Tag Archives: Sales Tax

Etsy sellers:If You Ship $10,000 Worth of Goods to NY…

Etsy sellers: If you sell $10,000/yr in goods that are shipped to NY:
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.”

Source:
http://www.tax.ny.gov/bus/st/newpresumptionstvendor.htm

and

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.)”

Source: http://www.tax.state.ny.us/pdf/memos/sales/m08_3s.pdf

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.

Source: http://www.sba.gov/content/collecting-sales-tax-over-internet
(A government website)


New York Sales Tax FAQ


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 possession 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 for NY transactions?

If you have registered with the state of NY to be authorized to collect New York sales tax…:

NY has destination-based sales tax–the tax rate is where the buyer takes possession of the goods. See it on the NYS website here:

In-person rate is based on where the buyer takes possession.

In-Person Sales–Use the Local Sales Tax Rate:

For in-person sales, you charge the state and local tax for the NY 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 for taxable items buyers take with them. If you mail the item to the person, you use the NY tax rate for where the item is delivered to–even if they pay you at the show–because that’s where the customer takes possession of the goods.

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 New York address to which the item is shipped regardless of the location of the buyer or seller. If someone from CA has something shipped to their aunt in NY, you charge the CA customer NY sales tax at the rate where their aunt will receive the package.

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 New York Sales Tax FAQ, part 2, 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”.

Items you ship out of state: You cannot collect NY sales tax on items that are being delivered out of state. On interstate orders, the customer is responsible for paying “Use Tax” directly to their own state if their state taxes the items they received, just like when a NY buyer purchases something over the internet which is taxable but on which NY sales tax hasn’t been collected by the seller. More help for Use Tax here: What is Use Tax?

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 calculator, 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 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)SPDF

More on NYS sales tax & shipping here:
Shipping and Delivery Charges (Tax Bulletin ST-838 (TB-ST-838))

Commonly asked questions about NY sales tax is continued here:

New York Sales Tax FAQ, part 2

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.