By
Updated
January 16, 2024
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If you're selling to customers in New York, you need to charge sales tax—but New York's rules can be confusing. This guide will explain New York's sales tax system in simple terms to help you file correctly and avoid penalties.
We'll cover everything from tax rates to economic nexus laws. Whether you're new to ecommerce or just starting to sell in New York, this guide has you covered.
The total sales tax rate in New York ranges from 4% to 8.875%. The total sales tax rate depends on the county and city. This includes the 4% state sales tax plus local rates.
You can look up the complete list of sales tax rates in each city and county in New York. Here’s a snippet of the same.
Here are some critical local sales tax rates in New York:
Here is the list of recent changes to the New York sales tax.
To calculate New York sales tax, you can use the formula:
Sales tax = (base rate + local rate) * purchase price.
For example, if the base rate is 4%, the local rate is 4%, and the purchase price is $100, the sales tax would be $8.
Ecommerce businesses that incorrectly file or pay their New York sales tax can attract penalties of up to 10% of the unreported tax amount and an additional 1% for each month of delay—the amount does not exceed a maximum of 30%.
The critical difference between destination-based and origin-based sales tax states is how the sales tax rate is determined for a transaction:
New York is a destination-based sales tax state. This means the sales tax rate applied to a transaction is based on where the customer is located and the product is delivered, not where the seller is located.
In New York, sellers are required to collect and remit sales tax at the rate applicable to the destination of the sale - where the customer receives the product. For example, if a seller in New York City ships a product to a customer in Buffalo, they would charge the Buffalo sales tax rate.
No, New York is not currently a member of the Streamlined Sales and Use Tax Agreement (SSUTA), also known as the Streamlined Sales Tax (SST).
New York considers sellers to have sales tax nexus if they meet either physical presence or economic nexus thresholds:
To legally collect and pay NY sales tax, ecommerce businesses must register for a Certificate of Authority with the NY State License Center.
Online sellers meeting the NY nexus thresholds should register for the NY sales tax collection. Marketplaces may handle this registration.
Having over $500,000 in sales or 100+ transactions hits economic nexus. Any physical presence, like employees or inventory, also reaches the nexus.
Yes, wholesalers with nexus that sell taxable goods still need an NY Certificate of Authority.
Yes, even temporary selling activity can hit the nexus threshold and require sales tax registration in NY.
To register for sales tax in New York, visit the Department of Taxation and Finance website. Then, follow the steps below:
1. Gather your business information
2. Apply online for a Certificate of Authority at the NY State License Center
3. Set up your sales tax collection process
4. Post your Certificate of Authority in a visible place at all business locations in NY
5. File NY sales tax returns on time based on your assigned filing frequency
Tip: Register for a Certificate of Authority before making taxable sales in NY. This will help you ensure compliance with collecting and remitting NY sales tax from the start.
Ecommerce sellers must register and obtain a Certificate of Authority with the New York State Tax Department if they meet the state's physical or economic sales tax nexus thresholds.
You can make sales once you have received the Certificate of Authority.
Registering for a sales tax permit in New York is free. However, there may be a security deposit required.
You need a New York seller's permit if you are only a wholesaler. Wholesalers must collect sales tax on all sales of tangible personal property made to retailers or consumers in New York.
Yes, you need a New York seller's permit if you only sell temporarily in the state. If you sell tangible personal property in New York for more than 90 days in a calendar year, you must register for a seller's permit and collect sales tax on all your sales.
Generally, sales of tangible personal property and some services are taxable in New York.
Some exemptions include:
Sellers must collect proper exemption certificates from qualified buyers to prove exempt sales.
Groceries, medicine, medical products, and clothing/footwear under $110 per item.
Besides prepared meals, soft drinks, candy, and dietary supplements, most non-prepared groceries are exempt.
Clothing and footwear under $110 per item are exempt. Above $110, they are taxable.
Yes, digital products like software, videos, music, and ebooks are generally taxable in NY when sold to an end user.
Yes, New York taxes most SaaS services. Businesses offering a SaaS product should collect and remit taxes in the New York state.
Some services like repairs, maintenance, installation, and utilities are taxable. Most professional and personal services are not taxable in New York.
