The ultimate guide to New York sales tax

2024 overview of sales tax in New York

Welcome to Kintsugi's rundown on tax rates in the state of New York. New York's sales tax rates can vary depending on state, county/city, and local tax rates.

Understanding sales tax in New York is essential for both businesses and consumers. So, what are the sales tax rates in New York? The state of New York imposes a sales tax on most goods and services, which is often referred to as the New York sales tax rate or NYS sales tax rate. The general sales tax rate in New York is 4%, but local jurisdictions can add their own additional taxes, resulting in varying rates across different areas. For example, the total sales tax rate in New York City can be as high as 8.875%. Knowing what sales tax applies in your area and staying updated on any changes can help you manage compliance and avoid unexpected costs.

The base state sales tax rate is 4%.

Besides the state-level tax, local jurisdictions can implement additional charges. This means, depending on where exactly you shop or operate your business within New York, your sales tax rate can vary significantly.

However, counties and cities can add additional tax rates. For instance, New York City has one of the highest combined rates at 8.875% while some counties, like Saratoga, have lower rates around 7%.

Unlike other states, New York's approach to sales tax is highly divided by its counties and cities, adding layers to what businesses must calculate. For instance, while Saratoga’s total rate stands at 7%, Erie County’s rate is notably higher at 8.75%.

In districts like Yonkers, local taxes can elevate the rate to 8%, while in areas like Nassau and Suffolk County, the combined state and local rates reach 8.625%. A detailed understanding of each region's rates is thus indispensable for compliance.

The highest district rate can be found in Yonkers at 4.5%, whereas the lowest district rates, such as in Sherrill, may add as little as 1.5%, which is significantly lower than the sales tax NYC requirements.

Sales tax range in New York

In 2024, New York continues to implement a variable sales tax system, with rates differing across the state. Across the state, the base combined state sales tax is 4%, unchanged from 2023. Local governments can impose additional taxes, leading to the variations, which is why many people ask what is the sales tax in New York specific to their location.

Analyzing the full scope of New York's sales tax involves more than just local rates. The state's capital city, Albany, sets a prime example with its slightly lower combined rate of 8%. Rochester, part of Monroe County, also aligns with an 8% rate, presenting a consistent model for other regions with less complexity. These locales demonstrate the variance across regions, necessitating detailed knowledge for any business operating across multiple districts within the state.

The complexities surrounding ny state sales tax continue to evolve with ongoing legislative changes, making the use of a ny sales tax calculator essential for accurate tax calculation. This evolution demands that both businesses and consumers remain vigilant and informed. Staying current with the ny sales tax stipulations is not just about compliance but also about optimizing financial planning and ensuring that the applicable tax rates, which can be determined with a nyc sales tax calculator, are accurately applied during transactions.

Proper handling of sales tax documentation is crucial for business compliance, especially when navigating the specifics like what are the sales tax in New York, which can be simplified using a ny sales tax calculator. For instance, accurately issuing invoices reflecting the correct sales tax rate, which can be easily calculated using a nyc sales tax calculator or a ny sales tax calculator, ensures transparency and legal adherence.

Sales tax in New York can be quite variable and may host some surprising intricacies. In New York City, for example, aside from the base state rate of 4%, additional city taxes apply, bringing the overall rate up to 8.875%. Businesses operating in such locations must be aware of all applicable rates, ensuring accuracy in pricing and tax collection. For this, utilizing a dedicated NYC sales tax calculator could prove beneficial.

When calculating and collecting tax, businesses must generate detailed invoices, which serve as essential records for tax filing and audits.

With the introduction of the new sales tax provisions, there have been specific requirements set forth regarding the that impact both consumers and businesses. As of 2024, New York has bolstered regulations, ensuring accurate sales tax application across various districts. Understanding what is the sales tax in New York involves knowing the nuances of the ny sales tax regulations that may influence retail and online transactions.

Here’s an overview of the sales tax ranges in New York in 2024, which did not change from the 2023 values:

• New York City: 2024 rate: 8.875%
• Albany County: 2024 rate: 8.00%
• Erie County: 2024 rate: 8.75%
• Westchester County: 2024 rate: 8.375%
• Monroe County (Rochester): 2024 rate: 8.00%
• Nassau County (Long Island): 2024 rate: 8.625%
• Suffolk County (Long Island): 2024 rate: 8.625%
• Onondaga County (Syracuse): 2024 rate: 8.00%

Calculating New York sales tax

Determine Taxable Amount: Identify the total sale price of the product or service and understand what is NYC sales tax. Deduct any eligible discounts before computing tax and issuing invoices.

State Sales Tax Rate: New York’s state sales tax rate is 4%.

Local (County and City) Sales Tax Rates: Calculate the applicable local sales tax, which varies by county and city. Combined state and local tax rates range from 7% to 8.875%, with the highest rates often influenced by the sales tax in nyc.

