If you're selling to customers in New York, you need to charge sales tax—but New York's rules can be confusing. This guide will explain New York's sales tax system in simple terms to help you file correctly and avoid penalties.
We'll cover everything from tax rates to economic nexus laws. Whether you're new to ecommerce or just starting to sell in New York, this guide has you covered.
Sales tax at a glance
New York sales tax rates & calculations in 2023
The total sales tax rate in New York ranges from 4% to 8.875%. The total sales tax rate depends on the county and city. This includes the 4% state sales tax plus local rates.
List of local sales tax rates in New York:
You can look up the complete list of sales tax rates in each city and county in New York. Here’s a snippet of the same.
Here are some critical local sales tax rates in New York:
Recent tax rate changes in New York
Here is the list of recent changes to the New York sales tax.
- Sales Tax Refunds for Commercial Vehicle Leases - Starting June 1, 2022, credits/refunds are allowed under certain conditions for sales tax paid on commercial motor vehicle leases with terminal rental adjustment clauses (TRAC leases). Applies to refunds made on or after June 1, 2022.
- New Cannabis Tax - Starting April 1, 2022, the sale/transfer of cannabis products by a distributor to a retail dispensary or customer is taxable. Distributors and retailers must register for an Adult-Use Cannabis Certificate of Registration.
- New Tax on Peer-to-Peer Car Sharing - Effective September 1, 2022, new state (3%) and regional (3%) taxes are imposed on gross receipts from peer-to-peer car-sharing programs. These are to be collected by the car-sharing company.
- Exemption for Tugboat Fuel - Starting September 1, 2022, the use of fuel by tugboats and towboats is exempt from the NY petroleum business tax. Refunds allowed.
- Waste Tire Fee Change - Starting March 1, 2023, the waste tire fee will be reported and paid with sales tax returns instead of separate returns.
FAQs
How do you calculate New York sales tax?
To calculate New York sales tax, you can use the formula:
Sales tax = (base rate + local rate) * purchase price.
For example, if the base rate is 4%, the local rate is 4%, and the purchase price is $100, the sales tax would be $8.
What are the penalties for not paying New York sales tax?
Ecommerce businesses that incorrectly file or pay their New York sales tax can attract penalties of up to 10% of the unreported tax amount and an additional 1% for each month of delay—the amount does not exceed a maximum of 30%.
What’s the difference between destination-based and origin-based sales tax states?
The critical difference between destination-based and origin-based sales tax states is how the sales tax rate is determined for a transaction:
- Destination-based sales tax states apply the sales tax rate based on where the customer is located and the product is shipped/delivered. The destination of the sale determines the rate.
- Origin-based sales tax states apply the sales tax rate based on the seller's location and where the product ships from. The origin of the sale determines the rate.
Is the New York sales tax destination-based or origin-based?
New York is a destination-based sales tax state. This means the sales tax rate applied to a transaction is based on where the customer is located and the product is delivered, not where the seller is located.
In New York, sellers are required to collect and remit sales tax at the rate applicable to the destination of the sale - where the customer receives the product. For example, if a seller in New York City ships a product to a customer in Buffalo, they would charge the Buffalo sales tax rate.
Is New York a streamlined sales tax state?
No, New York is not currently a member of the Streamlined Sales and Use Tax Agreement (SSUTA), also known as the Streamlined Sales Tax (SST).
Sales tax nexus and registration
New York considers sellers to have sales tax nexus if they meet either physical presence or economic nexus thresholds:
- Physical presence nexus: having property, employees, inventory, etc. in NY
- Economic nexus: $500,000+ in sales or 100+ transactions in NY (established January 2019)
To legally collect and pay NY sales tax, ecommerce businesses must register for a Certificate of Authority with the NY State License Center.
- No fee to register
- Provide online store information, locations, and projected monthly sales
- New owners must re-register if acquiring an existing NY ecom business.
Online sellers meeting the NY nexus thresholds should register for the NY sales tax collection. Marketplaces may handle this registration.
FAQs
What creates a sales tax nexus in New York?
Having over $500,000 in sales or 100+ transactions hits economic nexus. Any physical presence, like employees or inventory, also reaches the nexus.
Do I need a New York seller's permit if I’m only a wholesaler?
Yes, wholesalers with nexus that sell taxable goods still need an NY Certificate of Authority.
Do I need a New York seller's permit if I only sell temporarily in the state?
Yes, even temporary selling activity can hit the nexus threshold and require sales tax registration in NY.
Sales tax nexus table in New York
How to register for sales tax in New York?
To register for sales tax in New York, visit the Department of Taxation and Finance website. Then, follow the steps below:
1. Gather your business information
- Business name and contact details
- Ownership structure
- Federal EIN
- Date business activities began or will begin in NY
- Estimate of monthly taxable sales in NY
2. Apply online for a Certificate of Authority at the NY State License Center
- Registering for a sales tax permit in New York is free of charge.
