NY States

How Online Sellers Should Collect Sales Tax in New York

by Mark Faggiano

New York Sales Tax

This blog post may now be out of date. For our most up-to-date info on New York sales tax, check out our “New York Sales Tax Guide for Businesses.”

Here are the most often-asked questions our customers at TaxJar (particularly if you use Amazon’s Fulfillment by Amazon) ask us about having to collect and pay sales tax in New York. If your scenario is more unique, contact a tax professional.

You live outside New York state

If you run a business out of your home, for example, and you’re located in a state other than New York, then you have no sales tax nexus with New York. That means you’re not required to collect sales tax from customers that want taxable items shipped to a New York address.

To take this scenario one step further, let’s say you live in Texas and use FBA to store and ship your inventory. You’re not required to collect sales tax from your customers in New York because Amazon doesn’t have any warehouses located in New York. Cross NY off your list and concentrate on states like Texas or Pennsylvania. Those are more complicated.

You live/operate your business in New York

Let’s change the scenario. Let’s say you’re a resident of New York and you operate a business out of your garage. First, the New York Department of Taxation and Finance says,

Every person who sells taxable tangible personal property or taxable services (even if you make sales from your home) must register with the Tax Department before beginning business.

Next, you’re required to collect sales tax on any taxable item sold and shipped to an address in New York. By the way we put together a very helpful sales tax guide for NY that’s worth checking out.

How much sales tax do you collect?

Ok, so we know if you live in New York that you need to collect sales tax on table items shipped to New York addresses  How much you should collect is the next piece you need to figure out. The key thing to understand is that New York is a destination-based sales tax state – in other words, the sales tax rate you collect is based on the location of your customer. It is not based on your businesses location.

Here’s where it gets tricky. The sales tax rate can vary. It’s not the same for every address in New York. The correct rate is a combination of two rates:

  1. The New York state sales tax rate (4%)
  2. The local sales tax rate (click here for a list of local New York sales tax rates)

Here’s a screenshot from NY’s Guide to Sales Tax in New York State (page 9) that discusses the above.

ny-sales-tax-rates

Let’s go through an example. You run your business out of your home in Stamford, New York. You sell a taxable item to a customer who wants their order shipped to their home in Buffalo. According to both the Sales Tax Jurisdiction and Rate Lookup and the New York State Sales and Use Tax Rates by Jurisdiction, you are required to collect a total of 8.750% in sales tax. That’s 4% for the state and an additional 4.750% for the local jurisdiction (in this case Erie County). Remember, the rate is based on where you’re shipping to, not from.

The state of New York actually does a really nice job of explaining the concept of local sales tax collection in this video I found:

Summing it all up: only New Yorkers should collect in New York

If you live outside of New York (even if you are an Amazon FBA seller) then you’re not required to collect sales tax from your customers in New York. If you live in New York, then you are required to collect sales tax. Collect sales tax at the combines state and local rate. The local rate is determined by your customer’s location.

Got questions? Feedback? Tell me about your experience selling in NY in the discussion section below.

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  • jewelrybiz

    Very helpful! But the one answer I can’t find anywhere is, “If you live in NY and you have an online business do you collect tax from people in other states?”

    • You do IF you have nexus in other states.

      Nexus means a connection with a state that’s significant enough for you to be required to comply with that state’s sales tax laws. The most common causes for nexus are employees, salespeople, physical storefronts, warehouses or offices, and inventory.

  • Jacky Chen

    “If you live in NY and you have an online business do you collect tax from people in other states?” what if I sell item to a customer who lives in CA? what if I use Amazon FBA and the item is sent from warehouse which located at KY to a customer who lives in PA? what if I use Amazon FBA and the item is sent from warehouse which located at KY to a customer who lives in NY?

    • Without knowing anything abut your business…in general if you live in NY then you would collect sales tax from customer sin NY and any other state you have nexus.

      Nexus means a connection with a state that’s significant enough for you to be required to comply with that state’s sales tax laws. The most common causes for nexus are employees, salespeople, physical storefronts, warehouses or offices, and inventory.

      For FBA sellers, there are more than a dozen states where Amazon could store your inventory. All of those states say that your inventory causes nexus.

  • David

    Say you live in NY, and you are selling online and you sell to a customer in NY. How is your software, ex. Etsy, Godaddy, Ebay, Paypal. going know how to calculate the tax rate for that county the buyer lives in? Its only going to calculate the rate you enter when setting up your payment collections for the state. They’re is no way you can break down each county….

