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NEW YORK SALES TAX GUIDE

 All you need to know about sales tax in the Empire State



All state rates > New York sales tax rates > New York state tax guide


GUIDE SECTIONS


SALES TAX 101


SALES TAX NEXUS


GETTING REGISTERED


COLLECTING SALES TAX


FILING AND REMITTANCE


FILING DUE DATES


SHIPPING AND HANDLING


AN OVERVIEW OF NEW YORK SALES AND USE TAX

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Sales tax is a tax paid to a governing body (state or local) on the sale of
certain goods and services. New York first adopted a general state sales tax in
1965, and since that time, the base sales tax rate has risen to 4 percent. On
top of the state sales tax, there may be one or more local sales taxes, as well
as one or more special district taxes, each of which can range between 0 percent
and 4.875 percent. Currently, combined sales tax rates in New York range from 4
percent to 8.875 percent, depending on the location of the sale.

As a business owner selling taxable goods or services, you act as an agent of
the state of New York by collecting tax from purchasers and passing it along to
the appropriate tax authority. As of March 2019, sales and use tax in New York
is administered by the New York Department of Taxation and Finance.

Any sales tax collected from customers belongs to the state of New York, not
you. It’s your responsibility to manage the taxes you collect to remain in
compliance with state and local laws. Failure to do so can lead to penalties and
interest charges.

Use tax is similar to sales tax, but applied where goods are consumed rather
then where purchased. As an example, consider materials purchased tax free by a
construction company. Should the company choose to consume those materials for
their own purposes such as upgrading an office, use tax would be due on the
materials used.

To summarize, use tax is due when goods are purchased tax free by a merchant and
then converted for use, consumption, or enjoyment by that same merchant.


WHEN DO BUSINESSES NEED TO COLLECT NEW YORK SALES TAX?

In New York, sales tax is levied on the sale of tangible goods and some
services. The tax is collected by the seller and remitted to state tax
authorities. The seller acts as a de facto tax collector.

To help you determine whether you need to collect sales tax in New York, start
by answering these three questions:

 1. Do you have nexus in New York?
 2. Are you selling taxable goods or services to New York residents?
 3. Are your buyers required to pay sales tax?

If the answer to all three questions is yes, you’re required to register with
the state tax authority, collect the correct amount of sales tax per sale, file
returns, and remit to the state.


THE IMPACT OF FAILING TO COLLECT NEW YORK SALES TAX

If you meet the criteria for collecting sales tax and choose not to, you’ll be
held responsible for the tax due, plus applicable penalties and interest.

It’s extremely important to set up tax collection at the point of sale — it’s
near impossible to collect sales tax from customers after a transaction is
complete.



Learn about sales tax automation

Introducing our Sales Tax Automation 101 series. The first installment covers
the basics of sales tax automation: what it is and how it can help your
business.

Read Chapter 1


TRIGGERING NEW YORK SALES TAX NEXUS

--------------------------------------------------------------------------------



The need to collect sales tax in New York is predicated on having a significant
connection with the state. This is a concept known as nexus. Nexus is a Latin
word that means "to bind or tie," and it’s the deciding factor for whether the
state has the legal authority to require your business to collect, file, and
remit sales tax.


THE EXPANDING SCOPE OF SALES TAX NEXUS IN NEW YORK

Sales tax nexus in New York state used to be limited to physical presence: The
state tax authority could require a business to register, collect and remit
sales tax only if it had a physical presence in the New York, such as employees
or an office, a retail store, or a warehouse.

In June 2018, the Supreme Court of the United States overruled the physical
presence rule with its decision in South Dakota v. Wayfair, Inc. All states are
now free to tax businesses based on their economic and virtual connections to
the state, or economic nexus.

This decision has had an important impact on out-of-state and online sellers as
they are no longer required to have a physical presence in New York in order to
trigger nexus.


