ALJ Permits Only Minimum Penalties for Failure to File Information Returns -

A New York State Administrative Law Judge has rejected the maximum penalties imposed by the Department of Taxation and Finance on an alcoholic beverage wholesaler for failing to file information returns, finding that the Department failed to request records, that its use of an estimated method was improper, and that the company made great efforts to comply. Matter of Flair Beverages Corporation, DTA No. 826110 (N.Y.S. Div. of Tax App., Sept. 29, 2016).

Legal Background and Facts. Flair Beverages Corporation (“Flair”) is a licensed alcoholic beverage wholesaler. Legislation enacted in 2009 required every alcoholic beverage wholesaler that is licensed to sell without collecting sales and use tax to file annual information returns. The information gathered from the wholesalers’ information returns is used to analyze the sale of alcoholic beverages and determine the accuracy of income and sales tax returns filed by vendors who purchase from the wholesalers.