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The Town of Tonawanda for decades failed to collect sales taxes on merchandise and services it sold at hockey rinks, aquatic center and golf courses, and as a result is now offering $100,000 to settle with the state.
“It’s approximately $100,000 for three years,” said Town Attorney John J. Flynn.
The failure to collect sales tax goes back decades, for such things as craft sales at playgrounds in the 1950s, according to town officials. Since then, sales tax-generating venues in the town have expanded and now include the Aquatic and Fitness Center, two ice arenas, two golf courses and an online store.
“No one ever asked the question. No one ever thought this was something that we have to do,” Flynn said.
Town Supervisor Anthony F. Caruana announced that the town was voluntarily disclosing the situation to the state Department of Taxation and Finance through the Voluntary Disclosure Program, which allows taxpayers to avoid financial penalties and possible criminal charges by disclosing information about the taxes they owe, provided they enter a payment agreement and pay future taxes.
The Town Board also decided to retain a law firm to negotiate the settlement.
If the town’s application is accepted and its request for a three-year lookback period approved, the payment would cover sales taxes not collected from 2009 to 2011.
Caruana and Flynn said the sales tax issue was raised in 2000, when the town took over concessions at the ice arenas, but it received incorrect information at that time.
Flynn said he had no knowledge of the subject being pursued further. “They just left it there,” he said.
It surfaced earlier this year, as the Youth, Parks and Recreation Department prepared to take over concessions at the town’s two golf courses. That process included applying for liquor licenses.
“In the course of getting the paperwork and getting the liquor licenses and getting the sales tax certificates for the golf courses, [Recreation Director Daniel J. Wiles and Comptroller Edward D. Mongold] stumbled across the fact this should have been done for years and years at all of our concessions,” Flynn said.
Months of researching town records followed. But the paper trail goes back only to 1996; earlier records were destroyed in the July 1995 fire at the town’s old highway barn, where they were stored.
“Everything’s been done properly for 2012,” Flynn said.
According to sales tax filings obtained by The Buffalo News under the Freedom of Information Law, the town has made three payments so far this year, totaling a little more than $17,000. That figure represents sales tax collected on all appropriate goods and services, not just those generated by the Youth, Parks and Recreation Department, according to Flynn.
The first payment, covering the period from Dec. 1, 2011, to Feb. 29, 2012, was due March 20 but not paid until May 24. Quarterly payments due June 20 and Sept. 20 were made on time, though the June filing was later amended because of an error related to sales of clothing or footwear.
While purchases by governmental entities are exempt from sales taxes, regulations regarding the sale of goods and services are more complicated.
“They don’t have to collect sales tax on things only the government does,” said Cary Ziter, a spokesman for the state Department of Taxation and Finance.
Selling a copy of an official document, for example. “That’s what the government does,” Ziter said.
But when it comes to things such as concession stands, consumers could go to a private business for the same items.
“Therefore, it’s not unique that they are selling food and drink items,” Ziter said.
The News posed other examples for Ziter.
Greens fees at municipal golf courses aren’t taxable, he said, but ice skate rentals are. And the sale of items bearing a municipal logo are taxable, though the occasional “sales tax holidays” previously offered by New York State or individual counties muddy the water.
Ziter declined to comment specifically about the Town of Tonawanda, other than to confirm the town is registered to be a legal sales tax vendor.
As for the town’s intention to address its sales tax deficiencies, Ziter referred to the available options, which include the Voluntary Disclosure Program.
The sales tax developments were not a surprise to local businessman Mike Vishion. His Comfort Concessions & Catering held the concessions contract for the golf courses until December, when the Town Board ended the contract.
Vishion said it was political retribution. In the previous month’s elections, he unsuccessfully attempted to unseat Councilman Daniel J. Crangle, who’s closely aligned with Youth, Parks and Recreation Department operations. Town officials said the concession takeover was planned for years.
Since then, Vishion has closely followed the town’s handling of those operations.
“Being tax exempt does not perpetuate to everything that you sell. It shows the arrogance and the ignorance in which our town is being operated,” Vishion said. “This is the problem when government tries to get involved in private business.”

email: jhabuda@buffnews.com