In the past, an online seller who sold to customers located in a particular state had to have some physical presence in that state before the state could require the seller to collect and pay state sales tax. However, the requirement for physical presence was overturned in the Supreme Court’s 2018 decision in South Dakota v. Wayfair Inc.
For decades, New York had a law on the books requiring out-of-state sellers to pay sales tax in New York. However, the law was not enforced due to prior Supreme Court rulings. As a result of the Wayfair decision, New York is now able to enforce this law effective June 21, 2018, the date the Supreme Court issued its Wayfair decision.
Rules on Collecting New York Sales Tax by Remote Sellers
Sellers located outside of New York State that (1) sell tangible personal property delivered into New York, and (2) have no physical presence in New York, are required to register as a sales tax vendor and collect and remit sales tax on their New York State sales if for the immediately preceding four sales tax quarters:
- the seller earned more than $300,000 in gross receipts from sales of tangible personal property delivered into New York, and
- the business made more than 100 sales of tangible personal property delivered in the state.
Both of these conditions must be met during the applicable lookback period. For example, a business that meets the $300,000 sales threshold, but has not made more than 100 transactions in that period, is not required to register for sales tax.
If your business is not currently registered for New York State sales tax and has no physical presence in New York, you should do the following:
- Determine the total amount of gross receipts from sales of tangible personal property you made that were delivered into New York State in the past four sales tax quarters.
- Sales tax quarters are:
- March 1 through May 31,
- June 1 through August 31
- September 1 through November 30, and
- December 1 through February 28/29.
- Sales tax quarters are:
- Determine the number of sales transactions you made into New York during those same four sales tax quarters.
“Gross receipts” means the amount you received for all sales of tangible personal property delivered into New York, whether taxable or exempt, without any deductions for expenses. Count sales you make directly through your own website, phone sales, mail, or other means, as well as sales made through online marketplaces such as Amazon.
“Sales transactions” means each invoice, sales slip, contract, or other memorandum of sale issued for the sale of tangible personal property delivered into New York State, whether taxable or exempt, including sales for resale.
If you meet both requirements (more than $300,000 of gross receipts from sales of property into New York and more than 100 sales transactions in New York) you must register for New York State sales tax.
Sales Through Marketplace Providers
Many remote sellers sell their products though online marketplaces such as Amazon. These are called marketplace providers under New York sales tax law. A “marketplace provider” is a company that (1) facilitates sales of tangible personal property by providing a sales forum, which can be a website, catalog, store, or other forum; and (2) collects the money paid by customers (or has contracted with a third party to collect the payments) and pays it to marketplace sellers.
Effective June 1, 2019, marketplace providers are required to register with New York for sales tax purposes and collect and remit sales tax if in the previous four sales tax quarters:
- the cumulative total of the provider’s gross receipts from sales made or facilitated of tangible personal property delivered into New York exceeded $300,000, and
- the provider made or facilitated more than 100 sales of tangible personal property delivered in New York.
Such a marketplace provider is required to collect and remit sales tax on all taxable sales of tangible personal property that it facilitates for marketplace sellers. This is so regardless of whether the marketplace seller is required to register for sales tax purposes. The marketplace seller need not collect or remit sales taxes on sales made through such a marketplace provider. The marketplace provider should issue to the seller Form ST-150, Marketplace Provider Certificate of Collection. Alternatively, the marketplace provider can include a statement in its agreement with sellers that it is registered and will collect and remit sales taxes.
The bottom line: A remote seller that is required to register as a sales tax vendor need not collect sales taxes on sales made through registered marketplace providers such as Amazon.
How to Register and Collect Sales Tax
To register as a New York sales tax vendor you must complete an application and obtain a sales tax certificate of authority. You can apply online. Note: New York is not one of roughly two dozen states that participate in the Streamlined Sales and Use Tax Registration System. For more information, see the online guide How to Register for New York Sales Tax.