New York Sales Tax Enforcement Actions Checklist
Introduction
Businesses with sufficient nexus in New York must register for a Certificate of Authority and collect sales tax on taxable goods and services. Sales tax enforcement actions occur when the
New York Department of Taxation and Finance identifies noncompliance through filed returns, third-party data, audits, or failure to file required returns.
These actions include notices requesting information, audit notifications, assessments, and enforcement of collection under Tax Law Article 28. Understanding enforcement stages and responding appropriately protects your business interests and legal rights.
What This Issue Means
A sales tax enforcement action represents formal contact from the Department of Taxation and
Finance regarding your sales tax obligations. You may receive a notice requesting missing returns, an audit notification, a proposed assessment of additional tax, or a payment demand.
The action signals that the state has identified discrepancies through documented evidence of noncompliance with the requirements of Tax Law Article 28.
Why the State Issued This or Requires This
The Department of Taxation and Finance tracks sales tax compliance through filed returns, payment records, and third-party information such as vendor reports and credit card processing statements.
When the state identifies gaps—including unfiled returns for specific periods, returns showing unusually low sales, or payments that do not match filings—it initiates enforcement under statutory authority. The department also conducts routine audits of businesses in certain industries or with particular compliance profiles.
What Happens If This Is Ignored
Failure to respond to an enforcement notice triggers the next collection stage. The Department of Taxation and Finance may issue a Notice of Determination, which becomes a final assessment if not protested within 90 days. The state assesses penalties and interest under Tax
Law Section 1145.
Post-assessment collection actions include filing tax warrants with the Secretary of State and county clerks, creating liens on real and personal property, income executions up to 10 percent of gross wages, and bank account levies. Unpaid liability and enforcement costs escalate substantially over time.
What This Does NOT Mean
An enforcement notice does not constitute criminal prosecution. Civil enforcement and criminal tax prosecution are separate legal processes with distinct procedures and standards. Receiving an enforcement notice does not automatically result in tax warrants, levies, or seizures—those actions occur in the post-assessment collection stage after earlier enforcement steps fail.
Checklist: What to Do After Receiving a Sales Tax
Enforcement Action or Identifying This Issue
Step 1: Read the Notice Completely and Identify the Type
Obtain the original notice from the Department of Taxation and Finance. Look for the notice title or type, such as Request for Information, Notice of Determination, or Notice of Sales Tax Due.
Identify the specific tax periods in question. Record the notice number, issuance date, and any response deadline. Note the dollar amount if stated and keep the notice in a secure location.
Step 2: Verify Your Business Tax Registration
Confirm that your business name and New York State Tax ID match the notice exactly. Check whether the notice references a business location or address you recognize. Note any discrepancies clearly if the notice references a business you did not operate or an incorrect location. Verify your actual tax registration with the state rather than assuming the notice went to the wrong recipient.
Step 3: Gather All Relevant Records for the Period in Question
Collect all sales records, receipts, and point-of-sale reports for the months or years referenced in the notice. Locate copies of filed sales tax returns for that period, if any were filed. Find bank statements, credit card processing statements, and payment records showing deposits during that period. Organize inventory records, production logs, or vendor invoices for the same period if you maintain them. Store all documents in one accessible location for easy reference.
Step 4: Determine Whether You Filed Returns for the Period in Question
Check your business records to confirm whether you filed a sales tax return for the specific period mentioned in the notice. Obtain a copy of that return and compare it to the notice if you
filed. Note the reason if you did not file, such as no sales, business closure, or unawareness of the requirement. Contact the Department of Taxation and Finance to request a transcript of filed returns on your account if you are unsure whether you filed.
Step 5: Calculate Your Estimated Sales Tax Liability if You Have Not Already
Done So
Review your records to estimate total sales for the period in question. Determine which sales were taxable and which were exempt under New York law. Apply the applicable New York sales tax rate to taxable sales, noting that rates vary by location and product type. Record any tax you already paid during that period. Write down your estimated balance owed or overpaid for reference.
Step 6: Review the Notice Deadline and Plan Your Response
Identify the response deadline clearly stated in the notice. Calculate how many days remain until that deadline. Determine whether you can gather the needed information and respond by that date. Prioritize immediate action if the deadline is within ten days. Prepare to request an extension if you cannot respond in time.
