Go To Great Panes, Kathryn Maloney ©2010-2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
This information doesn’t cover all areas of sales tax and when/how to apply it. This is based on my knowledge of NY State business info, and I advise you to re-check the info with NYS publications and employees yourself which is why I try to link to the info on the state website for reference.
Please-please-please–Always double check info you get on-line with the authorities.
Each state has its own regulations–posts for other states can be found here: Sales Tax & Business Registration Help
This NYS document is a great place to start, it has the basics for NY Sales Tax–it’s a PDF file:
Pub 750: A Guide To Sales Tax in New York State
Be sure to register before you start collecting NYS sales tax. NYS start up info here: NYS Business Links
Some commonly asked about NY Sales Tax issues:
1. New York has destination-based sales tax:
Destination-based sales tax means you collect sales tax at the rate where the buyer takes possesion of the goods–if you mail an item that’s the rate at the address you mail it to, not the location you mail it from/the seller is located in.
To find the tax for a specific New York address use this on-line tool:
http://www8.tax.ny.gov/STLR/stlrHome
Don’t forget to make sure your items fall under the general sales tax rate by checking the blue “Limitations on Use” link on that page. Clothing, food items and other products may not get the same rate as everything else gets at a particular location.
Limitations on Use: http://www.tax.state.ny.us/e-services/stlr/stlrinfo.htm
2. What sales tax rate do I use?
In-Person Sales–Use the Local Sales Tax Rate:
For in-person sales, you charge the state and local tax for the location where the buyer takes possession of the item.
For example, when you are at a craft show, you charge the rate based on the street address of the show. It’s still destination based–as far as the tax rate is concerned the destination is where the seller hands the goods off. See it on the NYS website here:
In-person rate is based on where the buyer takes possession.
Shipping Items You Sell–Use the Ship-To Address to Get the Rate:
If you sell through the internet, by mail or by phone, the location is the address to which the item is shipped regardless of the location of the buyer or seller.
This means that collecting the tax based on your location is not correct unless you happen to live in a zone with the same tax rate as the delivery address. (You’re also not allowed to over-charge or under-charge–see NY Sales Tax continued, link at the end of this post.)
See it on the NYS website here:
Shipped goods sales tax rate is based on “point of delivery”.
3. You can’t use Paypal’s sales tax calculator for NY Sales Tax
(nor Etsy’s sales tax feature)
NY has more than 10 different tax rates across the state based on our 60+ counties that can only be determined by using the buyer’s street address AND zip code, which means you can’t set up Paypal (or Etsy) to accurately charge NY sales tax.
Even if you put all the 5 digit zip codes for NY in the sales tax function, it will not charge sales tax appropriately for NYers because the sales tax rates are determined by political zones (counties) which are not defined by 5 digit zip codes since 5 digit zip codes can cross county lines–you’d need the full 9 digit zip code to determine the right zone. (You cannot put 9 digit zip codes in the tax calcualtor, so even if you wanted to spend a week doing it, you can’t.)
You can even have two houses next to each other in the same zip code and each has a different sales tax rate because they are in different counties and so they fall under different political jurisdictions. Here’s what we do for our NY Etsy sales:
Have Trouble with Destination-based Sales Tax on Etsy?
4. There is Sales Tax on Shipping if items are taxable:
NY sales tax is also applied to shipping charges for taxable items, unless you use a third party service to ship your items, in which case they charge you tax on their service (so you don’t charge it to your buyer).
For example, a pack and ship store will charge you sales tax on their services, and you pass that cost on to your buyer in the total cost; you don’t re-tax that amount since sales tax has already been paid on it. That’s different than when you mail an item to a buyer.
See it on on the NYS website: http://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/taxable_receipt.htm
It gets more complicated if only some of the goods in the transaction are taxable–see here for full details:
Technical Services Bureau TSB-M-92 (2)S–PDF
Commonly asked questions about NY sales tax is continued here:
New York Sales Tax–continued
Go To Great Panes, Kathryn Maloney ©2010-2012
This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.
