New York Sales Tax Litigation Services
Representation for Your Sales Tax Controversy in New York State Court
Sales Tax Helper, LLC represents businesses seeking further appeal of their sales tax assessment from the New York Department of Taxation and Finance (NYDTF). Following the sales tax audit and likely a conciliation conference, the business is left with no alternative to keep fighting the case other than to file a Petition with the Division of Tax Appeal and commence litigation. While most businesses view litigation as a very expensive and even more time-consuming endeavor, it is a very normal occurrence for our business and many cases are filed in the New York Division of Tax Appeals. It is also an opportunity to get a truly independent review of their case, unlike the NYDTF’s administrative appeal processes.
That said, litigating your New York sales tax assessment is a business decision that requires careful consideration of your goals and case. A consultation with our sales tax professionals is the first step for reviewing your case and making an informed choice about litigation options. Read more about how sales tax litigation works in New York below and how our sales tax professionals could be an essential part of your defense.
When Could You Pursue Litigation of Your Sales Tax Case with the NYDTF?
Litigation over your NYDTF audit results or assessment usually happen after exhausting administrative protest through a conciliation conference with the Bureau of Conciliation and Mediation Services;
Following the Conciliation Order, businesses can then file a petition (Form TA-100) with the Division of Tax Appeals.
Typically, a business can appeal the Conciliation Oder within 90 days (sometimes 30 days) of its issuance. It Is critical that the deadline not be missed or It can be very difficult to reopen the case. Following the Petition, the state will respond to the petition within 75 days. From there, the Petitioner has a 20 day period to respond with a reply filing.
Following the Initial filings, the case proceeds to hearing. The hearing phase resembles a traditional courtroom tenor, with slightly laxed rules of evidence and formalities. Nonetheless it Is critical to have an experienced sales tax attorney or professional at this stage as witnesses are called, exhibits are proffered and admitted, and witnesses are examined and cross examined. The case I heard by a neutral ALJ, who Is unaffiliated with the Department.
At the conclusion of the hearing, the ALJ will eventually Issue a decision. The Decision will be based on the developed record and Include findings of fact, legal conclusion and an ultimate conclusion of the case. The decision Is appealable to a Tax Appeals Tribunal within 30 days for yet another round of review.
The final decision of the Tax Appeals Tribunal is appealable Into traditional court at this juncture but this appeal Is outside the scope of this article.
The Potential Benefits and Risk of Litigating Your New York Sales Tax Bill
The math on the cost-benefit analysis of further litigating your sales tax case is simple. The upside is you could get a judgment that overturns the NYDTF’s original assessment or decision, which leads to a lower overall sales tax liability. Conversely, the risk is that you are unable to change the assessment to your benefit while also having to pay the court and professional fees only to end up in a similar position.
Therefore, professional representation at this level is essential for getting an accurate analysis on the probabilities of each possible outcome. While not a law firm, the consultants at Sales Tax Helper, LLC have many years of experience exclusively handling sales and use tax issues in New York. We provide a cost-effective solution for evaluating the pros and cons of further appeal and representing your interests in court.
Settling Your Sales Tax Case with the NYDTF After Filing a Petition in New York State Court
Filing a petition to litigate your sales tax assessment could also prove beneficial as a tool for incentivizing the NYDTF to settle on more favorable terms. A settlement could reduce the amount of your assessment and save you from some of the time and resources it takes to pursue a judgment through litigation. In fact, we have found that it is not uncommon for the start of the controversy process to be the most effective settlement opportunity tactic that a taxpayer has.
After receiving notice of the petition, the NYDTF must weigh the risks of a court shedding light on their audit and assessment practices in a public forum. The NYDTF might also be afraid of the court reviewing their interpretation of New York’s sales tax laws and regulations. In other words, the outcome of your case is important to the NYDTF because of its ability to negatively impact the NYDTF’s tax collection in future cases.
This could give you some leverage when it comes to garnering interest in settlement with the NYDTF. Ultimately, the murkiness of your case (as well as the NYDTF’s willingness to litigate) will determine the overall prospects of a potential settlement.
Is Your Sales Tax Case a Candidate for Litigation in New York State Court?
As mentioned, litigation over your sales tax assessment when aspects of the law, NYDTF audit practices, or other facts of your business’s transactions could lead to a favorable judgment. Showing the NYDTF made a mistake, while not uncommon, places the burden on you to make the case. Reoccurring New York sales tax issues and factors that could make your case a strong candidate for further litigation might include:
- Your assessment includes a substantial number of penalties that the NYDTF has the discretion to remove.