- You will receive a confirmation with your NY Tax ID number.
3. Set up your sales tax collection process
- Update your ecommerce software, POS system, or accounting system to charge NY sales tax rates properly.
- Ensure you can file NY sales tax returns. Consider sales tax software to simplify compliance.
4. Post your Certificate of Authority in a visible place at all business locations in NY
- You could add a link to the certificate from your homepage, the footer section, and even create a separate page to showcase the certificate.
- If you own a physical location, ensure that you show the certificate at your billing counters
5. File NY sales tax returns on time based on your assigned filing frequency
- You will be allotted a filing frequency which will be subject to change based on the previous year's tax collection
- Ensure that you complete your filing on or before the due dates to avoid penalties.
Tip: Register for a Certificate of Authority before making taxable sales in NY. This will help you ensure compliance with collecting and remitting NY sales tax from the start.
Registration requirements for online sellers in New York
Ecommerce sellers must register and obtain a Certificate of Authority with the New York State Tax Department if they meet the state's physical or economic sales tax nexus thresholds.
- Physical nexus refers to having property, employees, inventory, or other facilities in New York.
- Economic nexus means exceeding $500,000 in sales or 100+ separate transactions delivered into New York over the prior four quarters.
- Once an online seller meets either nexus threshold, they must register at least 20 days before making any taxable sales or providing taxable services to New York customers.
You can make sales once you have received the Certificate of Authority.
Cost of registration for a New York sales tax license
Registering for a sales tax permit in New York is free. However, there may be a security deposit required.
Agencies to register within New York
- New York State Department of Taxation and Finance - This is the primary state agency that administers sales tax in New York. Businesses must register with the NYS Tax Department for a Certificate of Authority to collect and remit sales tax.
- New York State License Center - Businesses can apply online at the License Center for their initial sales tax Certificate of Authority registration.
- Office of Cannabis Management - Distributors and retailers of adult-use cannabis products must obtain a license from this agency before registering for a Cannabis Tax Certificate from the Tax Department.
- Metropolitan Commuter Transportation District (MCTD) - The MCTD imposes an additional 0.375% sales tax within the district. You may need to register with MCTD if your business is in the district.
- Local governments - Cities, counties, and other localities may require separate registrations for local sales taxes imposed. Businesses need to check requirements based on their locations.
FAQs
Do I need a New York seller's permit if I’m only a wholesaler?
You need a New York seller's permit if you are only a wholesaler. Wholesalers must collect sales tax on all sales of tangible personal property made to retailers or consumers in New York.
Do I need a New York seller's permit if I only sell temporarily in the state?
Yes, you need a New York seller's permit if you only sell temporarily in the state. If you sell tangible personal property in New York for more than 90 days in a calendar year, you must register for a seller's permit and collect sales tax on all your sales.
What's taxable and what's exempt
Generally, sales of tangible personal property and some services are taxable in New York.
Exemptions from sales tax in New York
Some exemptions include:
- Most non-prepared food
- Prescription and OTC medicine
- Medical supplies & equipment
- Clothing and footwear under $110
Sellers must collect proper exemption certificates from qualified buyers to prove exempt sales.
FAQs
What items are exempt from tax in New York?
Groceries, medicine, medical products, and clothing/footwear under $110 per item.
Are groceries taxable in New York?
Besides prepared meals, soft drinks, candy, and dietary supplements, most non-prepared groceries are exempt.
Is clothing taxable in New York?
Clothing and footwear under $110 per item are exempt. Above $110, they are taxable.
Are digital products taxable in New York?
Yes, digital products like software, videos, music, and ebooks are generally taxable in NY when sold to an end user.
Is software-as-a-service (SaaS) taxable in New York?
Yes, New York taxes most SaaS services. Businesses offering a SaaS product should collect and remit taxes in the New York state.
Are services taxable in New York?
Some services like repairs, maintenance, installation, and utilities are taxable. Most professional and personal services are not taxable in New York.
Excise & discretionary taxes
New York has various excise taxes in addition to statewide sales tax
Excise taxes in New York (alcohol, tobacco, gasoline, fuel, marijuana)
- Alcoholic beverages - $0.184 per gallon tax on beer, $0.30 per gallon on liquor
- Cigarettes - $5.35 per pack of 20 cigarettes as state excise tax
- Motor fuel - $0.185 per gallon tax on gasoline, $0.455 per gallon on diesel
- Marijuana - 13% excise tax on recreational marijuana sales for adult-use
Food and beverage tax in New York
New York does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items:
- Soda and other sweetened beverages are subject to an excise tax of 1c per ounce.
- Alcoholic beverages are subject to alcohol excise taxes.