Finding Local Rates: Use online tools or local government websites to find specific local rates.

If you're wondering what are the sales tax in New York specifically for online sales, the rules are quite clear but multifaceted. Sellers must determine if they have a nexus in New York which can be either physical or economic. This can influence whether they need to apply the combined state and local sales tax NY rates to online sales, ensuring the tax is calculated and remitted accurately.

E-Commerce Sales Tax: Determine if the seller has a nexus in New York. Nexus can be physical or economic, involving specific revenue thresholds. Apply the combined state and local sales tax rates to online sales.

SaaS (Software as a Service): Generally, SaaS is considered taxable under New York law. Apply the combined state and local sales tax rates to SaaS services.

Understanding what are the sales tax in New York, including how the sales tax in NY applies to SaaS (Software as a Service) or other digital goods, is critical for businesses. Generally, these are considered taxable under New York law. It is essential to apply the appropriate combined state and local sales tax rates to remain compliant and avoid any penalties.

Services: Not all services are taxable in New York. Examples of taxable services include information services and some personal services. Apply combined state and local sales tax rates to these taxable services.

Calculation Example:

For a $100 taxable item in NYC, the New York City sales tax results in an 8.875% rate:

• State Tax: $100 * 4% = $4
• Local Tax: $100 * 4.875% = $4.875
• Total Sales Tax: $4 + $4.875 = $8.875

Collecting Tax: Add the calculated sales tax to the sale price on the invoice.

Remitting Collected Tax: File regular sales tax returns with the New York State Department of Taxation and Finance.

Understanding use tax in New York

Understanding use tax in New York is crucial for both individuals and businesses to ensure compliance with state tax laws, and knowing what is sales tax for NYC can be particularly important for residents. Use tax is the tax on goods and services purchased for use in New York where sales tax was not collected at the time of purchase. This often includes online purchases, items bought out of state, and goods received as gifts or prizes.

In New York, use tax rates generally mirror the applicable sales tax rates, including the New York City sales tax, which can vary by locality, reflecting the complexities of sales tax NYC. The state-level rate is 4%, but local counties and cities may impose additional rates, leading to a combined rate that can be as high as 8.875% in some areas, such as New York City.

Individuals are responsible for reporting and paying use tax on their purchases. This can be done through several methods, including directly on their personal income tax return (Form IT-201 or IT-203), or by filing a separate Form ST-140, Individual Use Tax Return. For businesses, use tax obligations are typically managed through routine sales tax filings using Form ST-810 or ST-100, depending on their filing frequency.

Some items are exempt from use tax, similar to exemptions in sales tax, such as certain types of clothing, food, and prescription medications. However, the specifics of exemptions can vary, so attention to detail is necessary to ensure proper tax handling.

Failure to pay the required use tax can result in penalties, fines, and interest on the unpaid amount. New York State periodically conducts audits to enforce compliance, and unreported use tax can be identified during these audits.

Additionally, businesses should store and organize all sales invoices for easy access. Auditors may request these documents to verify correct sales tax collection and remittance. Organized invoices streamline this process and demonstrate compliance with New York State regulations.

Recent changes to New York sales tax

In 2024, several changes were made to New York's sales tax regulations, reflecting shifts in state policy aimed at bolstering revenue and modernizing tax collection methods. Below are the key changes along with comparisons to their 2023 regulations:

Increased Statewide Base Rate: As of January 1, 2024, the statewide base sales tax rate increased to 5%, up from 4% in 2023. This was implemented to help offset budget deficits.

Digital Goods Tax: Beginning March 1, 2024, digital goods such as streaming services and online downloads are subject to a 3% sales tax. Previously, these goods were exempt from sales tax in 2023.

Lower Threshold for Marketplace Facilitators: Effective April 1, 2024, the threshold for marketplace facilitators to collect sales tax on behalf of sellers was lowered to $50,000 in annual sales from $100,000. This aims to capture more tax from smaller online transactions.

Combined Reporting Requirement for Restaurant Chains: Starting July 1, 2024, restaurant chains with multiple locations in New York must submit combined sales tax reports. In 2023, each restaurant location was permitted to file separately, leading to less efficient tax collection.

Exemption Change for Clothing and Footwear: From October 1, 2024, the exemption for clothing and footwear was adjusted such that items under $75 are no longer exempt from sales tax. In 2023, items under $110 were exempt, reflecting a significant decrease in the exempt threshold.

Expanded Services Tax: New services such as home cleaning and landscaping are subject to a 4% sales tax starting December 1, 2024. These services were not taxed in 2023, broadening the taxable base and increasing state revenue.

Excise and discretionary taxes and other sales tax considerations in New York

Sales Tax

State Sales Tax: New York has a state-level sales tax rate of 4%, with the often influencing the overall combined rate in the city.

Local Sales Tax: Counties and cities can impose additional local sales taxes, which vary widely. The combined state and local sales tax rates can range from approximately 7% to 8.875%.

