When I was growing up, way too many years ago, it was common for small convenience stores to have a sign hanging behind the counter that said, “We don’t charge sales tax, we only collect it.” Who is liable for tax is often irrelevant to buyers and sellers—until they want a refund. Two recent Division of Tax Appeals administrative law judge (ALJ) determinations, New Cingular Wireless1and Richard L. Feigen & Co.,2 work through some of these issues. Cingular may have turned on the fact that the seller had not yet refunded sales tax to its customers. On the other hand, in Feigen, the seller ended up bearing the tax although it had already refunded its customer.
The two cases generally deal with Section 1139 of the New York Tax Law, which provides the rules for receiving a sales tax refund in cases where such tax was “erroneously, illegally or unconstitutionally collected or paid.” Section 1139(a) requires the state to refund such sales tax if the tax was paid in the last three years and the collector of sales tax had already issued a refund to the customer. Under Section 1139(c), in order to receive a refund, a collector or payer of sales tax must file a claim within the later of three years of the filing of a return or two years of paying the tax.
‘Cingular’
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