Unlike most other states that have put online sales tax rules or laws into effect, New York isn't giving merchants any wiggle room, as the rules are in effect immediately.

New York has established which out-of-state sellers need to collect sales tax for orders placed by consumers within the state. And, unlike most other states that have put online sales tax rules or laws into effect, it isn’t giving merchants any wiggle room as its rules are now in effect.

The state’s Department of Taxation and Finance on Tuesday formally released its guidance, which establishes that out-of-state retailers need to collect and remit sales tax if:

  • The cumulative total of the retailer’s gross receipts from sales of tangible property delivered into the state exceeded $300,000 in the previous four quarters, and;
  • The retailer made more than 100 sales of tangible personal property delivered in the state.

The guidance clarifies the state’s sales and use tax law, which has been in place since 1965. However, it couldn’t enforce the law until June when the U.S. Supreme Court ruled in the South Dakota v. Wayfair Inc. case that, for the first time, states and local governments could require online retailers to collect sales tax even if they don’t have a physical presence, or nexus, in the state or local tax jurisdiction. That case overturned the previous Supreme Court precedent that was established in the 1992 case Quill Corp. v. North Dakota. 

“After Quill fell away, states have had free rein to look at the statutes on the books,” says David Campbell, CEO and co-founder of TaxCloud, which offers merchants free software that enables them to comply with state and local taxation laws (it is paid by the states that offer the software). “While it is a little alarming to get no notice that the state will begin enforcing the law, it is the state’s law.”

For now, New York’s Department of Taxation and Finance says retailers that meet the state’s thresholds need to register as a New York State vendor. And a frequently asked questions section of the department’s site about the rules is “forthcoming,” a spokesman says.

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Read about how e-retailers are navigating the hodgepodge of state laws and regulations in Internet Retailer’s October issue cover story, “The Supreme Court overturned Quill. Now what?” or listen to an Internet Retailer webinar on the topic here. You can find additional resources and research available here.

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