- Candy and chewing gum are subject to an excise tax of 2c per ounce.
Remote sellers in New York
Remote sellers, or sellers who do not have a physical presence in New York, are required to collect sales tax on sales made to New York residents if their sales exceed $500,000 or if they make at least 100 separate transactions in the prior four quarters. This is the economic nexus for sales tax in New York.
Prepaid sales tax rates for fuel products in New York
New York requires all fuel products sold in the state to prepay the sales tax. The prepaid sales tax rate for fuel products is 8 cents per gallon for motor fuel like gasoline. The rate is 17.5 cents per gallon for highway diesel motor fuel.
Local sales taxes in New York
In addition to the 4% state sales tax, local governments in New York can impose their own discretionary sales taxes. These local sales taxes result in combined rates ranging from 4-8.875% depending on the county, city, or district. For example, New York City has a local tax of 4.5% in addition to the 4% state sales tax. There is also a Metropolitan Commuter Transportation District surcharge of 0.375% for a combined rate of 8.875%.
Collecting sales tax in New York
Now, let’s look at the steps to collect sales tax in New York.
How to collect sales tax in New York if you are not based in New York (Out-of-State)?
If you are an out-of-state seller with no physical presence in New York, you must collect and remit sales tax if you meet either economic nexus threshold:
- Having over $500,000 in sales delivered to New York in the last four quarters.
- Making at least 100 transactions for taxable goods delivered to New York in the last four quarters.
Meeting either of these thresholds hits a sales tax nexus with New York.
Tip: Register for a Certificate of Authority with the New York Department of Taxation and Finance. This will allow you to charge, collect, and remit the proper NY sales tax rates even if you don't have a physical presence in the state.
Once registered, you must calculate the sales tax rate based on each customer's destination in New York and ensure your sales systems are set up to charge the appropriate rate. NY uses destination sourcing for sales tax.
Also, if you're using Shopify Tax and Numeral, the tax calculations are done automatically on Shopify and then Numeral handles the remittance for the same.
Is sales tax charged on shipping rates in New York?
In New York, shipping charges are taxable if the sale itself is taxable. To be exempt, shipping must be separately stated and shipped directly to the customer, and delivery costs must be tracked.
If exempt conditions are not met, charges are partially or fully taxable. Handling fees, and shipping to the seller, and shipping built into the price are generally taxable.
Filing & paying sales taxes
Ecommerce businesses collect sales taxes on the sale of goods and services. Businesses then remit those taxes to the state government. The frequency with which ecommerce businesses must file and pay sales taxes varies by state.
Filing and paying sales taxes in New York
Ecommerce businesses in New York must register with the Department of Taxation and Finance before collecting sales tax.
Once registered, businesses will be assigned a filing frequency and due dates. Companies can file their sales tax returns online, by mail, or by fax. Payments can be made by check, money order, credit card, or electronic funds transfer.
Sales tax return filing schedule and due dates in New York
Filing penalties in New York
The state of New York charges a few different penalties depending on the situation.
Civil penalties
- No tax due but late filing: $50 penalty.
- Late by 60 days or less: For the first month, the penalty for late tax payment is 10% of the amount due. For each additional month, the penalty is 1%, up to a maximum of 30%. The minimum penalty is $50.
- More than 60 days late: The penalty for late tax payment is calculated as the greater of 10% of the tax due for the first month plus 1% for each additional month (up to 30% of the tax due on the return), $100, or 100% of the tax due on the return, but it cannot exceed $5.0.
Criminal offenses
- Failure to file or report: Subject to fines and jail time.
Penalties for not collecting tax
- Wilful failure to collect tax: Subject to fines and jail time.
Penalties for not paying tax
- Late payment: 10% of tax due for the first month, plus 1% for each additional month, not exceeding 30%.
- Omission of more than 25% of taxes: 10% of the tax you failed to report.
- Fraudulent failure to pay: twice the amount of unpaid tax, plus interest.
Miscellaneous penalties
- failure to display the certificate of authority: $50.
- Operating without a certificate of authority: Up to $500 for the first day, plus up to $200 for each subsequent day, not exceeding $10,000.
Record-keeping violations
- Failure to maintain records: Up to $1,000 for each quarter or part of a quarter of failure.
Penalties may be reduced or eliminated if reasonable cause is shown.
When are returns due in New York?
In New York, you can file your taxes on the last day of the month following the period end date.
For instance, if you file quarterly and the filing period ends on March 30, your return filing due date will be April 31.
Similarly, for yearly billing, where the filing period ends on December 31, you can file your taxes by January 31.
FAQs
What are the New York sales tax due dates?
The due dates for filing sales tax returns in New York vary depending on the filing frequency. For quarterly filers, the due dates are:
- January 31st
- April 30th
- July 31st
- October 31st
I didn’t collect any New York sales tax during this period. Do I still need to file a return?
