New York Releases Guidance on Economic Nexus Threshold and Requirements for Remote Sellers

Effective Date: June 21, 2018, the date of the United States Supreme Court decision in Wayfair

Threshold: $300,000 $500,000 in sales of tangible personal property and more than 100 sales (On June 24, 2019, New York enacted legislation to raise the state’s economic nexus threshold to $500,000. The number of transactions threshold remains the same.)

Measurement Date: Immediately preceding four sales tax quarters

Includable Transactions: $300,000 gross tangible personal property sales

When You Need to Register Once You Exceed the Threshold: Next transaction

On January 15, 2019, the New York State Department of Taxation and Finance released a notice stating that businesses without physical presence in New York that exceed the state’s economic nexus threshold must collect and remit state and local sales taxes. New York did not pass specific legislation to enforce the remote seller collection responsibility. In the notice, the Department states that following the South Dakota v. Wayfair decision, “certain existing provisions in the New York State Tax Law that define a sales tax vendor immediately became effective.” Businesses that fall within the definition of sales tax vendor and make taxable sales into the state are required to collect and remit sales tax.

Remote sellers without physical presence will be required to collect and remit sales tax, if in the immediately preceding four sales tax quarters the seller:

  • Has made more than $300,000 $500,000 in sales of tangible personal property delivered in the state; and
  • Conducted more than 100 sales of tangible personal property delivered in the state

The sales tax quarters for New York are:

  • March 1 through May 31,
  • June 1 through August 31,
  • September 1 through November 30, and
  • December 1 through February 28/29.

Sellers that meet this threshold and are not yet registered as a vendor with New York are expected to do so immediately. For more information, visit the Department’s webpage on the new requirement. (N-19-1 Notice Regarding Sales Tax Registration Requirement for Businesses with No Physical Presence in New York State, New York State Department of Taxation and Finance, January 15, 2019)

UPDATE: On March 26, 2019, the New York Department of Taxation and Finance released a bulletin related to registration requirement for businesses with no physical presence in New York state. This bulletin states that New York’s economic nexus rules became effective on June 21, 2018, the date of the United States Supreme Court decision in Wayfair. Previous bulletins were not as explicit in naming June 21, 2018 as the effective date.

UPDATE: On June 24, 2019, the New York Governor signed S.B. 6615, which raised the state’s economic nexus threshold to $500,000 from $300,000. The number of transactions threshold remains the same at 100 sales.

UPDATE: On November 5, 2019, the New York State Department of Taxation and Finance issued a technical memorandum stating that the change in the state’s economic nexus threshold dollar amount from $300,000 to $500,000 in annual sales is effective retroactive to June 21, 2018. The technical memorandum also states that a business with no physical presence in-state that registered for sales tax because of the economic nexus provisions and in good faith collected and remitted sales tax at an incorrect local rate must pay the additional local sales tax due but is not liable for penalty and interest on the additional local tax. This relief only applies to sales made during the first four quarterly periods after the business was required to register. (Technical Memorandum TSB-M-19(4)S, New York State Department of Taxation and Finance)

Posted on November 13, 2019