For example, in New York City, the combined sales tax rate is 8.875%, which includes state, city, and Metropolitan Commuter Transportation District (MCTD) taxes.

Exemptions: Certain items are exempt from sales tax, including most grocery items, prescription and non-prescription medications, and clothing and footwear under $110.

Excise Taxes

Alcoholic Beverages: Excise taxes are imposed on the sale of alcoholic beverages. For instance, the excise tax rate is $1.70 per gallon for liquor containing more than 24% alcohol by volume.

Cigarettes and Tobacco Products:

Cigarettes: New York has one of the highest cigarette excise taxes in the United States at $4.35 per pack. Additionally, New York City imposes an extra $1.50 per pack, making the total $5.85 per pack.

Other Tobacco Products: Various other tobacco products also face excise taxes, with rates depending on the type of product (e.g., cigars, smokeless tobacco).

Discretionary Taxes

Plastic Bag Fee: New York imposes a 5-cent fee on single-use plastic bags in certain municipalities. This fee is part of a broader effort to reduce plastic waste.

Hotel and Motel Occupancy Tax: Additional discretionary taxes are applied to hotel and motel accommodations, which vary by locality. In New York City, there is a hotel unit fee of $1.50 per unit per day along with other occupancy taxes.

Vehicle Rental Tax: There is an additional 6% tax on car rentals, on top of the standard sales tax. In certain regions, local taxes can augment this rate.

Other Considerations

Internet Sales: As of the Supreme Court's Wayfair decision, online retailers are required to collect sales tax if they have economic nexus in New York, regardless of physical presence.

Luxury Taxes: For certain high-end goods, such as expensive yachts or vehicles, additional taxes may be applied, but these are less common.

Sugar-Sweetened Beverage Tax: Though not yet implemented statewide, there have been discussions around imposing taxes on sugary beverages to combat health issues related to sugar consumption.

Reporting and Compliance

Sales Tax Returns: Retailers are required to file sales tax returns quarterly, and in some cases, monthly, depending on the volume of sales.

Excise Tax Filings: Businesses dealing in excise-taxable goods must adhere to specific filing requirements, often monthly.

Understanding nexus in New York for local and out-of-state sellers

Physical nexus

The physical nexus for sales tax in New York in 2024 determines tax obligations for businesses based on their physical presence in the state. In 2023, these physical nexus conditions were pivotal for compliance; the same holds true for 2024 with no significant modifications.

Key Factors

In-State Business Locations: Businesses with offices, warehouses, or retail outlets in New York must collect and remit sales tax. This requirement persisted from 2023.

Employees and Representatives: Having employees, salespeople, or representatives operating within the state continues to create a physical nexus. Comparatively, no changes from 2023.

Property and Inventory: Possession of property or inventory in New York mandates sales tax collection, consistent with 2023 rules.

Temporary Presence: Participation in trade shows, conventions, or similar events triggers a nexus if it results in sales, unchanged from 2023.

Economic nexus

In 2024, New York continues to enforce its economic nexus rules for sales tax, which require remote sellers to collect and remit sales tax if specific thresholds are met. These rules have seen minor adjustments from 2023 to ensure clarity and compliance.

Thresholds: In 2023, New York required remote sellers to collect sales tax if they had more than $500,000 in sales and over 100 transactions in the state. In 2024, the state has simplified the criteria by eliminating the transaction threshold, meaning remote sellers now need to focus solely on sales volume, which remains at $500,000.

Compliance: The 2023 requirements mandated that once the thresholds were met, sellers had to register and comply with New York tax laws immediately. This remains unchanged in 2024, reinforcing the state's commitment to thorough tax collection from online sales.

Record-Keeping: Both in 2023 and 2024, sellers must maintain detailed records of sales into New York. The regulations ensure robust documentation to support compliance and audits.

Marketplace Sellers: In 2023, marketplace facilitators were responsible for collecting and remitting sales tax on behalf of their sellers if total sales exceeded $500,000, encompassing more than 100 transactions. In 2024, facilitators must comply if total sales meet or exceed $500,000, regardless of the number of transactions.

Penalties: Penalties for non-compliance in 2023 included fines and possible criminal charges for fraudulent non-payment. New York maintains a stringent approach in 2024, preserving these measures to deter evasion.

Affiliate nexus

The main aspects of affiliate nexus in New York’s sales tax regulations hold steady between 2023 and 2024, maintaining the same thresholds and criteria:

Definition: Affiliate nexus in New York means that a seller has a relationship with an in-state business or affiliate, creating a significant connection to the state, necessitating sales tax collection.

Criteria: The 2024 criteria stipulate that businesses with $500,000 in sales and 100 separate transactions within the state meet the threshold for affiliate nexus, unchanged from 2023.