Yes, you still need to file a sales tax return even if you didn't collect any sales tax. This is because you may be eligible for a refund.
Can I get an extension on filing my New York sales tax return?
You can request an extension to file your New York sales tax return. However, you must submit a request for an extension by one month after the due date of your return or prepayment form and payment.
Can I amend a New York sales tax return?
Yes, you can file an amended return in New York. You need to pay any additional tax that may have been missed, along with the interest or penalties the state requires.
What is the penalty for filing and paying New York sales tax late?
New York has a 10% penalty for late filing or incorrect filings. An additional penalty of 10% may apply if you file after the due date. However, the total penalty will not exceed 10% of your tax amount during the period.
Audit & appeals process
The NY Dept. of Taxation and Finance may audit to verify compliance. The auditor reviews records and tax returns. An appeal involves discussions with the auditor along with formal appeals if needed.
New York sales tax audit process
The New York sales tax audit process is as follows:
- MAP allows eligible businesses to conduct a self-audit under CDTFA guidance, with benefits like reduced interest rates.
- Businesses with straightforward tax issues may participate by completing a specific agreement.
- Businesses review sales and purchase records for correct tax calculation and reporting. Special considerations apply to complex transactions.
- The auditor verifies the work, explains the results, and completes the audit.
- Special audits vary by program; alternative verification may be used for specific transactions.
- The process concludes with a review by the auditor and potential eligibility for the Managed Audit Program if the criteria are met.
Here's what to expect during a sales tax audit
During a New York sales tax audit under the Managed Audit Program (MAP), you can expect the following:
- Under the guidance of a CDTFA auditor, you will review sales and purchase records to ensure correct tax calculation and reporting.
- You may need to verify transactions by sending letters to vendors or customers using specific forms and sample letters provided by the auditor.
- You will perform tasks such as reviewing tax returns, reports, and schedules. The auditor will provide detailed instructions.
- The auditor will review your completed work to determine whether additional tax is owed, a refund is due, or the returns were correctly filed.
- An exit conference will be held where the auditor will explain the proposed credits, refunds, or additional tax resulting from the audit.
- A Report of the Field Audit will be prepared, summarizing the findings. If disagreements arise, further review and discussion steps are involved.
- Provisions exist for appealing audit results, and refunds may be subject to review and approval.
Appealing the audit results
If you disagree with the results, you can file an appeal and request a review. Here’s what happens.
- You mark your objections on the audit proposal and return it to the auditor.
- You can request additional meetings with the auditor's supervisor if needed.
- The Department of Taxation and Finance will send you a Notice of Determination or a Notice of Deficiency for taxes due if disagreements persist.
- You can appeal through the Bureau of Conciliation and Mediation Services or the Division of Tax Appeals.
- Generally, you have 90 days from the notice issuance date to file your appeal. Refer to your notice for the specific deadline.
A formal written appeal is required, even if you've previously written to the department objecting to the proposal.
Sales tax registration
Registering for New York sales tax is easy. Start by gathering the basic information about your business and bank.
Create NY.gov Account:
- Head over to the New York Business Express website and click “I Need a NY.GOV ID”.
- Fill in the account information and then activate your account via a confirmation email.
- Set security questions and a high-security password.
Start Sales Tax Application:
- Log in to your NY.gov account and navigate to NY Business Express.
- Click "Start Application" and fill out your business information.
- You'll need a Federal Employer Identification Number (FEIN or EIN) or a business tax ID from your home country.
Submit Application:
- Provide physical addresses, industry classification (NAICS code), and other business details.
- Once approved, you'll receive a Certificate of Authority and a sales tax ID number by mail.
You must legally register 20 days before making your first sale in New York. The New York Department of Taxation and Finance is available for any questions throughout the process and after.
Also, note that you must file a sales tax return every quarter, even if no sales were made. Payments can be made online in USD.
More Information & Contacts
For sales tax filing and appeals in New York, you would be required to contact:
- New York State Department of Taxation and Finance
- Contact the Department of Taxation and Finance:
- Phone: (518) 457-5735
- Website: www.tax.ny.gov
- New York State Department of Taxation and Finance W A Harriman Campus
Albany, NY 12227
Additional resources:
- Sales Tax Information Center - tax.ny.gov/bus/st/stidx.htm
- Publication 750 - NYS Sales and Use Tax Guide - www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/pub750.htm
- Small Business Sales Tax Toolkit - www.tax.ny.gov/bus/st/sales_tax_workbook.htm
- Online seminars, videos, and webinars - www.tax.ny.gov/bus/st/web_seminars.htm
There you have it—an in-depth guide on NY's sales tax for ecommerce companies. Also, in case you need someone to deal with the sales tax fiasco, Numeral can lend a hand. We have done this for the likes of immi and Amberjack and would be delighted to help you folks as well.
