Issue
The company received a New York State sales tax assessment of approximately $550,000.
The company retained leading New York state and local tax attorneys to challenge the assessment. However, these efforts yielded limited results despite significant investment.
Solution
Drawing on our deep understanding of New York sales tax laws and regulations, we crafted a tailored strategy to protect the client’s financial interests and minimize its tax liability. Specifically, our efforts concentrated on the primary purpose of the transactions at issue. Once we determined the primary purpose of the transactions, we were able to sufficiently convince the New York State audit department that the transactions constituted nontaxable professional services. For the services that remained taxable, we provided auditors with data demonstrating that significant portions of those services should not be sourced to New York, further reducing the assessment.
Outcome
The CBIZ State & Local Tax team reduced the $550,000 assessment to $30,000, including all interest and penalties. Our approach resolved key sales tax issues and delivered significant, timely financial relief for the client.
| Company Information | |
|---|---|
| Industry | Technology |
| Entity Type | C Corp |
| Ownership Structure | Owned by individuals |
| Geographic Footprint | Primarily New York, but they do business nationally |
| Annual Revenue | $20-$30M |
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