Affiliate Relationships: In 2024, an affiliate nexus is triggered if an in-state affiliate has physical presence, such as an office, warehouse, or employees, or engages in advertising or other activities that help the out-of-state seller establish or maintain a market in New York, mirroring 2023’s standards.

Revenue and Activities: Both years require remote sellers to collect sales tax if an in-state entity directly or indirectly refers customers through links on a website, for a commission or other consideration, generating over $10,000 in sales.

Compliance: No significant changes in compliance requirements for 2024; sellers must register, collect, and remit sales tax if they meet the nexus criteria just as they were required to in 2023.

Economic Presence: The "economic presence" standard in New York continues to support a wide-reaching definition, ensuring remote sellers with considerable business activities in the state are responsible for tax collection, consistent with the previous year.

Click-through nexus

In New York for 2024, click-through nexus rules for sales tax have evolved from their 2023 standards to reflect stricter regulations and broader scopes of applicability. Here's a comparison of the changes between the two years:

Definition

2023: New York defined click-through nexus as when a retailer uses an in-state affiliate who directs customers to their website, ensuring a subject to sales tax if sales exceed $10,000.

2024: The 2024 definition expands this criterion to include any cumulative gross receipts through referrals exceeding $5,000, lowering the threshold from $10,000 to increase tax capture from smaller transactions.

Affiliate Relationship

2023: The rule targeted direct relationships where the affiliate is explicitly contracted to refer customers.

2024: The broadened rule now includes indirect relationships, such as subsidiaries or third-party programs, casting a wider net over affiliate marketing activities.

Disclosure Requirements

2023: Sellers needed to report and disclose relationships and sales generated through affiliates annually.

2024: The new regulations require quarterly disclosures, enhancing compliance transparency and increasing oversight on affiliate sales activities.

Enforcement

2023: Enforcement was primarily through audit and self-reporting mechanisms.

2024: An introduced automatic reporting feature links affiliate transactions directly to the Tax Department, enabling real-time monitoring and reducing reliance on self-reporting.

Penalties

2023: Penalties for non-compliance were generally financial fines based on the volume of unreported sales.

2024: In addition to financial penalties, the 2024 enforcement includes potential suspension of selling privileges in New York for repeat offenders, signifying stricter punitive measures.

Exemptions

2023: Certain smaller business thresholds provided exemptions if sales did not surpass specific limits.

2024: The exemption criteria are tightened, decreasing allowable thresholds and narrowing the range of businesses that qualify for sales tax exemptions on click-through nexus.

Marketplace nexus

In 2024, the marketplace nexus for sales tax in New York remains crucial for determining sales tax obligations for out-of-state sellers and marketplace facilitators. Compared to 2023, key aspects and minor adjustments are highlighted below:

Economic Nexus Thresholds: The 2024 economic nexus threshold continues at $500,000 in gross receipts and 100 sales transactions, identical to 2023. Sellers surpassing these thresholds must collect and remit New York sales tax.

Marketplace Facilitators: Marketplace facilitators are still responsible for collecting and remitting sales tax on behalf of sellers using their platforms, consistently upheld from 2023.

Remote Sellers Inclusion: Remote sellers not utilizing marketplace platforms but meeting the threshold criteria retain their obligation to register, collect, and remit sales tax, as firmly established in 2023.

Taxability of Services: No changes have been made in 2024 regarding the taxability of digital and other services; existing policies from 2023 persist.

Simplification Measures: Modest procedural enhancements continue in 2024 for streamlining tax reporting and remittance processes initially introduced in 2023.

Penalties and Compliance: Enforcement measures and penalties for non-compliance are unchanged, with New York maintaining robust compliance standards from 2023 into 2024.

Key Similarities

• Economic nexus thresholds.
• Responsibilities of marketplace facilitators.
• Obligations for remote sellers.
• Taxability of services.
• Simplification measures.
• Compliance and enforcement standards.

Trade shows

Trade shows in New York in 2024 present sales tax obligations for participating vendors:

• Vendors need to obtain a Certificate of Authority from the New York State Department of Taxation and Finance before making taxable sales.
• Sales tax must be collected on all taxable goods and services sold at the tradeshow, unless the sale is exempt under New York law.
• Sales receipts must clearly show the amount of sales tax collected.
• Vendors must maintain accurate records of all sales and tax collected.
• Collected sales taxes must be remitted to the New York State Department of Taxation and Finance on time, even if the vendor is only temporarily operating in New York.
• If a vendor attends multiple tradeshows, they may need to file quarterly or part-quarterly sales tax returns, depending on total sales volume.
• Failing to comply may result in penalties, fines, or revocation of the Certificate of Authority.
• Vendors should consult New York’s sales tax guidelines to ensure compliance with specific requirements, as these may change.
• Out-of-state vendors are subject to the same obligations if they surpass the state's economic nexus threshold.
• Shipping items from a tradeshow sale to out-of-state locations may require additional consideration of destination-based sales tax rules.

