New York Sales Tax Vendors Beware: A Lack of Orderly Records Will Cost You

Alvan L. Bobrow, JD, LLM, and Maureen R. Monaghan, JD, LLM

In its 2009/10 budget legislation, New York State sent a clear message to businesses responsible for collecting New York sales tax and their accounting representatives: Keep adequate and orderly sales records or be prepared to face stiff new penalties if audited. New York State's new recordkeeping requirements for sales tax vendors were adopted as part of the state's sweeping new tax compliance and enforcement measures, which are aimed at alleviating the state's projected $16 billion budget shortfall. As many tax professionals are well aware, the New York State Department of Taxation and Finance (DTF) has placed a particular emphasis on compliance among sales tax vendors. This article discusses the new recordkeeping requirements for sales tax vendors, the penalties imposed for noncompliance, and practical guidance regarding the interpretation and applicability of the rules. Sales tax vendors and their accounting representatives should become intimately familiar with these new requirements to avoid incurring costly, potentially devastating, monetary penalties in the event of an audit—penalties that come on top of any liability the business may already be facing.