In This Issue:

- ALJ Upholds Denial of Sales Tax Refund Because Vendor Failed to First Make Refunds to Customers

- HMO Held Exempt from New York City General Corporation Tax

- State Tax Department Issues Guidance on Application of Sales Tax to Sales of Computer Software

- “Whistleblower” Suit Filed Against Vanguard under New York False Claims Act

- State Tax Department Unveils Corporate Tax Reform Guidance on Web Site

- Excerpt from ALJ Upholds Denial of Sales Tax Refund Because Vendor Failed to First Make Refunds to Customers:

In Matter of New Cingular Wireless PSC LCC, DTA No. 825318 (N.Y. Div. of Tax App., July 17, 2014), a New York State Administrative Law Judge upheld the denial of a sales tax refund of over $100 million, finding that the vendor had not complied with the statutory requirement that the amount in issue must first be refunded to customers.

Facts. Over a nearly five-year period, New Cingular Wireless, now known as AT&T Mobility (“ATTM”), erroneously billed, collected and remitted over $100 million in New York sales tax on its sales of Internet access services to its customers. As part of a class action settlement agreement involving 44 states, approved by the District Court for the Northern District of Illinois, ATTM agreed to reimburse its New York customers for the overcollected tax by filing a refund claim for the benefit of its customers. The class members specifically consented to ATTM’s filing of a refund claim in New York, payment of the refund by the taxing authority to ATTM or directly to an escrow account, and the distribution of the settlement fund amounts, net of attorneys’ fees, to the customers by an escrow agent under court supervision.