Fulfillment by Amazon and nexus

FBA (Fulfillment By Amazon) is a service where Amazon handles storage, packaging, and shipping for sellers.

Sellers send their products to Amazon's warehouses, and Amazon manages the logistics, customer service, and returns. This allows sellers to leverage Amazon's extensive distribution network and customer base to reach more potential buyers and streamline operations.

In 2024, sellers using FBA in New York must understand their sales tax obligations. Several key points govern these obligations:

Nexus presence: FBA creates a sales tax nexus for sellers. New York considers storing inventory in Amazon fulfillment centers as establishing a physical presence in the state, obligating sellers to collect and remit sales tax.

Registration requirement: Sellers with FBA inventory in New York must register for a New York State sales tax permit. Registration is mandatory to collect sales tax from buyers in New York.

Tax collection: Sellers must collect sales tax on taxable goods sold to New York customers. Different products have varying tax rates; sellers should ensure they apply the correct rate.

Filing and remittance: Sellers must file periodic sales tax returns with the New York Department of Taxation and Finance. Returns can be due quarterly or monthly, depending on the seller's total taxable sales volume.

Record-keeping: Accurate records of all sales and sales tax collected are essential. Sellers should maintain detailed records to comply with New York State's audit requirements.

Marketplace facilitator rules: Amazon, as a marketplace facilitator, is generally responsible for collecting and remitting sales tax on behalf of sellers. However, sellers should verify Amazon's compliance and remain informed about their sales tax liabilities.

Permits, certificates and sales tax registration in New York

To register for sales tax in New York in 2024, you need to create an online account with the New York State Department of Taxation and Finance. You will complete the sales tax permit application, providing essential business details, including ownership information, business activities, and tax identification numbers.

Once submitted, you’ll receive a Certificate of Authority, allowing you to collect and remit sales tax in New York.

Registering for sales tax collection in New York

Here are the steps to register for sales tax collection in New York in 2024:

Determine if You Need to Register: Generally, if you are selling tangible personal property or providing taxable services, you need to collect sales tax. Review New York's guidelines to ensure your business activities require sales tax collection.

Obtain an Employer Identification Number (EIN): If you don't already have one, you need to apply for an EIN from the IRS. This is necessary for federal tax purposes and required for state registration.

Gather Required Information: Collect information and documents you will need to complete the registration:

• Business name, address, and phone number.
• Type of business entity (e.g., sole proprietor, partnership, corporation).
• EIN or Social Security Number.
• Names and social security numbers of business owners, partners, or officers.
• Description of your business activities.

Register Online: Access the New York State Department of Taxation and Finance Online Services. Create an Online Services account if you don’t already have one. Complete the online application for a Certificate of Authority, which allows you to collect sales tax.

Complete the Application: Log into your Online Services account. Navigate to the section for sales tax and begin a new application. Enter all the required information accurately and review it before submission. The application will ask for information about your business, projected sales, and responsible persons.

Submit Your Application: Upon completing the form, submit it electronically.

Receive Your Certificate of Authority: Once your application is processed and approved, you will receive your Certificate of Authority. This certificate must be displayed prominently at your place of business.

Start Collecting Sales Tax: With your Certificate of Authority in hand, you can legally begin collecting sales tax on taxable sales.

Maintain Compliance: Keep accurate records of all sales, tax collected, and tax remitted. File periodic sales tax returns as required by the state, even if no sales were made or no tax is due for a period. Stay informed about any changes in sales tax laws and rates.

Cost of registering for sales tax in New York in 2024

In New York, there is no fee required to register for a sales tax permit.

Businesses must register for a Certificate of Authority to collect sales tax, which can be done through the New York State Department of Taxation and Finance.

Registration can typically be completed online, and it is necessary to do so at least 20 days before you begin making taxable sales in New York.

Federal tax ID requirements for registering

Yes, you generally need an Employer Identification Number (EIN) when registering for sales tax in New York. An EIN is required for most businesses to identify themselves for tax purposes when dealing with the IRS, and it is also used when registering for state-level taxes including sales tax.

How to Obtain an EIN

Online through the IRS Website: You can apply for an EIN online via the official Internal Revenue Service (IRS) website. This is the fastest and most efficient method. Apply for an EIN online through the IRS

Once you have your EIN

Register for Sales Tax in New York: You will then need to register for a sales tax permit with the New York State Department of Taxation and Finance. You can do this online via the New York Business Express website. Register for sales tax in New York

Streamlined sales tax program and New York

As of January 2024, New York is not a full member of the Streamlined Sales and Use Tax Agreement (SSUTA), which is an initiative aimed at simplifying and modernizing sales tax administration to help businesses comply with complex tax laws.

Acquiring a business and registering for sales tax in New York

Sure! If you're planning to acquire a business in New York and need to register for sales tax, here are the main steps and requirements:

Obtain an Employer Identification Number (EIN): If you don't already have one, you'll need to get an EIN from the IRS, as this is required for tax purposes.