New York has various excise taxes in addition to statewide sales tax
New York does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items:
Remote sellers, or sellers who do not have a physical presence in New York, are required to collect sales tax on sales made to New York residents if their sales exceed $500,000 or if they make at least 100 separate transactions in the prior four quarters. This is the economic nexus for sales tax in New York.
New York requires all fuel products sold in the state to prepay the sales tax. The prepaid sales tax rate for fuel products is 8 cents per gallon for motor fuel like gasoline. The rate is 17.5 cents per gallon for highway diesel motor fuel.
In addition to the 4% state sales tax, local governments in New York can impose their own discretionary sales taxes. These local sales taxes result in combined rates ranging from 4-8.875% depending on the county, city, or district. For example, New York City has a local tax of 4.5% in addition to the 4% state sales tax. There is also a Metropolitan Commuter Transportation District surcharge of 0.375% for a combined rate of 8.875%.
Now, let’s look at the steps to collect sales tax in New York.
If you are an out-of-state seller with no physical presence in New York, you must collect and remit sales tax if you meet either economic nexus threshold:
Meeting either of these thresholds hits a sales tax nexus with New York.
Tip: Register for a Certificate of Authority with the New York Department of Taxation and Finance. This will allow you to charge, collect, and remit the proper NY sales tax rates even if you don't have a physical presence in the state.
Once registered, you must calculate the sales tax rate based on each customer's destination in New York and ensure your sales systems are set up to charge the appropriate rate. NY uses destination sourcing for sales tax.
Also, if you're using Shopify Tax and Numeral, the tax calculations are done automatically on Shopify and then Numeral handles the remittance for the same.
In New York, shipping charges are taxable if the sale itself is taxable. To be exempt, shipping must be separately stated and shipped directly to the customer, and delivery costs must be tracked.
If exempt conditions are not met, charges are partially or fully taxable. Handling fees, and shipping to the seller, and shipping built into the price are generally taxable.
Ecommerce businesses collect sales taxes on the sale of goods and services. Businesses then remit those taxes to the state government. The frequency with which ecommerce businesses must file and pay sales taxes varies by state.
Ecommerce businesses in New York must register with the Department of Taxation and Finance before collecting sales tax.
Once registered, businesses will be assigned a filing frequency and due dates. Companies can file their sales tax returns online, by mail, or by fax. Payments can be made by check, money order, credit card, or electronic funds transfer.
The state of New York charges a few different penalties depending on the situation.
Penalties may be reduced or eliminated if reasonable cause is shown.
In New York, you can file your taxes on the last day of the month following the period end date.
For instance, if you file quarterly and the filing period ends on March 30, your return filing due date will be April 31.
Similarly, for yearly billing, where the filing period ends on December 31, you can file your taxes by January 31.
The due dates for filing sales tax returns in New York vary depending on the filing frequency. For quarterly filers, the due dates are:
Yes, you still need to file a sales tax return even if you didn't collect any sales tax. This is because you may be eligible for a refund.
You can request an extension to file your New York sales tax return. However, you must submit a request for an extension by one month after the due date of your return or prepayment form and payment.
Yes, you can file an amended return in New York. You need to pay any additional tax that may have been missed, along with the interest or penalties the state requires.
New York has a 10% penalty for late filing or incorrect filings. An additional penalty of 10% may apply if you file after the due date. However, the total penalty will not exceed 10% of your tax amount during the period.
The NY Dept. of Taxation and Finance may audit to verify compliance. The auditor reviews records and tax returns. An appeal involves discussions with the auditor along with formal appeals if needed.
The New York sales tax audit process is as follows:
During a New York sales tax audit under the Managed Audit Program (MAP), you can expect the following:
If you disagree with the results, you can file an appeal and request a review. Here’s what happens.
A formal written appeal is required, even if you've previously written to the department objecting to the proposal.
Registering for New York sales tax is easy. Start by gathering the basic information about your business and bank.
Create NY.gov Account:
Start Sales Tax Application:
Submit Application:
You must legally register 20 days before making your first sale in New York. The New York Department of Taxation and Finance is available for any questions throughout the process and after.
Also, note that you must file a sales tax return every quarter, even if no sales were made. Payments can be made online in USD.
For sales tax filing and appeals in New York, you would be required to contact:
Additional resources:
There you have it—an in-depth guide on NY's sales tax for ecommerce companies. Also, in case you need someone to deal with the sales tax fiasco, Numeral can lend a hand. We have done this for the likes of immi and Amberjack and would be delighted to help you folks as well.
