By JOSEPH KELLARD
The investigation — dubbed Operation “Gold Rush” and led by Detective Sgt. William Flanagan — involved law enforcement officials posing as customers and making transactions in which jewelry was exchanged tax-free if the customers paid with cash, Suozzi said. Search warrants were executed on Tuesday, Feb. 5 at the businesses that allegedly failed to collect or pay sales taxes, Suozzi added.
Suozzi made the announcement at a Feb. 7 press conference at police headquarters in Mineola, describing the investigation as a joint operation by the county police and New York State Department of Taxation & Finance Enforcement.
While each business, including Eli’s Corner on Merrick Road in Oceanside, remains under investigation, Suozzi did reveal that in one case authorities found $1 million in sales taxes had gone unpaid. “That means that with just one business the county didn’t receive $40,000 in sales taxes, and the state $45,000 in sales taxes for five or six years,” Suozzi said.
Suozzi noted that some of the 11 businesses had whole files in their cabinets labeled “no tax.”
“This is just a drop in the bucket,” said Police Commissioner Lawrence Mulvey about the “Gold Rush” investigation, during the Feb. 7 press conference. “It’s not unthinkable that there are tens of millions of sales tax dollars involved in this issue in the county,” Suozzi said. “ … We can’t allow this to continue.”
Suozzi said businesses that fail to collect and remit state sales taxes not only violate the law, but they also gain an unfair advantage over businesses that do comply with tax laws, and adversely impact all taxpayers.
“The more the county collects in sales taxes,” Suozzi said, “the less people have to pay in property taxes.”
Suozzi and Mulvey said the “Gold Rush” investigation started about three months ago, timing it with the holiday season, when jewelry stores typically do more business.
“Also, jewelry stores have been suspect in this area,” Mulvey added. Both the commissioner and the county executive said that the state performs these types of investigations regularly, and that the county will continue to collaborate with the state by conducting them on various businesses on a more aggressive and consistent basis.
Mulvey said punishment for non-compliance is “double the gain” from the offense, but noted that most of these cases are settled short of litigation.
“The county simply wants them to pay the back taxes,” the commissioner said.
The owner of Eli’s Corner in Oceanside declined to comment.
Comments about this story? JKellard@liherald.com or (516) 569-4000 ext. 287.