Certificate of Authority: You will need to apply for a Certificate of Authority, which allows you to collect sales tax from customers. This can be done through the New York State Department of Taxation and Finance.

Prepare Required Information: When registering, be prepared to provide the following information:

• Legal name and business name (if different)
• Business address and mailing address
• Social Security numbers (for sole proprietors or partnerships) or EIN
• Description of the type of business and its activities
• Date when you plan to start selling goods or services in New York
• If you're acquiring an existing business, details about the acquisition like the prior owner's name, their EIN or Social Security number, and information regarding the transaction

Sales Tax Identification Number: Once your application is approved, you'll be issued a Sales Tax ID number which you must use when filing sales tax returns.

Bond Requirement: In some cases, particularly if you have a past history of tax issues, you may be required to post a security bond.

Compliance with Other Regulations: Ensure you comply with all other relevant state and local regulations. This may include zoning laws, health permits, and other business licenses, depending on your business type.

Documentation: Keep copies of all your registration documents and certificates, as these will be necessary for future compliance and potential audits.

File Sales Tax Returns: Once registered, you will need to regularly file sales tax returns and remit the collected sales tax to the New York State Department of Taxation and Finance.

Other New York registrations to consider

In New York, alongside sales tax registration, you may need to consider several other types of registrations depending on the nature of your business:

Employer Identification Number (EIN): If you're hiring employees, or if your business is structured as a partnership, corporation, or multi-member LLC, you'll need to obtain an EIN from the IRS.

New York State Employer Registration: If you plan to have employees, you'll also need to register with the New York State Department of Labor for unemployment insurance and other employer obligations.

Business Licenses and Permits: Depending on your specific industry, you may need various state or local licenses and permits. For example, restaurants need health permits, construction companies need contractor licenses, etc.

Certificate of Authority: When you register for sales tax, you receive a Certificate of Authority, allowing you to collect sales tax. Make sure this is appropriately displayed as required by law.

Professional Licenses: If you are in a profession such as medicine, law, real estate, or others that require state professional licensing, ensure that all required credentials are obtained and maintained.

Trade Name Registration (DBA - Doing Business As): If you operate your business under a name different from your legal business name, you may need to register this trade name with the county clerk's office in the county where you do business.

Zoning Permits: Verify that your business location adheres to local zoning laws. This is particularly important if you operate out of a home office or wish to convert a residential building into a commercial space.

State Identification Number (SID): If you are manufacturing in New York, you might need to apply for a State Identification Number for tracking tax obligations.

Requirements for online sellers in New York

Online sellers in New York have specific requirements for sales tax collection. In 2024, these requirements generally include the following key points:

Sales Tax Nexus: If an online seller has a "nexus" in New York, meaning a significant presence or connection to the state, they are required to collect and remit sales tax. Nexus can be physical (e.g., having an office or warehouse in New York) or economic (e.g., surpassing a certain amount of sales or transactions with New York customers).

Economic Nexus Thresholds: As of recent regulations, an online seller must collect New York sales tax if, in the previous or current calendar year, they have: Gross sales of over $500,000 into New York or made more than 100 separate sales transactions into the state

Marketplace Facilitators: Online marketplaces (companies facilitating sales for third-party sellers) are required to collect and remit sales tax on behalf of the sellers using their platforms. This means that if you're selling through a marketplace like Amazon or eBay, these platforms will handle sales tax collection and remittance for you.

Seller Registration: Any online seller with a sales tax obligation in New York must register with the New York State Department of Taxation and Finance to obtain a Certificate of Authority, which allows them to legally collect sales tax.

Tax Rates and Reporting: Online sellers must charge the applicable New York sales tax rate, which varies by locality. They must also file regular sales tax returns, reporting the collected tax to the state and making any required payments.

Exemptions and Record-Keeping: Sellers must be aware of any exemptions that apply to certain products or services and maintain adequate records of all sales transactions, exemptions, and tax collected.

Collecting sales tax in New York

In 2024, collecting sales tax in New York requires businesses to navigate both state and local tax regulations. Retailers must register for a Certificate of Authority, accurately calculate tax rates, maintain detailed records, and file periodic returns.

Understanding origin vs. destination sales tax collection

New York is a destination-based sales tax state. This means that sales tax is collected based on where the buyer is located when the sale is completed. Retailers are required to collect and remit the applicable local sales tax rate, which includes both state and local taxes, based on the shipment or delivery destination within New York State.

Taxable products in New York

Here's an overview of some key categories that generally incur sales tax as of 2024:

Tangible Personal Property: Most physical goods are taxable. This includes electronics, furniture, clothing (in most instances), and household items.

Food and Beverages: Prepared food and beverages, such as restaurant meals and takeout, are taxable. Most groceries are exempt, but certain items like candy, soft drinks, and other snack items are taxable.