The total sales tax rate in New York ranges from 4% to 8.875%. The total sales tax rate depends on the county and city. This includes the 4% state sales tax plus local rates.
You can look up the complete list of sales tax rates in each city and county in New York. Here’s a snippet of the same.
Here are some critical local sales tax rates in New York:
Here is the list of recent changes to the New York sales tax.
To calculate New York sales tax, you can use the formula:
Sales tax = (base rate + local rate) * purchase price.
For example, if the base rate is 4%, the local rate is 4%, and the purchase price is $100, the sales tax would be $8.
Ecommerce businesses that incorrectly file or pay their New York sales tax can attract penalties of up to 10% of the unreported tax amount and an additional 1% for each month of delay—the amount does not exceed a maximum of 30%.
The critical difference between destination-based and origin-based sales tax states is how the sales tax rate is determined for a transaction:
New York is a destination-based sales tax state. This means the sales tax rate applied to a transaction is based on where the customer is located and the product is delivered, not where the seller is located.
In New York, sellers are required to collect and remit sales tax at the rate applicable to the destination of the sale - where the customer receives the product. For example, if a seller in New York City ships a product to a customer in Buffalo, they would charge the Buffalo sales tax rate.
No, New York is not currently a member of the Streamlined Sales and Use Tax Agreement (SSUTA), also known as the Streamlined Sales Tax (SST).
New York considers sellers to have sales tax nexus if they meet either physical presence or economic nexus thresholds:
To legally collect and pay NY sales tax, ecommerce businesses must register for a Certificate of Authority with the NY State License Center.
Online sellers meeting the NY nexus thresholds should register for the NY sales tax collection. Marketplaces may handle this registration.
Having over $500,000 in sales or 100+ transactions hits economic nexus. Any physical presence, like employees or inventory, also reaches the nexus.
Yes, wholesalers with nexus that sell taxable goods still need an NY Certificate of Authority.
Yes, even temporary selling activity can hit the nexus threshold and require sales tax registration in NY.
To register for sales tax in New York, visit the Department of Taxation and Finance website. Then, follow the steps below:
1. Gather your business information
2. Apply online for a Certificate of Authority at the NY State License Center
3. Set up your sales tax collection process
4. Post your Certificate of Authority in a visible place at all business locations in NY
5. File NY sales tax returns on time based on your assigned filing frequency
Tip: Register for a Certificate of Authority before making taxable sales in NY. This will help you ensure compliance with collecting and remitting NY sales tax from the start.
Ecommerce sellers must register and obtain a Certificate of Authority with the New York State Tax Department if they meet the state's physical or economic sales tax nexus thresholds.
You can make sales once you have received the Certificate of Authority.
Registering for a sales tax permit in New York is free. However, there may be a security deposit required.
You need a New York seller's permit if you are only a wholesaler. Wholesalers must collect sales tax on all sales of tangible personal property made to retailers or consumers in New York.
Yes, you need a New York seller's permit if you only sell temporarily in the state. If you sell tangible personal property in New York for more than 90 days in a calendar year, you must register for a seller's permit and collect sales tax on all your sales.
Generally, sales of tangible personal property and some services are taxable in New York.
Some exemptions include:
Sellers must collect proper exemption certificates from qualified buyers to prove exempt sales.
Groceries, medicine, medical products, and clothing/footwear under $110 per item.
Besides prepared meals, soft drinks, candy, and dietary supplements, most non-prepared groceries are exempt.
Clothing and footwear under $110 per item are exempt. Above $110, they are taxable.
Yes, digital products like software, videos, music, and ebooks are generally taxable in NY when sold to an end user.
Yes, New York taxes most SaaS services. Businesses offering a SaaS product should collect and remit taxes in the New York state.
Some services like repairs, maintenance, installation, and utilities are taxable. Most professional and personal services are not taxable in New York.
New York has various excise taxes in addition to statewide sales tax
New York does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items:
Remote sellers, or sellers who do not have a physical presence in New York, are required to collect sales tax on sales made to New York residents if their sales exceed $500,000 or if they make at least 100 separate transactions in the prior four quarters. This is the economic nexus for sales tax in New York.
New York requires all fuel products sold in the state to prepay the sales tax. The prepaid sales tax rate for fuel products is 8 cents per gallon for motor fuel like gasoline. The rate is 17.5 cents per gallon for highway diesel motor fuel.
