W. T. Grant Company v. Joseph, 2 N.Y.2d 196, 159 N.Y.S.2d 150 (1957)

Stenger, John H.

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Buffalo Law Review Volume 7 Number 1 Article 96 10-1-1957 Taxation—City Sales Tax—Liability of Vendor John H. Stenger Follow this and additional works at: https://digitalcommons.law.buffalo.edu/buffalolawreview  Part of the Taxation-State and Local Commons Recommended Citation John H. Stenger, Taxation—City Sales Tax—Liability of Vendor, 7 Buff. L. Rev. 173 (1957). Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol7/iss1/96 This The Court of Appeals Term is brought to you for free and open access by the Law Journals at Digital Commons @ University at Buffalo School of Law. It has been accepted for inclusion in Buffalo Law Review by an authorized editor of Digital Commons @ University at Buffalo School of Law. For more information, please contact lawscholar@buffalo.edu. COURT OF APPEALS, 1956 TERMCity Sales Tax-Liability Of VendorThe New York City Sales Tax Law imposes a retail sales tax on thepurchaser, but makes the vendor liable therefor both as a collecting trustee and asa taxpayer.21 While the tax is imposed at a flat percentage rate,2 1 provision ismade for a bracket schedule 23 to avoid instances where the percentage would yieldfractions of one cent; hence, the actual tax due may exceed the flat percentage taxwhere a majority of sales are in the lower portions of the bracket.24V. T. Grant Company v. Joseph25 presented the question of the extent ofthe vendor's tax liability, and, concomitantly, the extent of the record-keepingrequirements under the law. The vendor kept no record of individual sales, butpaid over to the city either the tax actually collected or the percentage rate on itstotal sales, whichever was greater. The city comptroller asserted that the returnsmust show the amount of tax that the purchaser was required to pay, andproceeded to assess a sizable deficiency upon the basis of a test check.The Court of Appeals, one judge dissenting, held that since the vendor wasunder a duty as a taxpayer to pay the tax to the city whether or not collected fromthe purchaser,26 he must therefore pay the amount of tax required to be paid bythe purchaser, irrespective of the vendor's diligence in collection.27 The record-keeping requirements of the law were interpreted, in view of this liability, asdemanding records of individual sales in order to establish the tax due thereon.28As noted by the dissent, the majority view imposes a harsh, expensive record-keeping burden upon vendors who have millions of small sales each year.Nonetheless, this effect had already been legislatively incorporated into the lawby a 1946 amendment,29 not applicable to the instant case which arose earlier,by which it was clearly specified that the vendor would be liable for the taxcollected or required to be collected. Thus, the vendor who fails to keep extensiverecords does so at his peril.21. ADMINISTRATIVE CODE OF CITY OF NEW YORK §N41-2.0; Fifth Ave. BuildingCo. v. Joseph, 297 N.Y. 278, 79 N.E.2d 22 (1948); Matter of Atlas Television Co.,273 N.Y. 51, 6 N.E.2d 94 (1936).22. ADMINISTRATIVE CODE OF CITY OF NEW YORK §N41-2.0.23. Id. §N41-3.0.24. For example, where the flat percentage was 2% but the bracket schedulecalled for one-cent tax on all sales from 17 to 66 cents, the actual tax on a 17cent sale would exceed 5%.25. 2 N.Y.2d 196, 159 N.Y.S.2d 150 (1957).26. Fifth Ave. Building Co. v. Joseph, supra note 21; Merchants Refriger-ating Co. v. Taylor, 275 N.Y. 113, 9 N.E.2d 799 (1937).27. Matter of Atlas Television Co., supra note 21.28. ADMINISTRATIVE CODE OF CITY OF NEW YORK §N41-4.0, merely requiresthat:Every person . . . keep records of receipts and of the taxpayable thereon.29. Id. §N41-2.0.

Taxation—City Sales Tax—Liability of Vendor

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Taxation—City Sales Tax—Liability of Vendor

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