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Learn the fundamentals of sales tax
Do you need to collect sales tax in New York?
You’ll need to collect sales tax in New York if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in New York?
New York considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- If employees are located in the state
- Goods in a warehouse
- Ownership of real or personal property
- Delivery of merchandise in New York in vehicles owned by the taxpayer
- Independent contractors or other representatives in New York
Do you have economic nexus in New York?
In January 2019 New York provided guidance that vendors who make more than $300,000 per year in gross revenue and make sales into New York in more than 100 separate transactions in the last 4 quarters have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read New York’s economic nexus guidance for sellers here.
Is what you’re selling taxable?
Certain services in New York are considered taxable. If your business includes performing repair and maintenance services to real property, you are required to register for sales tax. This includes services such as: lawn mowing, interior or exterior painting of an existing house or structure, snow removal services, plumbing repairs, electrical repairs, and swimming pool maintenance.
Tangible products are taxable in New York, with a few exceptions. These exceptions include certain groceries and food items, over-the-counter and prescription medicine, family planning products, medical devices, and certain clothing and footwear sold for less than $110 per item. Also, tax exempt are medical devices, certain machinery and chemicals used in research and development.
Is SaaS taxable in New York?
SaaS is taxable in New York. (Source)
What is use tax?
If your business purchases taxable property or services from out of state that would be subject to New York sales tax if sold in-state, use tax is owed. Consult the New York State Department of Taxation and Finances site for a full list of examples where use tax is owed, including use of taxable property that is manufactured, processed, or assembled by the business and purchases made over the internet or phone.
How to get a sales tax permit in New York
Sellers with sales tax nexus in New York must apply for a New York sales tax permit, which in New York is called a Certificate of Authority.
Register for a sales tax permit at the New York State License Center.
You’ll need this information to register for a sales tax permit in New York:
- General business information such as your name and employer identification number or social security number
- Your business location(s) – if you have multiple locations in New York you’ll need to file for a New York sales tax permit for each location
There is no fee to apply for a sales tax permit in New York. Other business registration fees may apply.
Collecting Sales Tax
The sales tax rate you collect in New York depends on exactly where in New York your buyer is located.
How to Collect Sales Tax in New York if You are Based in New York
New York is a destination-based sales tax state. So if you live in New York, collecting sales tax can be a bit complicated. You should be charging everyone in your state the rate where the item is being delivered. That could include a combination of state, county, city, and district tax rates.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator. The state sales tax rate in New York is 4%. For New York City, the local or city sales tax is an additional 4.875%, for a total tax rate of 8.875%.
How to Collect Sales Tax in New York if you are Not Based in New York
New York wants sellers who made a sale into New York from outside the state to charge sales tax based on the destination of the buyer.
Should you collect sales tax on shipping charges in New York?
In New York, if you are selling taxable goods, and charge for shipping as part of an order, then it’s taxable. It doesn’t matter if the shipping charge is part of the price of the item or if it’s listed separately from the price of the item.
If the goods you are selling aren’t taxable, then neither is your shipping.
When are Returns Due?
When you file and pay New York sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in New York?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In New York, you will generally be required to file and remit sales tax either monthly*, quarterly or annually.
Note: New York requires filers who exceed $300,000 to file on a part-quarterly (or monthly) basis.
New York sales tax returns are generally due the 20th or the final day of the month following the reporting period. If the New York filing due date falls on a weekend or holiday, sales tax is due the next business day.
Filing Sales Tax
When it comes time to file sales tax in New York you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in New York
Calculating how much sales tax you should remit to the state of New York is easy with TaxJar’s New York sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your New York sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in New York
The state of New York requires you to do all sales tax filing and payment remittance online. You can do one of two things:
- File online at the New York Department of Taxation and Finance. You must also remit your payment through their online system.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.