SALES TAX CONSIDERATIONS FOR OUT-OF-STATE SELLERS

If you have sales tax nexus in New York, you’re required to register with the
New York Department of Taxation and Finance and to charge, collect, and remit
the appropriate tax to the state. Out-of-state sellers with no physical presence
in a state may establish sales tax nexus in the following ways:

 * Affiliate nexus: Having ties to businesses or affiliates in New York. This
   includes, but isn’t limited to, the design and development of tangible
   personal property (goods) sold by the remote retailer, or solicitation of
   sales of goods on behalf of the retailer. More details on affiliate nexus in
   New York.
 * Click-through nexus: Having an agreement to reward a person(s) in New York
   for directly or indirectly referring potential purchasers of goods through an
   internet link, website, or otherwise, and:
   * The total cumulative sales price from such referrals is more than $10,000
     during the preceding four quarterly sales tax periods.
 * Economic nexus: As a result of the June 21, 2018 Wayfair ruling, any business
   that meets the economic nexus threshold criteria listed below during the
   preceding four sales tax quarters "is required to register as a vendor
   immediately" and collect, file, and remit sales tax to the New York
   Department of Revenue:
   * The remote seller's gross receipts from sales of tangible personal property
     delivered into New York exceeds $300,000; and
   * The remote seller made retail sales for delivery into New York in 100 or
     more separate transactions.
 * Inventory in the state: Storing property for sale in New York. This includes
   merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in a
   warehouse located in New York but owned or operated by Amazon. As of November
   2018, remote vendors do not have sales tax nexus if their only tie to New
   York is inventory in a warehouse owned by a third party.
 * Trade shows: You may be liable for collecting and remitting New York use tax
   on orders taken or sales made during conventions or trade shows in the state.
   If you sell taxable items at an event in New York only once a year, you’re
   required to collect and remit sales tax. However, mere attendance at a
   convention or trade show, without making sales or taking orders for taxable
   goods, generally doesn’t trigger sales tax nexus.

For more information, see Registration requirement for businesses with no
physical presence in New York State, New York Tax Law § 1101(b)(8),Do I Need to
Register for Sales Tax?, and Publication 750, A Guide to Sales Tax in New York
State.


TRAILING NEXUS

Sales tax nexus can linger even after a retailer ceases the activities that
caused it to be “engaged in business” in the state. This is known as trailing
nexus. As of November 2018, New York does not have an explicitly defined
trailing nexus policy. 


FULFILLMENT BY AMAZON (FBA)

If you’re an active Amazon seller and you use Fulfillment by Amazon (FBA), you
need to know where your inventory is stored and if its presence in New York will
trigger nexus. FBA sellers can also download an Inventory Event Detail Report
from Amazon Seller Central to identify inventory stored in New York.

If you sell taxable goods to New York residents and have inventory stored in the
state, you likely have nexus and an obligation to collect and remit tax. To
begin to understand your unique nexus obligations, check out our free economic
nexus tool or consult with a trusted tax advisor.



SOURCING SALES TAX: UNDERSTANDING WHICH TAX RATE TO APPLY

In some states, sales tax rates, rules, and regulations are based on the
location of the seller and the origin of the sale (origin-based sourcing). In
others, sales tax is based on the location of the buyer and the destination of
the sale (destination-based sourcing).

New York generally uses destination-based sourcing. In New York, the sales tax
rate is generally determined by the point of delivery, which is where ownership
and/or possession of the item is transferred by the seller to the purchaser. For
services, the rate is based on where the service is delivered, or where the
property on which the service is performed is delivered.

For additional information, see the New York Department of Taxation and Finance.



REGISTERING TO COLLECT SALES TAX IN NEW YORK

--------------------------------------------------------------------------------



After determining you have sales tax nexus in New York, you need to register
with the proper state authority and collect, file, and remit sales tax to the
state. We get a lot of questions about this and recognize it may be the most
difficult hurdle for businesses to overcome. Avalara Licensing can help you
obtain your New York business license and sales tax registration.


