New York State says you should be collecting NYS Sales Tax
on packages shipped to a NY address
Please check all information with the authorities in charge of the laws–don’t take the word of any non-official website, including ours.
In this case, that would be New York State:
Sales Tax Information Center 1-800-698-2909
Links below to supporting documents on the NYS Sales Tax website.
This only applies to you if you have shipped $10,000 worth of goods to NY addresses in the past year and you have a business nexus in NY:
New legislation in New York State (NYS) says that sellers that have a business “nexus” in NY state AND who ship $10,000 a year worth of goods to NY addresses must register with NYS and collect sales tax for items shipped to a New York address. I’ve called the state several times and spoken with a few different people, and the answer is always that you must collect sales tax if a venue you sell through is based in NY and the venue gets a commission on your sale. Etsy qualifies as a business nexus in NY State for all Etsy sellers, so if your business is good enough to be shipping $10,000 worth of goods to NY a year, you should be registering.
I can guess how they might find a way to get records of US sellers and items shipped to NY addresses and maybe even enforce this new legislation across the USA, but I can’t imagine how they expect to enforce NYS Sales Tax laws on sellers from other countries, but I digress…
From the NY State website:
New Presumption Applicable to Definition of Sales Tax Vendor
“Recently enacted legislation (Chapter 57 of the Laws of 2008) amended the Tax Law to provide a presumption that certain sellers of taxable tangible personal property or services are sales tax vendors that are required to register for sales tax purposes and collect state and local sales taxes. The new law provides that a seller is presumed to be a vendor if the seller enters into agreements with residents of this state to refer customers to the seller, as described below under New rules regarding who is presumed to be a vendor.”
From NY State’s Sales Tax Memo TSB-M-08(3)S:
“Accordingly, if a business located outside New York State solicits sales of taxable tangible personal property or services through employees, salespersons, independent contractors, agents, or other representatives located in New York State, the business must register as a vendor and obtain a Certificate of Authority for New York State sales tax purposes. (See Tax Law Section 1101(b)(8) and Sales and Use Tax Regulations Section 526.10(a)(3).)”
and you must register with NY if you meet both of these requirements:
“• The seller enters into an agreement or agreements with a New York State resident or residents under which, for a commission or other consideration, the resident representative directly or indirectly refers potential customers to the seller, whether by link on an Internet Web site or otherwise. A resident representative would be indirectly referring potential customers to the seller where, for example, the resident representative refers potential customers to its own Web site, or to another party’s Web site which then directs the potential customer to the seller’s Web site.
• The cumulative gross receipts from sales by the seller to customers in New York State as a result of referrals to the seller by all of the seller’s resident representatives under the type of contract or agreement described above total more than $10,000 during the preceding four quarterly sales tax periods. (Sales tax quarterly periods end on the last day of February, May, August and November.)”
Some background about the current fight against allowing this legislation to stand:
You may have heard about Amazon.com’s fight with New York over this new sales tax law (mentioned briefly here–see “Effective June 1, 2008“: http://www.amazon.com/gp/help/customer/display.html?nodeId=468512&#which). The lawsuit they filed is based on the Supreme Court’s Decision in the Quill Corp. v. North Dakota case (504 U.S. 298 (1992):
- …1992 Supreme Court ruling (Quill v. North Dakota, 504 U.S. 298, (1992)) in which the justices ruled that states cannot require mail-order businesses, and by extension, online retailers to collect sales tax unless they have a physical presence in the state. The Court reasoned that forcing sellers to comply with over 7,500 tax jurisdictions was too complex for sellers to manage, and would put a strain on interstate commerce.
(A government website)