In addition to the 4% state sales tax, local governments in New York can impose their own discretionary sales taxes. These local sales taxes result in combined rates ranging from 4-8.875% depending on the county, city, or district. For example, New York City has a local tax of 4.5% in addition to the 4% state sales tax. There is also a Metropolitan Commuter Transportation District surcharge of 0.375% for a combined rate of 8.875%.
Now, let’s look at the steps to collect sales tax in New York.
If you are an out-of-state seller with no physical presence in New York, you must collect and remit sales tax if you meet either economic nexus threshold:
Meeting either of these thresholds hits a sales tax nexus with New York.
Tip: Register for a Certificate of Authority with the New York Department of Taxation and Finance. This will allow you to charge, collect, and remit the proper NY sales tax rates even if you don't have a physical presence in the state.
Once registered, you must calculate the sales tax rate based on each customer's destination in New York and ensure your sales systems are set up to charge the appropriate rate. NY uses destination sourcing for sales tax.
Also, if you're using Shopify Tax and Numeral, the tax calculations are done automatically on Shopify and then Numeral handles the remittance for the same.
In New York, shipping charges are taxable if the sale itself is taxable. To be exempt, shipping must be separately stated and shipped directly to the customer, and delivery costs must be tracked.
If exempt conditions are not met, charges are partially or fully taxable. Handling fees, and shipping to the seller, and shipping built into the price are generally taxable.
Ecommerce businesses collect sales taxes on the sale of goods and services. Businesses then remit those taxes to the state government. The frequency with which ecommerce businesses must file and pay sales taxes varies by state.
Ecommerce businesses in New York must register with the Department of Taxation and Finance before collecting sales tax.
Once registered, businesses will be assigned a filing frequency and due dates. Companies can file their sales tax returns online, by mail, or by fax. Payments can be made by check, money order, credit card, or electronic funds transfer.
The state of New York charges a few different penalties depending on the situation.
Penalties may be reduced or eliminated if reasonable cause is shown.
In New York, you can file your taxes on the last day of the month following the period end date.
For instance, if you file quarterly and the filing period ends on March 30, your return filing due date will be April 31.
Similarly, for yearly billing, where the filing period ends on December 31, you can file your taxes by January 31.
The due dates for filing sales tax returns in New York vary depending on the filing frequency. For quarterly filers, the due dates are:
Yes, you still need to file a sales tax return even if you didn't collect any sales tax. This is because you may be eligible for a refund.
You can request an extension to file your New York sales tax return. However, you must submit a request for an extension by one month after the due date of your return or prepayment form and payment.
Yes, you can file an amended return in New York. You need to pay any additional tax that may have been missed, along with the interest or penalties the state requires.
New York has a 10% penalty for late filing or incorrect filings. An additional penalty of 10% may apply if you file after the due date. However, the total penalty will not exceed 10% of your tax amount during the period.
The NY Dept. of Taxation and Finance may audit to verify compliance. The auditor reviews records and tax returns. An appeal involves discussions with the auditor along with formal appeals if needed.
The New York sales tax audit process is as follows:
During a New York sales tax audit under the Managed Audit Program (MAP), you can expect the following:
If you disagree with the results, you can file an appeal and request a review. Here’s what happens.
A formal written appeal is required, even if you've previously written to the department objecting to the proposal.
Registering for New York sales tax is easy. Start by gathering the basic information about your business and bank.
Create NY.gov Account:
Start Sales Tax Application:
Submit Application:
You must legally register 20 days before making your first sale in New York. The New York Department of Taxation and Finance is available for any questions throughout the process and after.
Also, note that you must file a sales tax return every quarter, even if no sales were made. Payments can be made online in USD.
For sales tax filing and appeals in New York, you would be required to contact:
Additional resources:
There you have it—an in-depth guide on NY's sales tax for ecommerce companies. Also, in case you need someone to deal with the sales tax fiasco, Numeral can lend a hand. We have done this for the likes of immi and Amberjack and would be delighted to help you folks as well.
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Deb Mukherjee
Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale through seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.
With Numeral, you spend five minutes or less every month on sales tax. We’re the white-glove service you are looking for that’s run by ecommerce operators and CPAs.
No long-term contract. No credit card required.
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