By Brian Gordon 11/26/2014
It is important to know that if you are under
examination by the state of New York for a sales tax audit, it might not end
there. Sales tax audits may be referred to other tax sections within New York
state if they feel that the results of the sales tax audit will impact other
taxes.
Mohammad and Roosha Javed thought that their audit
was completed, but following the sales
tax audit of their fast food business, 492 Fast Food, Inc., the New York State
Audit Division informed the Javed’s that their personal income tax returns for
the same years were selected for audit. The increase in sales per the sales tax
audit flowed through as an increase in entire net income for the
corporation. The increased entire net
income of the corporation was then determined to be a constructive dividend to
Mohammad Javed, a shareholder of the corporation.
These audit findings were upheld in a hearing before
Administrative Law Judge Donna M. Gardner who concluded the following:
The
sales tax determination provided a factual basis for the Division to conclude
that the income reported by petitioner on their personal income tax returns for
the years at issue were not accurate, and therefore, the Division properly used
the sales tax audit findings to calculate petitioners’ personal income tax
liability. Thus, the income tax determination made by the Division was valid
and proper.
Please contact Brian
Gordon if you are selected for a New York sales tax audit. I will prepare your defense for the sales tax
audit as well as a potential corporation or income tax audit.