Sales tax at a glance
New York sales tax rates & calculations in 2023
The total sales tax rate in New York ranges from 4% to 8.875%. The total sales tax rate depends on the county and city. This includes the 4% state sales tax plus local rates.
List of local sales tax rates in New York:
You can look up the complete list of sales tax rates in each city and county in New York. Here’s a snippet of the same.
Here are some critical local sales tax rates in New York:
Recent tax rate changes in New York
Here is the list of recent changes to the New York sales tax.
- Sales Tax Refunds for Commercial Vehicle Leases - Starting June 1, 2022, credits/refunds are allowed under certain conditions for sales tax paid on commercial motor vehicle leases with terminal rental adjustment clauses (TRAC leases). Applies to refunds made on or after June 1, 2022.
- New Cannabis Tax - Starting April 1, 2022, the sale/transfer of cannabis products by a distributor to a retail dispensary or customer is taxable. Distributors and retailers must register for an Adult-Use Cannabis Certificate of Registration.
- New Tax on Peer-to-Peer Car Sharing - Effective September 1, 2022, new state (3%) and regional (3%) taxes are imposed on gross receipts from peer-to-peer car-sharing programs. These are to be collected by the car-sharing company.
- Exemption for Tugboat Fuel - Starting September 1, 2022, the use of fuel by tugboats and towboats is exempt from the NY petroleum business tax. Refunds allowed.
- Waste Tire Fee Change - Starting March 1, 2023, the waste tire fee will be reported and paid with sales tax returns instead of separate returns.
FAQs
How do you calculate New York sales tax?
To calculate New York sales tax, you can use the formula:
Sales tax = (base rate + local rate) * purchase price.
For example, if the base rate is 4%, the local rate is 4%, and the purchase price is $100, the sales tax would be $8.
What are the penalties for not paying New York sales tax?
Ecommerce businesses that incorrectly file or pay their New York sales tax can attract penalties of up to 10% of the unreported tax amount and an additional 1% for each month of delay—the amount does not exceed a maximum of 30%.
What’s the difference between destination-based and origin-based sales tax states?
The critical difference between destination-based and origin-based sales tax states is how the sales tax rate is determined for a transaction:
- Destination-based sales tax states apply the sales tax rate based on where the customer is located and the product is shipped/delivered. The destination of the sale determines the rate.
- Origin-based sales tax states apply the sales tax rate based on the seller's location and where the product ships from. The origin of the sale determines the rate.
Is the New York sales tax destination-based or origin-based?
New York is a destination-based sales tax state. This means the sales tax rate applied to a transaction is based on where the customer is located and the product is delivered, not where the seller is located.
In New York, sellers are required to collect and remit sales tax at the rate applicable to the destination of the sale - where the customer receives the product. For example, if a seller in New York City ships a product to a customer in Buffalo, they would charge the Buffalo sales tax rate.
Is New York a streamlined sales tax state?
No, New York is not currently a member of the Streamlined Sales and Use Tax Agreement (SSUTA), also known as the Streamlined Sales Tax (SST).
Sales tax nexus and registration
New York considers sellers to have sales tax nexus if they meet either physical presence or economic nexus thresholds:
- Physical presence nexus: having property, employees, inventory, etc. in NY
- Economic nexus: $500,000+ in sales or 100+ transactions in NY (established January 2019)
To legally collect and pay NY sales tax, ecommerce businesses must register for a Certificate of Authority with the NY State License Center.
- No fee to register
- Provide online store information, locations, and projected monthly sales
- New owners must re-register if acquiring an existing NY ecom business.
Online sellers meeting the NY nexus thresholds should register for the NY sales tax collection. Marketplaces may handle this registration.
FAQs
What creates a sales tax nexus in New York?
Having over $500,000 in sales or 100+ transactions hits economic nexus. Any physical presence, like employees or inventory, also reaches the nexus.
Do I need a New York seller's permit if I’m only a wholesaler?
Yes, wholesalers with nexus that sell taxable goods still need an NY Certificate of Authority.
Do I need a New York seller's permit if I only sell temporarily in the state?
Yes, even temporary selling activity can hit the nexus threshold and require sales tax registration in NY.
Sales tax nexus table in New York
How to register for sales tax in New York?
To register for sales tax in New York, visit the Department of Taxation and Finance website. Then, follow the steps below:
1. Gather your business information
- Business name and contact details
- Ownership structure
- Federal EIN
- Date business activities began or will begin in NY
- Estimate of monthly taxable sales in NY
2. Apply online for a Certificate of Authority at the NY State License Center
- Registering for a sales tax permit in New York is free of charge.
- You will receive a confirmation with your NY Tax ID number.