    • In the examples you gave, those platforms will calculate the tax for you down to the local level (except for PayPal). In general, TaxJar is able to break down the sales and taxes collected and report them out by jurisdiction within states (when it’s required).

      • Estefania

        If your company is based in New York and your customer’s Bill To address is in New York but you are shipping the product to their location In CA. Do you have to charge NY taxes?

  • guest

    stamford is in connecticut – kind of puts everything you wrote into question if you don’t even know that. unless you’re a lawyer, I’d be very careful about the advice you’re dishing out (i.e. what a nexus means, etc.).

    • Louis

      But he was clear that he was writing about Stamford, NY – not Stamford, CT nor Stamford, VT nor Stamford, England, etc . .

    • mahy

      I’m a lawyer, and your are stupid.

  • Actually, there is a Stamford, NY: http://www.stamfordny.com/website/

  • Mark, what about the scenario: we are not a NY business nor resident, but inventory is stored in New York State? In most other states, this implies nexus and a sales tax collection obligation, however I was confused by your emphasis on “living in New York” above — is this to say that storing inventory with a third party agent does not constitute nexus?

    • Hi Matt, Good question. Nexus is determined by any sort of “significant presence.” So if you have what New York considers to be a significant presence (which would include an office, employee, sales person, warehouse, products stored, etc.), then you should charge sales tax to buyers in New York. I hope this helps.

  • Fabiana R Santana

    If I have a DS business and am based in NY, and have a customer in Indiana, do I charge her tax? I do not have a Nexus in Indiana, and the parent company is based in Canada. For example, she could buy on their website or from me. So what, if any tax, do I charge her? Thanks!

    • Hi There, You only charge sales tax to customers in states where you have sales tax nexus. It doesn’t sound like, in this case, you need to charge a customer in Indiana sales tax.

  • Brandon D

    Maybe you can answer my question. I just started up a site, http://www.funorders.com , selling 3D Printed thing’s and models. And I am wondering what I have to do to get my stuff set up for taxes in ohio? I am just starting the site up, and have not had sales as of yet. Would a small “business” like this need to start collecting sales tax? Thanks

  • Hi Brandon,

    I recommend you check out our Sales Tax 101 for Online Sellers Guide. This free guide will be a great start for you! http://offers.taxjar.com/sales-tax-101-whitepaper

  • Mv

    I’m starting a shop on Etsy and live and will be selling from New York. I understand that I’m required to charge NY Sales tax only to NY buyers, however, am I required to set up the tax rate by jurisdictions? I will be shipping only to United States destinations.

    • Hi Mv, New York is a destination-based sales tax state, which means you would charge sales tax at the rate where your buyer lives (as opposed to “origin-based” states, where you would collect the sales tax rate where you are located.) This can be a little time consuming to set up through Etsy’s system, unfortunately.

  • From what we understand, sales tax is based on the ship to address, not the bill to address, but I always recommend checking with an accountant on these specific instances.

  • Lois

    If one lives in New York and sells wholesale merchandise to retailers for resale, does the seller charge the retailer tax on their purchases?

  • As a genearl rule of thumb, you must always charge sales tax in states where you have nexus unless you get a reseller permit from the state. I hope this helps!

  • johnny

    I live in New York but my business is out of state. With me being the sole proprietor with no other inventory, employees, or similar in this state (me just living here) a sign of significant presence resulting in me having to have to file sales tax?

    • I can’t give specific tax advice to your personal situation, but I have a feeling New York would probably consider your living there to be nexus if you do any work from there. I recommend giving the NY Department of Revenue a call (http://www.tax.ny.gov/), or contacting a reputable sales tax expert. There’s a list here:

      http://www.taxjar.com/sales-tax-accountant-directory/

      • johnny

        How on earth am I supposed to collect sales tax in this way? The website I use (aerort.storenvy.com) only has room for one set sales tax. Do you recommend I charge the highest combined state and local tax as an estimate for safety? or if I get TaskJar can they handle all these variables? My site just cant handle all this variation.

  • Hi Johnny,
    Good question. eBay is set up the same way as StorEnvy, and we wrote a post detailing how different sellers have chosen to collect sales tax on eBay. You can find out more here: http://taxjar.wpengine.com/sales-tax-on-ebay/

  • mlb516

    Hi- we’re a wine store in NY shipping bottles to CT. I understand we are supposed to charge CT sales tax, but how do we report it to the state? Do we report that specific to NY or CT or both?

