Sales Tax Fundamentals
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Economic Nexus Laws by State: New York
byNovember 1, 2020
State laws on economic nexus vary and it’s hard to keep up if you’re doing business in multiple states. We’ve done the research for you and here’s all the information you need to know about economic nexus in New York.
What is economic nexus in New York?
With the recent South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now free to pursue sales tax from eCommerce businesses who have a “significant presence” in their state.
Significant presence or “nexus” was previously defined as having a physical presence (ex: brick and mortar store, employee, or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.
Most important, this now means that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
What’s the threshold for economic nexus law in New York?
- State: New York
- Threshold: $500,000 per year in gross revenue AND makes sales into New York in more than 100 separate transactions in the last 4 quarters.
- Summary: According to the state, sellers that meet both the sales and transaction number thresholds are required to register for a New York sales tax permit, collect sales tax on sales that ship into New York, and remit sales tax to the state.
- Full text: You can read guidance on the text of New York economic nexus law here.
When did this New York law go into effect or is it planned?
The law became effective on June 21, 2018, the date of the United States Supreme Court decision in Wayfair. The increase for businesses from $300,000 to $500,000 that have no physical presence in New York is effective retroactively to June 21, 2018. The increase for marketplace providers is effective retroactively to June 1, 2019.
I meet the economic threshold requirement in New York. Now what?
Here’s a quick checklist of what to do next:
- Register for a sales tax permit in New York (info below)
- Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
- Connect TaxJar once to all of the places you sell
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Enroll in AutoFile and tell us how often you need to file
- Relax, you now handled your sales tax exposure. We’ll handle the rest for you.
Can you help me register for a sales tax permit?
Certainly! TaxJar offers these two options:
- Read our do it yourself instructions for every state
- Visit TaxJar.com/register to have one of our expert partners do it for you (~$100 each state not including state’s fees)
Who can handle my New York sales tax filings for me?
At TaxJar, we help more than 15,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile. Read more about how AutoFilecan handle all of your returns in as many states as you’d like.
I’ve met this threshold in New York, now where can I ask questions?
We recommend speaking with a vetted sales tax expert to answer specific questions for your business.
And finally…I’m close to meeting this threshold for New York. Will TaxJar notify me when I reach it?
Yes! With TaxJar’s Economic Nexus Insights Dashboard, you can see where your business currently has nexus, where your business is approaching nexus, and recommended next steps on how to begin complying with sales tax in all states.
Proactive notifications let you know when you’re approaching or have reached thresholds, so you can stay in front of any changes to your nexus requirements.
Schedule a time to look at your specific sales tax needs and learn about automation.
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Please note: This blog is for informational purposes only. Be advised that sales tax rules and laws are subject to change at any time. For specific sales tax advice regarding your business, contact a tax advisor.