3. Set up your sales tax collection process
- Update your ecommerce software, POS system, or accounting system to charge NY sales tax rates properly.
- Ensure you can file NY sales tax returns. Consider sales tax software to simplify compliance.
4. Post your Certificate of Authority in a visible place at all business locations in NY
- You could add a link to the certificate from your homepage, the footer section, and even create a separate page to showcase the certificate.
- If you own a physical location, ensure that you show the certificate at your billing counters
5. File NY sales tax returns on time based on your assigned filing frequency
- You will be allotted a filing frequency which will be subject to change based on the previous year's tax collection
- Ensure that you complete your filing on or before the due dates to avoid penalties.
Tip: Register for a Certificate of Authority before making taxable sales in NY. This will help you ensure compliance with collecting and remitting NY sales tax from the start.
Registration requirements for online sellers in New York
Ecommerce sellers must register and obtain a Certificate of Authority with the New York State Tax Department if they meet the state's physical or economic sales tax nexus thresholds.
- Physical nexus refers to having property, employees, inventory, or other facilities in New York.
- Economic nexus means exceeding $500,000 in sales or 100+ separate transactions delivered into New York over the prior four quarters.
- Once an online seller meets either nexus threshold, they must register at least 20 days before making any taxable sales or providing taxable services to New York customers.
You can make sales once you have received the Certificate of Authority.
Cost of registration for a New York sales tax license
Registering for a sales tax permit in New York is free. However, there may be a security deposit required.
Agencies to register within New York
- New York State Department of Taxation and Finance - This is the primary state agency that administers sales tax in New York. Businesses must register with the NYS Tax Department for a Certificate of Authority to collect and remit sales tax.
- New York State License Center - Businesses can apply online at the License Center for their initial sales tax Certificate of Authority registration.
- Office of Cannabis Management - Distributors and retailers of adult-use cannabis products must obtain a license from this agency before registering for a Cannabis Tax Certificate from the Tax Department.
- Metropolitan Commuter Transportation District (MCTD) - The MCTD imposes an additional 0.375% sales tax within the district. You may need to register with MCTD if your business is in the district.
- Local governments - Cities, counties, and other localities may require separate registrations for local sales taxes imposed. Businesses need to check requirements based on their locations.
FAQs
Do I need a New York seller's permit if I’m only a wholesaler?
You need a New York seller's permit if you are only a wholesaler. Wholesalers must collect sales tax on all sales of tangible personal property made to retailers or consumers in New York.
Do I need a New York seller's permit if I only sell temporarily in the state?
Yes, you need a New York seller's permit if you only sell temporarily in the state. If you sell tangible personal property in New York for more than 90 days in a calendar year, you must register for a seller's permit and collect sales tax on all your sales.
What's taxable and what's exempt
Generally, sales of tangible personal property and some services are taxable in New York.
Exemptions from sales tax in New York
Some exemptions include:
- Most non-prepared food
- Prescription and OTC medicine
- Medical supplies & equipment
- Clothing and footwear under $110
Sellers must collect proper exemption certificates from qualified buyers to prove exempt sales.
FAQs
What items are exempt from tax in New York?
Groceries, medicine, medical products, and clothing/footwear under $110 per item.
Are groceries taxable in New York?
Besides prepared meals, soft drinks, candy, and dietary supplements, most non-prepared groceries are exempt.
Is clothing taxable in New York?
Clothing and footwear under $110 per item are exempt. Above $110, they are taxable.
Are digital products taxable in New York?
Yes, digital products like software, videos, music, and ebooks are generally taxable in NY when sold to an end user.
Is software-as-a-service (SaaS) taxable in New York?
Yes, New York taxes most SaaS services. Businesses offering a SaaS product should collect and remit taxes in the New York state.
Are services taxable in New York?
Some services like repairs, maintenance, installation, and utilities are taxable. Most professional and personal services are not taxable in New York.
Excise & discretionary taxes
New York has various excise taxes in addition to statewide sales tax
Excise taxes in New York (alcohol, tobacco, gasoline, fuel, marijuana)
- Alcoholic beverages - $0.184 per gallon tax on beer, $0.30 per gallon on liquor
- Cigarettes - $5.35 per pack of 20 cigarettes as state excise tax
- Motor fuel - $0.185 per gallon tax on gasoline, $0.455 per gallon on diesel
- Marijuana - 13% excise tax on recreational marijuana sales for adult-use
Food and beverage tax in New York
New York does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items:
- Soda and other sweetened beverages are subject to an excise tax of 1c per ounce.
- Alcoholic beverages are subject to alcohol excise taxes.
- Candy and chewing gum are subject to an excise tax of 2c per ounce.