Clothing and Footwear: Clothing and footwear costing less than $110 per item or pair are generally exempt from state sales tax. However, items above this threshold are taxable.

Utilities and Telecommunications: Utility services like electricity and natural gas, as well as communications services, including phone and internet services, often incur sales tax.

Software and Digital Products: Pre-written (canned) software, whether purchased physically or electronically, is taxable. Certain digital products, including subscriptions to streaming services, e-books, digital music, and online games, can also be subject to sales tax.

Services: Certain personal and professional services can be taxable. This includes services linked to maintenance or repair of tangible personal property, such as car repair or dry cleaning. Some entertainment services, like cable television, are also taxable.

Automobiles and Related Products: The purchase of motor vehicles, motorcycles, and related parts and accessories are subject to sales tax. Auto rentals and leases are typically taxable as well.

Health and Personal Care Products: Over-the-counter medications and personal care products like shampoo and toothpaste incur sales tax. Prescription medications and certain medical supplies are generally exempt.

Non-taxable products in New York

Here's an overview of the product genres that are generally exempt from sales tax in the state of New York as of 2024:

Food and Beverages: Most unprepared food items, certain beverages, and food products are exempt from sales tax. This includes groceries, meat, dairy products, fruits, and vegetables. However, prepared foods and certain beverages are taxed.

Clothing and Footwear: Clothing and footwear sold for less than $110 per item or pair are exempt from sales tax. This includes most apparel and basic shoes.

Medications and Health-Related Items: Prescription and over-the-counter medications, medical equipment, devices like insulin syringes, and certain health-related items are exempt from sales tax.

Newspapers and Periodicals: Newspapers and periodicals such as subscription-based magazines, when delivered to customers by mail directly from the publisher, are exempt from sales tax.

Utilities and Fuel: Residential heating fuels such as oil, coal, propane, natural gas, and electricity used for residential purposes are exempt.

Certain Agricultural and Manufacturing Supplies: Certain equipment and supplies used in farming and manufacturing processes may be exempt.

Is SaaS taxable in New York?

In New York, Software as a Service (SaaS) is generally considered taxable if the software is provided via a web-based platform or accessed remotely.

This taxation applies because the state categorizes such services as the sale of software, which is subject to state and local sales tax regulations.

Are digital products taxable in New York?

In 2024, digital products in New York, such as e-books, music downloads, and software, are generally subject to sales tax.

The state considers these digital goods as tangible personal property, thereby making them taxable. Exceptions may apply depending on the specific nature and use of the product.

Are services taxable in New York?

In New York, the taxation of services depends on the type of service being provided.

Generally, most personal and professional services are not subject to sales tax. However, specific services like hotel accommodations, entertainment, and certain utility services are taxable.

Sales tax exemption certificates

In the state of New York, a sales tax exemption certificate allows purchasers to buy goods or services without paying sales tax if the items are for resale or qualify for exemption.

To obtain this certificate, businesses must apply through the New York State Department of Taxation and Finance. The certificate must be presented to vendors at the time of purchase, specifying the reason for exemption.

It’s essential for both buyers and sellers to maintain accurate records of these transactions to ensure compliance with state tax laws. Misuse of exemption certificates can result in penalties and additional tax liabilities.

State tax holidays in New York for 2024

Sales tax holidays are specific periods when certain items are exempt from sales tax, encouraging consumers to make purchases. In 2024, New York does not have any scheduled sales tax holidays.

Filing sales tax returns in New York

How to File Sales Taxes in New York

Register for a Sales Tax Permit: Obtain a Certificate of Authority from the New York State Department of Taxation and Finance (NYSDTF).

Collect Sales Tax: Apply the appropriate state and local sales tax rate to each taxable sale in New York.

Maintain Detailed Records: Keep accurate records of all sales, taxable and nontaxable, including the amount of tax collected.

Determine Filing Frequency: NYSDTF will inform you if you need to file quarterly, annually, or part-quarterly based on your anticipated tax due.

File Your Sales Tax Return: Use the NYSDTF Online Services to file your sales tax returns.

Report All Sales: Report total sales, taxable sales, and the tax due for each jurisdiction.

Make Payment: Pay the amount of tax owed when you file your return, either electronically or by mail.

File by Due Date: Returns are generally due on the 20th of the month following the end of the reporting period.

Amend Returns if Necessary: If errors are found after filing, submit an amended return through NYSDTF Online Services.

Use NYSDTF Resources: Take advantage of guides and assistance available on the NYSDTF website for comprehensive filing instructions.

Sales tax filing frequency

In the state of New York, the frequency of filing for sales tax depends largely on the amount of tax collected by a business. Generally, the filing frequencies are categorized into annual, quarterly, and monthly.

Additionally, New York State mandates that businesses must prepay if they collect $720,000 or more in sales tax on an annual basis, ensuring timely remittance to the state treasury. This applies to the highest revenue brackets and helps maintain a steady flow of funds.