- The NYDTF performed a field audit containing bad assumptions and imperfect use of statistics that led to gross exaggerations of your taxable sales.
- The NYDTF acted unfairly in your case based on its past practices.
- Your business operates in a space where New York’s sales tax laws and regulations are not well-defined or contain gray areas (e.g., real property contractors, SaaS, etc.).
- Other procedural issues with the NYDTF’s assessment against you (e.g., the statute of limitations on the audit period or assessment has run).
Why Not Use My CPA or In-House Tax Department for Sales Tax Litigation?
Businesses sometimes use their CPA or, occasionally, in-house tax department to handle their NYDTF sales tax audits. Even if the audit defense is handled expertly by the CPA or tax department, the state revenue agency may still take aggressive positions against the taxpayer. This is where representation from those with controversy experience becomes essential. You need sales tax help from people who (1) know the applicable sales tax rules and (2) know how the NYDTF litigation department operates for purposes of achieving a favorable outcome.
To find out how tax controversy may be the tool needed to successfully resolve your tax problems, contacta qualified tax consultant from our firm today.
Call or complete our contact form to discuss our sales tax litigation services in a free consultation.
Your Business Partner for All Things Sales Tax
From general consulting services to legal assistance and more, Sales Tax Helper is your go-to name for all things concerning sales taxes. We can help you with record keeping, maximizing your tax savings, protesting the outcome of an audit, suing the state taxing agency, and more.
With clients in every type of industry, we have helped thousands with sales tax audits, protests, and administrative disputes. Because all we do is sales tax, we are not the typical tax firm that just uses a one-size-fits-all approach. Our team really knows the intricacies of sales tax and can help you with your sales tax matters.
Sales Tax Audit FAQ
Q:What triggers a sales tax audit?
A:You inadvertently waived a red flag or your company landed in the small percentage selected for a random sales tax audit. These red flags include: Cash-based businesses, prior audits that resulted in owed sales tax, your sales reported to the state didn’t match what you reported to the IRS, a high volume of exempt sales, filing a refund claim, or a high number of credits. There’s also a possibility that your business happens to be in an industry that your state suspects rampant under-reporting. Often times, they will target industries effected by complex sales tax laws.
Q:How do I prepare for a sales tax audit?
A:1. RESPOND to the notice; 2. Get organized; 3. Identify/hire your audit manager; 4. Notify your auditor of who they will be corresponding with; 5. Compare your sales tax returns against the federal tax return; 6. Test at least 1 month of exempt sales; 7. Reconcile your sales tax payable account versus your sales tax payments; 8. Review your fixed assets purchased — did you pay sales tax on them?; 9. Review your purchases on your key expense accounts to ensure tax was paid on your purchases.
Q:How long do sales tax audits last?
A:Audit duration can vary dramatically from state to state and from business to business. Waiver issues aside, an audit generally takes 3-7 months to complete. Surprisingly, some audits can drag on for a few years. Time factors usually swing on the size of the company, the ability to produce reliable and organized documentation, and the level of sophistication of the business.
Q:Can I do this myself or should I hire a sales tax lawyer or a sales tax consultant?
A:We all enjoy the occasional DIY project, especially when it saves us money. Before opting to go that route, consider the risk vs. rewards involved. Avalara recently conducted a study and found that the average sales tax audit costs around $115,000. When facing a sales tax audit, it is beneficial to have someone with knowledge of the financial implications on your side. That is where sales tax professionals, such as those at Sales Tax Helper LLC, can save you a lot of heartache and money by avoiding a few missteps.
Q:What accounting software and services do you work with?
A:TaxJar, Vertex O Series, Avalara, Vertex Cloud, Quickbooks, Proconnect Tax Online, Canopy, ONESOURCE, Sovo Intelligent Compliance Cloud, Intuit Lacerte, CCH SureTax, SS&C Advent Axys, Vertex Payroll Tax Q Series, Bloomberg Tax Advantage, VATBox, CSC Corptax Compliant, Oracle Tax Reporting Cloud, TaxCloud, Fast Enterprises, GenTax, Fast Enterprises FastUI, SAP Tax Compliance, Taxify, and ESKORT Compliance Solution.