New York—Sales and Use Tax: Tax Collection Requirements for Marketplace Providers Discussed04 June 2019
New York discusses enacted legislation requiring marketplace providers to collect sales tax on taxable sales of tangible personal property that they facilitate for marketplace sellers. This requirement became effective June 1, 2019.
A marketplace provider is a person who, pursuant to an agreement, facilitates sales of tangible personal property by a marketplace seller. A person “facilitates a sale of tangible personal property” when:
- the person provides the forum in which, or by means of which, the sale takes place or the offer of sale is accepted, including an Internet web site, catalog, shop, store, booth or similar forum; and
- the person, or an affiliate, collects the receipts paid by a customer to a marketplace seller for a sale of tangible personal property, or contracts with a third party to collect the receipts.
A marketplace provider must be registered with the Department of Taxation and Finance for sales tax purposes. If not already registered, the marketplace provider must register at least 20 days before beginning business in New York.
A person with no physical presence in New York who facilitates sales for marketplace sellers as described above is a marketplace provider and is required to register for sales tax purposes and collect and remit sales tax if, in the previous four sales tax quarters:
- the cumulative total of the person’s gross receipts from sales made or facilitated of tangible personal property delivered into New York exceeded $300,000, and
- such person made or facilitated more than 100 sales of tangible personal property delivered in New York.
A marketplace seller is any person who has an agreement with a marketplace provider under which the marketplace provider will facilitate sales of tangible personal property for the marketplace seller.
Sales Of Tangible Personal Property
A marketplace provider is required to collect and remit sales tax on all taxable sales of tangible personal property (including prewritten computer software that is downloaded or remotely accessed by the customer) that it facilitates for marketplace sellers, regardless of whether the marketplace seller is required to register for sales tax purposes. A sale is any transaction where there is as transfer of title or possession, or both, of tangible personal property for a consideration. However, a marketplace provider is not required to collect sales tax on passenger car rentals.
A marketplace provider is not required to collect sales tax on transactions that are not considered the sale of tangible personal property, such as sales of:
- services (i.e., transportation services or electric service);
- restaurant food;
- hotel occupancy; or
- admissions to a place of amusement.
A marketplace seller who is registered to collect New York sales tax and makes sales of tangible personal property in New York by means other than through a marketplace provider remains responsible for collecting and remitting any tax due on those sales. Such a marketplace seller also remains responsible for collecting sales tax on taxable transactions facilitated by a marketplace provider that do not involve the sale of tangible personal property.
Requirements For Marketplace Providers
A marketplace provider has all the obligations and rights of a vendor, including, but not limited to:
- obtaining a Certificate of Authority;
- collecting tax, filing returns, and remitting the tax due;
- the right to accept a certificate or other documentation substantiating an exemption or exclusion from tax; and
- the right to receive a refund.
A marketplace provider cannot refuse to collect tax on a marketplace seller’s sales, even if the seller is registered for sales tax purposes. Marketplace providers must keep records and cooperate with the Department to ensure the proper collection and remittance of tax imposed, collected or required to be collected. Except as provided below, a marketplace provider must issue Form ST-150, Marketplace Provider Certificate of Collection, to its marketplace sellers for sales of tangible personal property that it facilitates for such sellers.
Marketplace providers. A marketplace provider is relieved of liability for failure to collect the correct amount of tax to the extent that the marketplace provider can show that the error was due to incorrect or insufficient information given to the marketplace provider by the marketplace seller. This relief does not apply if the marketplace seller and marketplace provider are affiliated.
Marketplace sellers. A marketplace seller who is registered to collect tax is relieved from the duty to collect tax on a sale of tangible personal property and should not include the receipts from the sale in its taxable receipts if:
- the marketplace seller can show that the sale was facilitated by a marketplace provider from whom the marketplace seller received, in good faith, a properly completed Form ST-150, Marketplace Provider Certificate of Collection, certifying that the marketplace provider is registered to collect sales tax and will collect sales tax on all taxable sales of tangible personal property by the marketplace seller facilitated by the marketplace provider; and
- any failure of the marketplace provider to collect the proper amount of tax on a sale was not the result of the marketplace seller providing the marketplace provider with incorrect or insufficient information. (This relief does not apply if the marketplace seller and marketplace provider are affiliated)
Alternative To Form ST-150
A marketplace provider who has a publicly-available agreement with its marketplace sellers that includes the following statement, or one that is substantially similar, does not need to issue Form ST-150 to such sellers:
- [Marketplace provider name] is registered to collect New York State sales tax and will collect sales tax on all taxable sales of tangible personal property that it facilitates for marketplace sellers for delivery to a New York State address.
This provision has the same effect as if the marketplace provider had issued Form ST-150 to its marketplace sellers.
TSB-M-19(2)S, New York Department of Taxation and Finance, May 31, 2019