HOW TO REGISTER AS A SALES TAX VENDOR IN NEW YORK

You can register for a New York Sales Tax Certificate of Authority online
through the New York Department of Taxation and Finance. To apply, you’ll need
to provide certain information about your business, including but not limited
to:

 * Business name, address, and contact information
 * Federal EIN number
 * Date business activities began or will begin
 * Projected monthly sales
 * Projected monthly taxable sales
 * Products to be sold


COST OF REGISTERING FOR A NEW YORK SELLER'S PERMIT

There is currently no cost to register for a seller's permit in New York.


ACQUIRING A REGISTERED BUSINESS

You must register with the New York Department of Taxation and Finance if you
acquire an existing business in New York. The state requires all registered
businesses to have the current business owner’s name and contact information on
file.



STREAMLINED SALES TAX (SST)

The Streamlined Sales and Use Tax Agreement (SSUTA), or Streamlined Sales Tax
(SST), is an effort by multiple states to simplify the administration and cost
of sales and use tax for remote sellers. Remote sellers can register in multiple
states at the same time through the Streamlined Sales Tax Registration System
(SSTRS).

As of November 2018, New York is not an SST member state.


COLLECTING SALES TAX IN NEW YORK STATE

--------------------------------------------------------------------------------



Once you've successfully registered to collect New York sales tax, you'll need
to apply the correct rate to all taxable sales, remit sales tax, file timely
returns with the New York Department of Taxation and Finance, and keep excellent
records. Here’s what you need to know to keep everything organized and in check.

How you collect New York sales tax is influenced by how you sell your goods:

 * Brick-and-mortar store: Have a physical store? Brick-and-mortar point-of-sale
   solutions allow users to set the sales tax rate associated with the store
   location. New tax groups can then be created to allow for specific product
   tax rules.
 * Hosted store: Hosted store solutions like Shopify and Squarespace offer
   integrated sales tax rate determination and collection. Hosted stores offer
   sellers a dashboard environment where New York sales tax collection can be
   managed.
 * Marketplace: Marketplaces like Amazon and Etsy offer integrated sales tax
   rate determination and collection, usually for a fee. As with hosted stores,
   you can set things up from your seller dashboard and let your marketplace
   provider do most of the heavy lifting.
 * Mobile point of sale: Mobile point-of-sale systems like Square rely on GPS to
   determine sale location. The appropriate tax rate is then determined and
   applied to the order. Specific tax rules can be set within the system to
   allow for specific product tax rules.

New York sales tax collection can be automated to make your life much easier.
Avalara AvaTax seamlessly integrates with the business systems you already use
to deliver sales and use tax calculations in real time.


TAX-EXEMPT GOODS

Some goods are exempt from sales tax under New York law. Examples include most
non-prepared food items, food stamps, and medical supplies.

We recommend businesses review the laws and rules put forth by the New York
Department of Taxation and Finance to stay up to date on which goods are taxable
and which are exempt, and under what conditions.


TAX-EXEMPT CUSTOMERS

Some customers are exempt from paying sales tax under New York law. Examples
include government agencies, some nonprofit organizations, and merchants
purchasing goods for resale.

Sellers are required to collect a valid exemption or resale certificate from
buyers to validate each exempt transaction.


MISPLACING A SALES TAX EXEMPTION/RESALE CERTIFICATE

New York sales tax exemption and resale certificates are worth far more than the
paper they’re written on. If you’re audited and cannot validate an exempt
transaction, the New York Department of Taxation and Finance may hold you
responsible for the uncollected sales tax. In some cases, late fees and interest
will be applied and can result in large, unexpected bills.


NEW YORK SALES TAX HOLIDAYS

Sales tax holidays exempt specific products from sales and use tax for a limited
period, usually a weekend or a week. Approximately 17 states offer sales tax
holidays every year. New York started the sales tax holiday trend back in 1997,
but it no longer offers temporary sales tax holidays. Instead, it provides a
year-round state sales tax exemption for clothing and footwear sold for less
than $110.


FILING SALES TAX RETURNS IN NEW YORK STATE

--------------------------------------------------------------------------------



You're registered with the New York Department of Taxation and Finance and
you've begun collecting sales tax. Remember, those tax dollars don't belong to
you. As an agent of the state of New York, your role is that of intermediary to
transfer tax dollars from consumers to the tax authorities.


