From: John Collins jcollins@mercuryllc.

com
Subject: NEWS: B&H Rejects AG's Move to Burden Consumers with A New Tax on Discounts
Date: November 21, 2019 at 10:05 AM
To: John Collins jcollins@mercuryllc.com

B&H PHOTO - FOR IMMEDIATE RELEASE

November 21, 2019
Contact: John Collins – 917-496-4587

B&H Rejects New York AEorney General’s Move to

Burden Consumers with A New Tax on Discounts
NEW YORK - B&H Photo spokesperson Jeff Gerstel today released the following statement
rejecOng the New York AQorney General’s aQempt to burden consumers with a new tax on
discounts. The AQorney General alleged in a November 14th lawsuit that B&H should have
collected addiOonal sales tax when customers received discounts on certain purchases:
“The AQorney General is trying to create a new tax on discounts to make New Yorkers pay more.
The AQorney General wants consumers to pay sales tax for what they actually pay plus an
addiOonal 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 enOre consumer electronics retail industry takes the
idenOcal approach that we do.
“B&H has done nothing wrong and it is outrageous that the AQorney General is aQacking a New
York company that employs thousands of New Yorkers while leaving the naOonal online and retail
behemoths unchallenged. The AQorney 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 allegaOons aggressively.
“B&H is not a big box store or a faceless chain; we are a New York insOtuOon, having operated
here for nearly 50 years with a stellar reputaOon. The New York State Department of TaxaOon and
Finance has done countless audits and never once – not a single Ome – menOoned any issue with
this widespread retail industry pracOce.”
B&H is represented by Baker & McKenzie LLP. ScoQ Brandman, the New York Managing Partner at
Baker McKenzie stated, “We are disappointed with the AQorney General's decision to file this
lawsuit, which is trying to effecOvely raise the sales tax rate through liOgaOon. New York law is
clear that B&H's treatment of ‘instant savings’ is correct. Even if the AQorney 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 addiOonal sales tax consumers could pay on popular items with
the AQorney General’s new tax on discounts:

Additional
Regular Selling
Item Discount Sales Tax Attorney
Price Price*
General Tax
Nikon AF-S $2,797 $650 $2,147 $190.55 $57.69
Apple iMac $2,299 $700 $1,599 $141.91 $62.12
Canon
$1,999 $500 $1,499 $133.04 $44.38
XF100
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 informaOon based on BandH.com on 11/18/19

The AQorney General’s new tax on discounts could also affect many household purchases:

Additional
Regular Selling Sales
Item Discount Attorney
Price Price* Tax
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 informaOon 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 AQorney General’s office has their way, customers
could have to pay sales tax on the $100 actual sale price, plus an addiOonal 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 enOre consumer electronics industry takes the same
approach to sales tax collecOon that B&H does.

Widespread Industry Standard

Here are some examples of tax collected by the largest naOonwide retailers on the idenOcal item
shipped to New York City. The popular camera kit below regularly sells for $650 and is currently
on promoOon 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
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
 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 AQorney General is accusing B&H
of wrongdoing for not collecOng the
extra $13.31 that none of its
compeOtors collect.

*All informaOon from retailer websites as of 11/18/19

As shown above, retailers who sell consumer electronics collect New York sales tax in the idenOcal
manner as B&H, following the rule of both the law and common sense. New York State tax
auditors have approved B&H’s pracOces 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 conducOng business with honesty and integrity in all of our dealings. We are
a service company, not a sales company, and we have built our reputaOon 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 compeOtor, 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 disappoinOng that the AQorney General seeks to undermine our reputaOon as part of
their aQempt 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
AQorney General decided to target B&H, and B&H alone, aser a mulO-year fishing expediOon 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 authoriOes and has done so for many years.
For the AQorney 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 TaxaOon and Finance regularly. The Department of
TaxaOon 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

Level Playing Field for New York Businesses

B&H has proudly operated in New York City since our start in 1973, despite a someOmes-hosOle
environment for businesses. Today, New York is aligned with most states on a consistent
approach to sales tax. If the AQorney General succeeds in creaOng this new tax on discounts, and
then tries to enforce it only against New York companies, local businesses will be at a compeOOve
disadvantage against out-of-state compeOtors, 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 TaxaOon 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 reporOng for many years.
Strange Con^ngency 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 AQorney General. It is surprising that the AQorney General
is trying to create a new tax on discounts, which would enrich an anonymous enOty. We believe
the AQorney General should disclose who stands to gain financially from this acOon.
###

......................

John Collins
Managing Director
200 Varick Street | Suite 600
New York, NY | 10014
212.681.1380 office | 917.496.4587 mobile
www.mercuryllc.com

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