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Sales & Use Tax Tips for December 2007
New York Steps-Up Search for “Tax Cheats”
Aggressive campaign may snag companies making unintentional errors.
Why should you be concerned?
In a significant policy change, the State Tax Department under Governor Spitzer has vowed to beef up its commitment to tax enforcement as an essential part of its strategy to close New York's multi-billion dollar tax gap -- the gap between taxes collected and the taxes actually owed. The state has created locally based special investigation units to work with state and local prosecutors looking for taxpayers who may have engaged in tax fraud. Among other taxes the state will begin investigating credits and deductions and looking for taxpayers who have not remitted the “trust fund” sales and use taxes they’ve collected.
The State has partnered up with many state and local prosecutors in the fight. Additionally, the State has offered grants to counties who participate in the program to help fund investigations, prosecutions, and recovery of lost funds in addition to encouraging voluntary compliance.
These programs give the counties a variety of the latest tools such as data mining, computer modeling, forensic accounting, and field investigative work to expose potential “tax cheats” and to build strong cases to bring to prosecutors. The state and local governments are working vigorously to ferret out such businesses.
Although the state is working towards finding “tax cheats” and your Company may not be intentionally engaging in fraud, you may still be at risk. For example, if you’re Company has unknowingly failed to pay tax on certain transactions, has been collecting sales or use tax at the wrong rate, not refunding or remitting the tax to the state, or has been claiming credits or deductions for bad debts that are then collected, etc. your Company could be targeted. Although fraud may not be involved it could still potentially cost your Company significant money in unpaid taxes and interest plus penalties.
Our professionals can help minimize potential exposure and make sure your company is in compliance with the sales and use tax laws. For more information visit our Services webpage.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
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