RATE OF SALES TAX:
4.00%
LOCAL & COUNTY MAXIMUM RATES:
4.875%
What are the taxable goods and services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in New York.
Traditional Products and Services
Physical property, such as furniture, household appliances, and motor vehicles, is subject to sales tax in New York.
Medicine, both prescription and non-prescription, food, fuel, and apparel are all tax-free.
In New York, several services are subject to sales tax. View this PDF from the New York Department of Revenue and Finance website for a complete list of taxable services.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in New York State are not required to collect sales tax on the sale of digital products or services.
However, there is one exception to this regulation in New York. Businesses are required to collect sales tax on pre-written computer software offered online.
How to Register for Sales Tax in New York
If you have concluded that you must charge sales tax on part or all of the products and services that your company offers, the next step is to apply for a Certificate of Authority.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
EIN number and business identifying information
Primary commercial activity
Type of business entity
Information for all company owners and officers
Your company location(s) – If you have numerous locations in New York, you must apply for a New York sales tax permit for each one.
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
In Buffalo, New York, Mary owns and operates a bookshop. Because books are taxed in the state of New York, Mary charges a flat rate of 8.750% on all sales. This includes the 4.0% sales tax rate in New York and the 4.750% sales tax rate in Erie County.
Sales inside the state
The state of New York has a policy known as a destination-based sales tax. This implies that long-distance transactions inside New York are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his home in New York City, New York. A buyer from Syracuse discovers Steve’s eBay website and buys a $350 set of headphones. Steve uses the New York State tax rate of 4.000% plus the Onondaga County tax rate of 4.000% when computing the sales tax for this transaction. The entire cost is $378.00 ($28.00 sales tax) at an 8.0% total sales tax rate.
Out-of-State Purchases
Businesses in New York must only pay sales tax on out-of-state sales if they have nexus in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your New York seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in New York are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Annual filing: If your firm collects less than $3,000.00 in sales tax per year and has been told that you must file annually, you must submit returns on an annual basis.
Quarterly filing: If your company’s gross revenues in taxable products or services are less than $300,000, you should submit quarterly reports. When most businesses begin, they will submit their sales tax returns quarterly.
Monthly filing: If your company’s gross revenues in taxable products or services exceed $300,000, you must submit returns on a monthly basis.
Deadlines for Filing
The deadline for all New York sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day.
Penalties for Filing Late
For late filing, New York imposes a minimum punishment of $50.00, plus interest on the entire amount payable.