HOW TO FILE A NEW YORK SALES TAX RETURN

Once you’ve collected sales tax, you’re required to remit it to the New York
Department of Taxation and Finance by a certain date. The New York Department of
Taxation and Finance will then distribute it appropriately.

Filing a New York sales tax return is a two-step process comprised of submitting
the required sales data (filing a return) and remitting the collected tax
dollars (if any) to the New York Department of Taxation and Finance. The filing
process forces you to detail your total sales in the state, the amount of sales
tax collected, and the location of each sale.

Online filing is generally recommended, but paper returns are acceptable.


SALES TAX FILING FREQUENCY

The New York Department of Taxation and Finance will assign you a filing
frequency. Typically, this is determined by the size or sales volume of your
business. State governments generally ask larger businesses to file more
frequently. See the filing due dates section for more information.

New York sales tax returns and payments must be remitted at the same time; both
have the same due date.


FILING NEW YORK SALES TAX RETURNS ONLINE

You may file directly with the New York Department of Taxation and Finance by
visiting their site and entering your transaction data manually. This is a free
service, but preparing New York sales tax returns can be time-consuming —
especially for larger sellers.


USING A THIRD PARTY TO FILE RETURNS

To save time and avoid costly errors, many businesses outsource their sales and
use tax filing to an accountant, bookkeeper, or sales tax automation company
like Avalara. This is a normal business practice that can save business owners
time and help them steer clear of costly mistakes due to inexperience and a lack
of deep knowledge about Missouri sales tax code.


FILING WHEN YOUR BUSINESS HAS COLLECTED NO SALES TAX

Once you have a New York Sales Tax Certificate of Authority, you’re required to
file returns at the completion of each assigned collection period regardless of
whether any sales tax was collected. When no sales tax was collected, you must
file a "zero return.”

Failure to submit a zero return can result in penalties and interest charges.


CLOSING A BUSINESS

The New York Department of Taxation and Finance requires all businesses to
"close their books" by filing a final sales tax return. This also holds true for
business owners selling or otherwise transferring ownership of their business.


TIMELY SALES TAX FILING DISCOUNT

Many states encourage the timely or early filing of sales and use tax returns
with a timely filing discount. As of March 2019, the New York Department of
Taxation and Finance offers a vendor discount (also known as a dealer collection
allowance) of 5 percent with a maximum of $200 per quarter and a $0 minimum.


NEW YORK SALES TAX FILING DUE DATES

--------------------------------------------------------------------------------



It's important to know the due dates associated with the filing frequency
assigned to your business by the New York Department of Taxation and Finance.
This way you'll be prepared and can plan accordingly. Failure to file by the
assigned date can lead to late fines and interest charges.

The New York Department of Taxation and Finance requires all sales tax filing to
be completed by the 20th of the month following the assigned filing period.
Below, we've grouped New York sales tax filing due dates by filing frequency for
your convenience. Due dates falling on a weekend or holiday are adjusted to the
following business day.

It's important to note the state of New York defines annual and quarterly filing
due dates based on a calendar year of March 1 through February 28/29.



Filing FrequencyDue DateExamplePart-quarterly (Monthly)For part-quarterly
(monthly) filers, sales tax returns are due on the 20th of the month following
the reporting month.April sales tax returns are due by May 20.QuarterlyFor
quarterly filers, sales tax returns are due on the 20th of the month following
the end of the reporting quarter.Q1 sales tax returns are due April 20.YearlyFor
yearly filers, sales tax returns are due on March 20 of the following year.2020
sales tax returns are due March 20, 2021.


Source: New York Department of Taxation and Finance


LATE SALES TAX FILING PENALTIES AND INTEREST

Filing a New York sales tax return late may result in a late filing penalty as
well as interest on any outstanding tax due. For more information, refer to our
section on penalties and interest.

In the event a New York sales tax filing deadline was missed due to
circumstances beyond your control (e.g., weather, accident), the New York
Department of Taxation and Finance may grant you an extension. However, you may
be asked to provide evidence supporting your claim.

