N.Y. Issues Refunds to Retailers for Tobacco Fee Overpayment

ALBANY, N.Y. -- The check is the mail for New York retailers who overpaid their tobacco registration fees for 2010. Officials at the New York State Department of Taxation and Finance informed the < a href="http://www.csnews.com/search-nyacs.html">New York State Association of Convenience Stores (NYACS) that automated refunds were sent either last week or this week.

Some retailers across the state are due refunds because they paid either a $1,000, $2,500 or $5,000 fee for 2010, depending on the store's total gross sales. Those were the amounts, up from the former $100 fee, set by the 2009-10 state budget.

NYACS, along with the Long Island Gasoline Retailers Association, the New York State Association of Service Stations and Repair Shops, and the United 7-Eleven Franchise Owners of Long Island and New York, launched a legal challenge and received a court order to freeze the fee at $100 pending a final decision, as CSNews Online previously reported. However, some retailers had already paid the higher fee before the court order was obtained.

Then this past spring, Gov. Andrew Cuomo signed off on a state budget that increased the tobacco registration fee to $300, retroactive to 2010. As a result, the tax department was directed to refund money to those retailers who paid thousands of dollars for 2010.

"Back in September 2009, some retailers did pay the higher $1,000, $2,500 or $5,000 fee amount for 2010 before NYACS obtained the restraining order. Ever since, NYACS has been trying to get the tax department to issue refunds for the excess, which for some chains totaled tens or even hundreds of thousands of dollars," according to a letter posted on the NYACS website.

"In this year's legislation setting the fee at $300, the tax department was directed to refund the overpayments without interest," the letter added. "They were slow to do so, citing an outdated data processing system that had to be reprogrammed to handle such transactions. In addition, the refunds had to go through an extra layer of processing – approval by the state comptroller's office."

On the flip side of the new $300 fee, the department was also directed to collect $200 a year for 2010 and 2011 from those retailers who only paid the $100 fee. The tax department told NYACS representatives last week that those collection notices have been sent out over the past couple of weeks.

Those demands for payment are coming one month before the Sept. 20 deadline for filing a tobacco registration renewal application for the 2012 calendar year. That application requires payment of the full $300 payment, NYACS added. So some retailers could end up paying $700 by next month's deadline; however, $400 of it is a one-time hit, as the association pointed out.

"Consider the alternative -- a one-time whack of $2,800 to $14,800 in retroactive payments, depending on your gross sales, if the court had reinstated the astronomical fee schedule," NYACS told its members. "The $300-a-year compromise is not a perfect solution, but it gives most of our retail members the chance to remain in the all-important tobacco category without paying a king's ransom in fees every year."