Remote sellers in New York
Remote sellers, or sellers who do not have a physical presence in New York, are required to collect sales tax on sales made to New York residents if their sales exceed $500,000 or if they make at least 100 separate transactions in the prior four quarters. This is the economic nexus for sales tax in New York.
Prepaid sales tax rates for fuel products in New York
New York requires all fuel products sold in the state to prepay the sales tax. The prepaid sales tax rate for fuel products is 8 cents per gallon for motor fuel like gasoline. The rate is 17.5 cents per gallon for highway diesel motor fuel.
Local sales taxes in New York
In addition to the 4% state sales tax, local governments in New York can impose their own discretionary sales taxes. These local sales taxes result in combined rates ranging from 4-8.875% depending on the county, city, or district. For example, New York City has a local tax of 4.5% in addition to the 4% state sales tax. There is also a Metropolitan Commuter Transportation District surcharge of 0.375% for a combined rate of 8.875%.
Collecting sales tax in New York
Now, let’s look at the steps to collect sales tax in New York.
How to collect sales tax in New York if you are not based in New York (Out-of-State)?
If you are an out-of-state seller with no physical presence in New York, you must collect and remit sales tax if you meet either economic nexus threshold:
- Having over $500,000 in sales delivered to New York in the last four quarters.
- Making at least 100 transactions for taxable goods delivered to New York in the last four quarters.
Meeting either of these thresholds hits a sales tax nexus with New York.
Tip: Register for a Certificate of Authority with the New York Department of Taxation and Finance. This will allow you to charge, collect, and remit the proper NY sales tax rates even if you don't have a physical presence in the state.
Once registered, you must calculate the sales tax rate based on each customer's destination in New York and ensure your sales systems are set up to charge the appropriate rate. NY uses destination sourcing for sales tax.
Also, if you're using Shopify Tax and Numeral, the tax calculations are done automatically on Shopify and then Numeral handles the remittance for the same.
Is sales tax charged on shipping rates in New York?
In New York, shipping charges are taxable if the sale itself is taxable. To be exempt, shipping must be separately stated and shipped directly to the customer, and delivery costs must be tracked.
If exempt conditions are not met, charges are partially or fully taxable. Handling fees, and shipping to the seller, and shipping built into the price are generally taxable.
Filing & paying sales taxes
Ecommerce businesses collect sales taxes on the sale of goods and services. Businesses then remit those taxes to the state government. The frequency with which ecommerce businesses must file and pay sales taxes varies by state.
Filing and paying sales taxes in New York
Ecommerce businesses in New York must register with the Department of Taxation and Finance before collecting sales tax.
Once registered, businesses will be assigned a filing frequency and due dates. Companies can file their sales tax returns online, by mail, or by fax. Payments can be made by check, money order, credit card, or electronic funds transfer.
Sales tax return filing schedule and due dates in New York
Filing penalties in New York
The state of New York charges a few different penalties depending on the situation.
Civil penalties
- No tax due but late filing: $50 penalty.
- Late by 60 days or less: For the first month, the penalty for late tax payment is 10% of the amount due. For each additional month, the penalty is 1%, up to a maximum of 30%. The minimum penalty is $50.
- More than 60 days late: The penalty for late tax payment is calculated as the greater of 10% of the tax due for the first month plus 1% for each additional month (up to 30% of the tax due on the return), $100, or 100% of the tax due on the return, but it cannot exceed $5.0.
Criminal offenses
- Failure to file or report: Subject to fines and jail time.
Penalties for not collecting tax
- Wilful failure to collect tax: Subject to fines and jail time.
Penalties for not paying tax
- Late payment: 10% of tax due for the first month, plus 1% for each additional month, not exceeding 30%.
- Omission of more than 25% of taxes: 10% of the tax you failed to report.
- Fraudulent failure to pay: twice the amount of unpaid tax, plus interest.
Miscellaneous penalties
- failure to display the certificate of authority: $50.
- Operating without a certificate of authority: Up to $500 for the first day, plus up to $200 for each subsequent day, not exceeding $10,000.
Record-keeping violations
- Failure to maintain records: Up to $1,000 for each quarter or part of a quarter of failure.
Penalties may be reduced or eliminated if reasonable cause is shown.
When are returns due in New York?
In New York, you can file your taxes on the last day of the month following the period end date.
For instance, if you file quarterly and the filing period ends on March 30, your return filing due date will be April 31.
Similarly, for yearly billing, where the filing period ends on December 31, you can file your taxes by January 31.
FAQs
What are the New York sales tax due dates?
The due dates for filing sales tax returns in New York vary depending on the filing frequency. For quarterly filers, the due dates are:
- January 31st
- April 30th
- July 31st
- October 31st
I didn’t collect any New York sales tax during this period. Do I still need to file a return?
Yes, you still need to file a sales tax return even if you didn't collect any sales tax. This is because you may be eligible for a refund.
