New York Enacts Marketplace Nexus Provisions

As part of its 2019-2020 budget package, New York has enacted marketplace nexus provisions, effective June 1, 2019. Marketplace providers are required to collect and remit sales tax on taxable sales of tangible personal property that they facilitate in New York if they meet either of the following conditions for the immediately preceding four quarterly periods ending on the last day of February, May, August and November:

  • Has cumulative total gross receipts of sales made or facilitated of property delivered in New York exceeding $300,000, or
  • Has made or facilitated more than 100 sales of property delivered in New York.

A marketplace provider has all the obligations and rights of a vendor, including, but not limited to, the duty to obtain a certificate of authority, to collect tax, file returns, remit tax, and the right to accept a certificate or other documentation from a customer substantiating an exemption or exclusion from tax. Marketplace sellers making sales through marketplace providers are relieved of these responsibilities, if the seller receives in good faith a certification from the marketplace provider on a form authorized by the Department of Taxation and Finance that the marketplace provider is collecting the tax on such transactions. The Department has not yet released this certification form for facilitators to provide to marketplace sellers.

A marketplace provider is relieved of liability for failure to collect the correct amount of tax to the extent that the marketplace provider can show that the error was due to incorrect or insufficient information given to the marketplace provider by the marketplace seller, unless the two parties are affiliated.

Per the legislation, a “marketplace provider” is “a person who, pursuant to an agreement with a marketplace seller, facilitates sales of tangible personal property by such marketplace seller or sellers.” A person “facilitates a sale of tangible personal property” if they meet both of the following conditions:

The person provides the forum in which the sale takes place or the offer of sale is accepted, including a shop, store, or booth, an internet website, catalog, or similar forum; and
such person or an affiliate of such person collects the receipts paid by a customer to a marketplace seller for a sale of tangible personal property, or contracts with a third party to collect such receipts.

Persons are affiliated if one person has an ownership interest of more than 5% in another.

Per the legislation, a “marketplace seller” is any person, whether or not they are required to obtain a certificate of authority, who has an agreement with a marketplace provider under which the marketplace provider will facilitate sales of tangible personal property by such person. (Ch. 59 (S.B. 1509), Laws 2019)

Posted on April 30, 2019