A newly filed lawsuit by the State of New York accuses electronics retailer B&H Foto & Electronics Corp of alleged tax fraud. The lawsuit, which was recently published on the New York Attorney General’s website, claims that B&H ‘intentionally underpaid sales tax on millions of dollars in receipts from its sales of cameras and other consumer electronics.’

The lawsuit claims that B&H failed to pay approximately $7 million in sales taxes on reimbursements it received from manufacturers on products sold with instant rebates to consumers. Specifically, the lawsuit alleges that when a customer would purchase an item with an instant rebate through B&H, and the manufacturer of the camera gear would subsequently reimburse B&H for the difference, B&H didn’t pay taxes on that reimbursement money, which would be considered income. This ‘arrangement,’ the lawsuit alleges, took place for 13 years and was brought to the state’s attention by a whistleblower.

The lawsuit likewise claims:

B&H knew that it should have been paying the tax. B&H has repeatedly and explicitly acknowledged—internally, to outside vendors, and to a competitor—that under New York tax law, it owed sales tax on these reimbursements … And, even after B&H learned that the State was investigating it for failing to pay the sales taxes due on these reimbursements, B&H continued to underreport its sales taxes while simultaneously admitting to others that it knew the sales tax was, indeed, due.

The lawsuit goes into great detailed about alleged communications within B&H that reportedly prove the company knew that it was supposed to pay taxes on instant rebate reimbursements. In a statement to The Verge, however, B&H said that it ‘has done nothing wrong,’ and that the New York AG has ‘decided to attack’ a local company while ‘leaving the national online and retail behemoths unchallenged.’

New York is seeking repayment of the back taxes, interest, penalties, and damages related to the alleged tax fraud.

We have contacted B&H with a request to comment on the lawsuit and allegations; we will update this article accordingly if we receive a response.

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