bizarre twist of this suit, there is an anonymous LLC accuser that could receive 25 percent of any funds recovered by the Attorney General. It is surprising that the Attorney General is trying to create a new tax on discounts, which would enrich an anonymous entity. We believe the Attorney General should disclose who stands to gain financially from this action.