Can I get an extension on filing my New York sales tax return?
You can request an extension to file your New York sales tax return. However, you must submit a request for an extension by one month after the due date of your return or prepayment form and payment.
Can I amend a New York sales tax return?
Yes, you can file an amended return in New York. You need to pay any additional tax that may have been missed, along with the interest or penalties the state requires.
What is the penalty for filing and paying New York sales tax late?
New York has a 10% penalty for late filing or incorrect filings. An additional penalty of 10% may apply if you file after the due date. However, the total penalty will not exceed 10% of your tax amount during the period.
Audit & appeals process
The NY Dept. of Taxation and Finance may audit to verify compliance. The auditor reviews records and tax returns. An appeal involves discussions with the auditor along with formal appeals if needed.
New York sales tax audit process
The New York sales tax audit process is as follows:
- MAP allows eligible businesses to conduct a self-audit under CDTFA guidance, with benefits like reduced interest rates.
- Businesses with straightforward tax issues may participate by completing a specific agreement.
- Businesses review sales and purchase records for correct tax calculation and reporting. Special considerations apply to complex transactions.
- The auditor verifies the work, explains the results, and completes the audit.
- Special audits vary by program; alternative verification may be used for specific transactions.
- The process concludes with a review by the auditor and potential eligibility for the Managed Audit Program if the criteria are met.
Here's what to expect during a sales tax audit
During a New York sales tax audit under the Managed Audit Program (MAP), you can expect the following:
- Under the guidance of a CDTFA auditor, you will review sales and purchase records to ensure correct tax calculation and reporting.
- You may need to verify transactions by sending letters to vendors or customers using specific forms and sample letters provided by the auditor.
- You will perform tasks such as reviewing tax returns, reports, and schedules. The auditor will provide detailed instructions.
- The auditor will review your completed work to determine whether additional tax is owed, a refund is due, or the returns were correctly filed.
- An exit conference will be held where the auditor will explain the proposed credits, refunds, or additional tax resulting from the audit.
- A Report of the Field Audit will be prepared, summarizing the findings. If disagreements arise, further review and discussion steps are involved.
- Provisions exist for appealing audit results, and refunds may be subject to review and approval.
Appealing the audit results
If you disagree with the results, you can file an appeal and request a review. Here’s what happens.
- You mark your objections on the audit proposal and return it to the auditor.
- You can request additional meetings with the auditor's supervisor if needed.
- The Department of Taxation and Finance will send you a Notice of Determination or a Notice of Deficiency for taxes due if disagreements persist.
- You can appeal through the Bureau of Conciliation and Mediation Services or the Division of Tax Appeals.
- Generally, you have 90 days from the notice issuance date to file your appeal. Refer to your notice for the specific deadline.
A formal written appeal is required, even if you've previously written to the department objecting to the proposal.
Sales tax registration
Registering for New York sales tax is easy. Start by gathering the basic information about your business and bank.
Create NY.gov Account:
- Head over to the New York Business Express website and click “I Need a NY.GOV ID”.
- Fill in the account information and then activate your account via a confirmation email.
- Set security questions and a high-security password.
Start Sales Tax Application:
- Log in to your NY.gov account and navigate to NY Business Express.
- Click "Start Application" and fill out your business information.
- You'll need a Federal Employer Identification Number (FEIN or EIN) or a business tax ID from your home country.
Submit Application:
- Provide physical addresses, industry classification (NAICS code), and other business details.
- Once approved, you'll receive a Certificate of Authority and a sales tax ID number by mail.
You must legally register 20 days before making your first sale in New York. The New York Department of Taxation and Finance is available for any questions throughout the process and after.
Also, note that you must file a sales tax return every quarter, even if no sales were made. Payments can be made online in USD.
More Information & Contacts
For sales tax filing and appeals in New York, you would be required to contact:
- New York State Department of Taxation and Finance
- Contact the Department of Taxation and Finance:
- Phone: (518) 457-5735
- Website: www.tax.ny.gov
- New York State Department of Taxation and Finance W A Harriman Campus
Albany, NY 12227
Additional resources:
- Sales Tax Information Center - tax.ny.gov/bus/st/stidx.htm
- Publication 750 - NYS Sales and Use Tax Guide - www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/pub750.htm
- Small Business Sales Tax Toolkit - www.tax.ny.gov/bus/st/sales_tax_workbook.htm
- Online seminars, videos, and webinars - www.tax.ny.gov/bus/st/web_seminars.htm
There you have it—an in-depth guide on NY's sales tax for ecommerce companies. Also, in case you need someone to deal with the sales tax fiasco, Numeral can lend a hand. We have done this for the likes of immi and Amberjack and would be delighted to help you folks as well.
About the author
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Deb Mukherjee
Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale through seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.
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