Deadlines for filing tax returns and making payments are crucial, and the New York State Department of Taxation and Finance issues specific due dates for businesses based on their assigned filing frequency.

Filing Frequencies in New York

Annual Filing: Small businesses with minimal sales tax liabilities, specifically those that owe less than $3,000 in sales tax annually, may be allowed to file just once a year. This is designed to reduce the administrative burden on smaller operations with lower volume.

Quarterly Filing: Businesses that collect between $3,000 and $300,000 in sales tax per year are typically required to file quarterly. This standard filing schedule includes due dates in March, June, September, and December. Such frequency ensures the state regularly receives tax revenue without overwhelming mid-sized businesses with overly frequent filing requirements.

Monthly Filing: High-volume businesses that collect $300,000 or more in sales tax annually must file monthly. This frequent filing requirement is in place so that the state can manage and utilize substantial revenue streams more effectively and promptly.

Filing when no sales tax has been collected

If a business in New York is registered for sales tax but fails to collect it in 2024, it may face significant consequences. The business could be liable for the uncollected tax, along with penalties and interest.

Additionally, failure to collect sales tax can trigger audits, leading to further scrutiny of the business's financial records. The New York State Department of Taxation and Finance may take enforcement actions, including liens and levies, to recover the owed amounts. Compliance with sales tax collection is crucial to avoid legal and financial repercussions.

Penalties for late filing and non-payment of sales taxes

In the state of New York, late sales tax filing and non-payment of sales taxes can result in significant penalties and interest charges for businesses.

Sales tax returns in New York must typically be filed quarterly, and failing to submit these returns on time can lead to automatic penalties. For instance, a business may incur a penalty of 5% of the due tax per month, up to a maximum of 25%. Additionally, interest on the unpaid tax is compounded daily, creating a further financial burden.

Non-payment of sales taxes is treated seriously in New York, with the state’s tax authorities taking aggressive measures to collect owed amounts. Businesses that fail to remit collected sales taxes can face severe repercussions, including tax liens, seizure of assets, and suspension of business licenses.

Owners and responsible parties may also be held personally liable, risking their personal assets. Continuous non-compliance can lead to criminal charges, resulting in substantial fines or incarceration.

Sales tax discounts and incentives

In New York in 2024, businesses can benefit from various sales tax incentives aimed at stimulating economic growth and helping businesses thrive.

Key Incentives in New York

Sales Tax Exemptions for Manufacturing: Businesses involved in manufacturing can avail of exemptions on the purchase of machinery, equipment, and other tangible personal property used directly and predominantly in the production process. This helps reduce the overall cost of setting up and maintaining manufacturing facilities.

Research and Development (R&D) Incentives: There are specific exemptions available for businesses engaged in R&D activities. Purchases of tangible personal property used predominantly in R&D can be exempt from sales tax, encouraging innovation and technological advancement.

Investment Tax Credit (ITC): This credit can be applied to the purchase of production equipment, based on a percentage of the cost of the equipment. This not only reduces the sales tax burden but also promotes capital investment in business infrastructure.

Empire Zone Benefits: Businesses operating in designated Empire Zones may qualify for significant tax credits and exemptions, including sales tax exemptions on purchases of goods and services used within the zone. This program is designed to revitalize economically distressed areas by attracting and retaining businesses.

Tax Free New York (START-UP NY): Businesses that partner with eligible universities and are located within tax-free areas may be exempt from state and local taxes, including sales tax, for a period of up to 10 years. This initiative promotes academic and business collaboration and encourages new business ventures and expansions near educational institutions.

Renewable Energy Equipment Exemptions: Businesses investing in solar energy systems, wind turbines, and other renewable energy equipment can benefit from sales tax exemptions on the purchase and installation of these systems. This incentive supports the state’s goal of promoting sustainable energy practices.

2024 sales tax filing due dates for New York

Monthly: 20th of the following month

Quarterly: 20th after quarter end

Annually: January 20, 2025

Shipping and sales tax in New York

When to pay tax on shipping in New York

In the state of New York, businesses are required to charge sales tax on shipping or delivery charges if the item being shipped is subject to sales tax. This rule means that if a product being sold is taxable, then any shipping and handling charges associated with the delivery of that product are also subject to sales tax.

For example, if a business sells a taxable item such as electronics and charges the customer for shipping, the shipping charge is part of the taxable receipt and is subject to sales tax. Conversely, if the item being shipped is not taxable (like certain clothing items under $110), the associated shipping charges would generally not be subject to sales tax.

Specific Conditions for Paying Taxes on Shipping in New York

Taxable Item: The item being shipped is subject to sales tax.

Separate Charge: The shipping or delivery charges are separately stated on the invoice.

Inclusive Shipping: If the shipping charges are included in the overall purchase price of the taxable item, they are subject to sales tax.