Online state sales tax: New York authorities provide guidance

On Behalf of | Dec 20, 2019 | Tax Audits

Last June, the Supreme Court of the United States (SCOTUS) extended the ability of state governments to collect sales and use taxes. In South Dakota v. Wayfair, an online vendor asked SCOTUS to review whether or not South Dakota could collect a sales tax on businesses that sold goods online to residents within the state but had no physical presence within South Dakota.

In the past, the law required businesses have a physical presence in the state for the state to collect a state sales tax. However, South Dakota had recently passed a law that allowed it to collect the state tax from online vendors who sold to residents within the state. The state law had clear rules and allowed the collection from vendors who sold at least $100,000 or had more than 200 transactions.

Ultimately, SCOTUS agreed with South Dakota and held that in certain situations, retailers no longer needed a physical presence within a state to be subject to state sales tax obligations.

This ruling has had an impact on vendors throughout the nation. States now have greater authority to collect these taxes, leaving vendors scrambling to determine their tax obligations.

What does this mean for those who do business in New York?

Any ruling from SCOTUS applies nationwide. As a result, this will impact those who sell goods in New York. Even those who do not have a physical presence in the state may need to pay a New York state sales tax.

How will businesses know if they are subject to a sales tax?

The New York State Department of Finance and Taxation recently published guidance. Essentially, those who sell tangible items are required to file a New York sales tax return if they sold more than $500,000 worth of goods and at least 100 transactions in the state during the tax year.

What happens if a business fails to meet its New York state tax obligations?

Those who do not pay their tax bill can face serious financial penalties. In addition to the outstanding tax bill, the business may be liable for interest and penalty fees.

Businesses can mitigate this risk by seeking legal counsel. The attorneys at Goldburd McCone are familiar with New York’s complicated tax laws. They can review your situation and better ensure your business is in compliance with applicable tax laws.