FAQs related to registration requirement for businesses with no physical presence in NYS29 March 2019
Why is this law being enforced now?
This provision has been in the New York State Tax Law for decades. However, it could not be enforced due to the United States Supreme Court’s ruling in Quill Corp. v. North Dakota [504 U.S. 298 (1992)]. This ruling generally provided that a business must have some physical presence in a state for that state to require the business to collect its sales tax. The decision in South Dakota v. Wayfair [138 S. Ct. 2080 (2018)], eliminated this physical presence test, so this longstanding provision in the Tax Law automatically became operative and enforceable.
What is the effective date of this law?
The law became effective on June 21, 2018, the date of the United States Supreme Court decision in Wayfair.
Will this result in a tax increase on New Yorkers?
No. Sales or use tax is owed by a New York purchaser on a taxable sale or purchase even if a business doesn’t collect it at the time of sale. This law increases the number of businesses that need to start collecting New York State sales tax, but doesn’t impose a new tax liability. See Tax Bulletin Use Tax for Individuals (including Estates and Trusts) (TB-ST-913).
What are the specific provisions in this law?
A business with no physical presence in New York who regularly or systematically solicits business in New York State by any means and makes taxable sales of tangible personal property to persons in the state is required to register as a sales tax vendor. As a vendor, you must collect and remit sales tax as applicable on your New York State sales.
For purposes of this law, a business is presumed to be regularly or systematically soliciting business in New York if, for the immediately preceding four sales tax quarters:
- the cumulative total of the business’s gross receipts from sales of tangible personal property delivered into the state exceeded $300,000, 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 lookback period. For example, a business that meets the sales threshold but has not made more than 100 transactions in that period is not required to register for sales tax.
[Tax Law §§ 1101(b)(8)(i)(E), 1101(b)(8)(iv)]
My business is located in New York and already collects New York State sales tax. Do I need to do anything as a result of this law?
No. Any business with a physical presence in New York, that is already registered for New York State sales tax, is unaffected by the law.
Does the law apply only to Internet retailers?
No. The law could apply to a variety of business types, including those that make sales through the Internet, by mail or telephone order, or by any other means where a business makes sales of items that are delivered into New York State (e.g., a furniture store, jeweler, or other retailer in another state making sales delivered into New York by common carrier).
How do I determine if my business meets the sales threshold specified in the law and therefore needs to collect New York sales tax?
If your business is not registered for New York State sales tax and has no physical presence in New York, but has made a substantial amount of sales into New York during the past year, 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 received for all sales of tangible personal property delivered into New York, whether taxable or exempt, without any deductions for expenses.
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 meet the thresholds under the law and must register for New York State sales tax. To apply, use New York Business Express.
I’ve reviewed my business’s sales history and determined that we met the sales thresholds on the date the law took effect (June 21, 2018) but we didn’t take any action to register for New York State sales tax. What should I do?
The “lookback period” for the June 21, 2018, determination is your New York State sales for the June 1, 2017, through May 31, 2018, period. If you met the thresholds for that period but have not yet registered for sales tax, you should do so immediately.
After reviewing our sales records, my business did not meet the thresholds as of June 21, 2018, but did meet them on a later date. What should I do?
You should register for New York State sales tax and begin to collect and remit tax. You must file a certificate of registration within thirty days after the day you met the thresholds and begin to collect tax twenty days thereafter.
My business has not met the sales thresholds for any period since the law has been in effect. What should I do if we meet the thresholds on a future date?
Determining whether you meet the thresholds will require a review of your New York sales after the conclusion of each sales tax quarter. If, in the immediately preceding four sales tax quarters, your cumulative total of sales exceeded $300,000 and you had more than 100 sales transactions, then your business must register for sales tax and begin collecting sales tax.
Should I include sales I make through an online marketplace into New York when determining if we meet the requirements?
Yes, those sales should be included in the calculation.
I have registered for New York State sales tax because we met the thresholds. Our sales have now fallen below the thresholds for the most recent four sales tax quarters. Can I surrender my Certificate of Authority and cease collecting New York State sales tax?
If you did not have more than $300,000 in more than 100 transactions in the immediately preceding four quarters, and you have no other connections with New York that satisfy the definition of a sales tax vendor, then you can file a final return and stop collecting New York State sales tax. You may prefer to remain registered in case you meet the thresholds in the future, but if you remain registered for sales tax, you must file sales and use tax returns for each reporting period, even if your business made no sales or did not make enough taxable sales to require you to collect sales tax for New York.
How do I register as a New York State sales tax vendor?
See Register as a sales tax vendor for information.
Where can I obtain information about New York’s sales tax base, rates, and administrative provisions?
A variety of Tax Bulletins and technical guidance on these topics, as well as a sales tax rate and jurisdiction lookup tool, are available at Sales tax administrative information.