Step 7: Prepare a Written Response to the Notice
Begin with a brief statement identifying the notice number and tax period. State which documents you are providing and which you cannot locate if the notice requests documents or information. Explain your position briefly if you disagree with the notice’s assessment or claim.
Include copies of supporting documents and never send original documents. Keep a copy of your response and all attachments for your records.
Step 8: Request an Extension of the Response Deadline If Needed
Contact the Department of Taxation and Finance immediately if you cannot meet the stated deadline. Identify the notice number and explain briefly why you need more time. Propose a new deadline that gives you a reasonable time to gather information. Request written confirmation that your extension was approved. Do not assume an extension is granted without receiving confirmation.
Step 9: Submit Your Response by the Deadline
Address your response to the specific address listed in the notice. Include the notice number and your Tax ID on all documents. Use certified mail with a return receipt to create proof of delivery when mailing documents. Keep a copy of your submission for your records, and record the date and method you submitted your response.
Step 10: Await the State’s Review and Next Communication
The state will review your response and may request additional information. You may receive a revised notice, a final assessment, or a notice that the matter is resolved. The state issues a written notification of its decision. Do not assume silence means the matter is closed, and wait for official written communication.
Step 11: Review Any Follow-Up Notice the State Issues
Read the state’s response in full when you receive it to understand the decision. Identify whether the state upheld the original assessment, modified it, or closed the matter. Note any new response deadline or payment due date. Review whether you have a right to appeal and the deadline to do so if you disagree with the state’s decision.
- Missing the response deadline can result in the proposed assessment becoming final.
- Failing to provide copies of supporting documents makes it difficult for the state to
- Assuming silence means the matter is resolved can lead to unexpected collection
- Submitting documents to the wrong address may delay processing or prevent your
- Ignoring follow-up notices escalates enforcement actions.
- Failing to keep copies of your own submissions eliminates your proof of response.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 12: Determine Your Next Step Based on the State’s Decision
File the notice in your records and ensure no further payments are expected if the matter is resolved in your favor. Make complete payment by the due date and retain proof of payment if you owe an amount and can pay in full.
Contact the Department of Taxation and Finance to discuss installment payment arrangements if you owe an amount but cannot pay in full. Review the notice to identify appeal or protest rights and applicable deadlines if you disagree with the state’s decision.
What Happens After This Is Completed
The Department of Taxation and Finance reviews your response and supporting documentation.
The state then issues a written decision—either a revised notice, a final assessment, or a notice of closure. You may have the right to appeal if you disagree with the state’s decision, which requires filing a petition within a specified timeframe.
Common Mistakes to Avoid reconsider your position. actions. response from reaching the correct reviewer.
Frequently Asked Questions
What if I did not receive the notice?
If the state mails the notice to the address on file, it assumes you received it. Contact the
Department of Taxation and Finance to explain if you believe you did not receive a notice, but learn later that enforcement action occurred. You may have options to address closed assessments in certain circumstances, though deadlines apply.
Can I dispute the notice even though it has already been issued?
You can submit your position and supporting documentation with your response. The state will consider your explanation and evidence before issuing a final decision.
What if I cannot find records from the period in question?
Explain this in your response and provide whatever documentation you have, such as bank statements or accounting records. The state may accept reasonable reconstructions of sales based on available evidence.
Do I need a tax professional to respond to an enforcement notice?
You may respond on your own. Professional assistance may be helpful if the issue is complex or the amount is significant.
How long does it take the state to review my response?
Processing time varies depending on the complexity of your response and the current workload.
Follow up in writing if you have not received a decision within 60 days.
Can the state assess tax from a period longer than my sales records go back?
The state can generally assess sales tax for a period of three years from the filing deadline.
Longer periods may apply if the state determines fraud occurred under specific statutory criteria.
Closing
Responding promptly and thoroughly to sales tax enforcement notices gives you the best opportunity to resolve the matter fairly. The state expects businesses to file returns and pay tax owed, and enforcement actions are routine administrative processes under Tax Law Article 28.
Organizing your records, understanding the specific issue, and submitting a clear, documented response by the deadline allows you to control the process. Contact the Department of Taxation and Finance or consult a tax professional if you remain uncertain about any aspect.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and aren’t sure how to respond, our team can help you understand your options and next steps.
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