Tonawanda News

Local News

November 10, 2010

Report finds some businesses not collecting sales tax

— — A report issued Tuesday by Comptroller Mark Poloncarz reveals that some Erie County businesses failed to collect sales tax that they should have.

According to the report, 606 businesses appeared to still be conducting business in the county, but no sales tax or exemption certificate was on file with the state Department of Taxation and Finance. Those establishments represent 9 percent of all entities doing business in Erie County.

“This practice has a negative effect on the county’s finances, as well as provides an unfair advantage to any business not collecting tax against competitors that are,” Poloncarz said in a statement. He added, “To allow someone to cheat the system is to punish the honest and hardworking business people of Erie County.”

It’s especially damaging since sales tax has become the county’s single largest revenue source over the past decade, the comptroller said. The county shares that sales tax revenue with three cities — Buffalo, Tonawanda and Lackawanna — along with 25 towns, 16 villages, 30 school districts and the NFTA.

Poloncarz says the report is the first of its kind in New York state.

The Comptroller’s Office mailed form letters to the 606 businesses to inquire whether they were collecting sales tax. The majority of the businesses contacted — 323 in all — did not respond, while 40 said they have a sales tax certificate but don’t collect tax, and 136 said they aren’t required to collect sales tax.

The businesses include a jewelry store, bed and breakfast, auto repair shop, music store, used clothing store, bar/restaurant, and a store that sells custom bridal gowns. Poloncarz’s office did not name the businesses.

Poloncarz’s report cites a study conducted in Hall County, Georgia, which found more than 1,000 businesses failed to collect sales tax, resulting in the loss of $25 million over the past three years.

The comptroller’s report was prepared in conjunction with the state tax department. It was limited to only those businesses that formed last year.

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