Hopefully you don't need to worry about this section because you're filing and
remitting New York sales tax on time and without incident. However, in the real
world, mistakes happen.

If you miss a sales tax filing deadline, follow the saying, "better late than
never," and file your return as soon as possible. Failure to file returns and
remit collected tax on time may result in penalties and interest charges, and
the longer you wait to file, the greater the penalty and the greater the
interest.


NEW YORK PENALTIES AND INTEREST PAYMENTS

If a registered business has collected no sales tax in New York but fails to
file a zero tax return (or missed their assigned due date), the penalty is $50.

A return filed late by 60 days or less is fined as follows:

 * 10 percent of the tax due for the first month; and
 * 1 percent for each additional month or part of a month not to exceed 30
   percent of the tax due

However, the penalty for a New York sales tax return filed late cannot be less
than $50.

A return filed late by more than 60 days is fined as follows by the greater of:

 * 10 percent of the tax due for the first month, plus 1 percent for each
   additional month or part of a month, not to exceed 30 percent of the tax due;
 * $100, or 100 percent of the amount required to be shown as tax on the return,
   whichever is less; or
 * $50.

If you file a return on time but don’t remit the tax due, the penalty is 10
percent of the tax due for the first month, plus 1 percent for each additional
month or part of a month not to exceed 30 percent. If you omit more than 25
percent of the taxes required to be shown on the return, the penalty is 10
percent of the tax you failed to report. If you fraudulently fail to pay any tax
due, the penalty is equal to twice the amount of the tax not paid, plus interest
on the unpaid tax, paid at the greater of 14.5 percent, or the rate set by the
Tax Commissioner.

Note: You may be subject to fines and a jail sentence if you fail to make,
render, sign, certify, or file any return or report. You may be subject to fines
and a jail sentence if you willfully fail to deposit taxes in a financial
institution as required or fail to remit the state and local taxes collected.

If you’re in the process of acquiring a business, it’s strongly recommended that
you contact the New York Department of Taxation and Finance and inquire about
the current status of the potential acquisition. Once you've purchased the
business, you’ll be held responsible for all outstanding New York sales and use
tax liability.


HOW SHIPPING AND HANDLING IMPACTS SALES TAX RETURNS

--------------------------------------------------------------------------------



Because New York has one of the largest populations in the Union, most
businesses have customers in the Empire State. If you’re collecting sales tax
from New York residents, you’ll need to consider how to handle taxes on shipping
and handling charges.


TAXABLE AND EXEMPT SHIPPING CHARGES IN NEW YORK

New York sales tax may apply to charges for shipping, delivery, freight,
handling, and postage.

Shipping and handling charges billed by the vendor to the customer are generally
taxable in New York if the sale is taxable, whether the charges are combined or
separately stated on the invoice. Shipping and handling charges billed by the
vendor are generally exempt when the sale is exempt, whether combined or
separately stated.

When a vendor charges a single charge for delivery of both taxable and
nontaxable property or services, the entire charge is generally subject to tax.
However, if taxable and nontaxable charges are separately stated on a bill, and
the charge for delivery is separately stated and allocated between taxable and
non-taxable sales, the charge to deliver the taxable goods is taxable and the
charge to deliver the exempt goods is exempt.

If a customer arranges delivery by a third person and pays that person directly,
the third person’s delivery charge is not taxable, even if the item delivered is
taxable.

There are exceptions to almost every rule with sales tax, and the same is true
for shipping and handling charges. Specific questions on shipping in New York
and sales tax should be taken directly to a tax professional familiar with New
York tax laws.

For additional information, see the New York State Department of Taxation and
Finance, Shipping and Delivery Charges.





Alabama sales tax rate changes

Need to know which sales tax rates in Alabama are changing? Check out our tax
rate change tracker for details.

Review rate changes
Alabama use tax guide

Free online guide to Alabama use tax, one of the most overlooked and
misunderstood taxes.

Read the guide


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