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  • Candace

    How do you PAY taxes with this method? My husband has an online business and I am just starting one. He is in the middle of submitting his first quarterly sales tax web file. He said NYS requires you to break down where the money came from for each sale?? So if I have 300 online sales to customers who live in NYS I need to look up each address and it’s corresponding local sales tax?? What?? Please tell me this is not true…

    • Hi Candace,

      Yes, it IS that complicated, which is crazy for an online seller trying to simply run a business. That’s exactly why we created TaxJar! Just connect your shopping carts or the platforms you sell on and we’ll input all of your sales and give you a New York report that’s lists all of those local sales tax rates so you can quickly and easily fill out that form. Try a 30-day free trial http://www.taxjar.com

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  • steve

    I’m live in australia and will be selling on Amazon FBA soon I need to have register DBA and i want to have a US address. is there a particular state to have an address that is better of sales tax wise?

  • Hi Steve,

    This is a great question and unfortunately I don’t have the expertise to give you an answer. That said, I can recommend two things:

    Ask in this Facebook group: https://www.facebook.com/groups/SalesTax4EcommerceSellers/

    Or contact Sylvia Dion, CPA at http://www.sylviadioncpa.com. She’s an expert in international sales tax and helps sellers get set up in the U.S.

    Good luck with your business venture!

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  • Thanks for the info, very helpful. What about digital products though, like ebooks, or online (video) courses? Are these taxable if I have nexus in NY and sell to a customer in NY?

    • HI Rachel, As of right now, New York hasn’t made a ruling that digital goods are taxable. Just keep in mind that more and more states are considering taxability of digital goods so this is worth keeping an eye on. I hope this helps!

  • For the sellers, it is highly important to first learn whether the products you are selling are taxable or not. For example, if your
    business comprises of repair and maintenance services for real property, you are required to pay the sales tax. Even the tangible products are taxable, with just few exceptions like certain groceries and food items, family planning
    products, medical devices, etc.

  • James1212

    Hi,

    If my business is based in NY and my customer is also based in new york but i am shipping the product out of state should i not collect sales tax because the shipping destination is outside of NY?

    we do not have nexus outside of NY.

    • The sales tax is based on the ship to address. So for example if you sell to someone with a billing address in New York but ship that item to Connecticut (a state where you don’t have nexus) then you wouldn’t need to charge sales tax. Your buyer would likely owe use tax on the item.

    • The sales tax is based on the ship to address. So for example if you sell to someone with a billing address in New York but ship that item to Connecticut (a state where you don’t have nexus) then you wouldn’t need to charge sales tax. Your buyer would likely owe use tax on the item.

  • James1212

    Hi,

    If my business is based in NY and my customer is also based in new york but i am shipping the product out of state should i not collect sales tax because the shipping destination is outside of NY?

    we do not have nexus outside of NY.

  • Yiper

    Hi, what if you have a business in a European country but living in NY. And you sell products in USA through a webshop that only sells in USA and all products will be shipped from NY address? 1) Would there be a need to register with the tax department? 2) if no, can i sell all goods shipped in USA with 0% tax? 3) if yes, do i only calculate tax for NY state destinations and all other states 0% tax? 4) what if shipping costs are charged, are same rules applicable? Thanks

  • Yiper

    Hi, what if you have a business in a European country but living in NY. And you sell products in USA through a webshop that only sells in USA and all products will be shipped from NY address? 1) Would there be a need to register with the tax department? 2) if no, can i sell all goods shipped in USA with 0% tax? 3) if yes, do i only calculate tax for NY state destinations and all other states 0% tax? 4) what if shipping costs are charged, are same rules applicable? Thanks

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  • Asher Touriel

    Hi Mark
    Thank you for your interesting posts.
    However -I am confused.
    I am talking about a business registered and operated in NY and sells and ships to states other than NY-let’s say NJ.
    I know that business should not add sales tax (based on experience) however,,…that business still has nexus to NY, so it has to collect NY sales tax.
    Do you agree?
    you were very clear when you mentioned the destination based concept..but you referred to in side NY only.
    Thank you
    Asher

    • You only need to charge sales tax to customers in states where you have nexus. Here’s more about what constitutes nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      If you don’t have any nexus in New Jersey, then you don’t have to charge sales tax to buyers in NJ. Hope this helps!

    • You only need to charge sales tax to customers in states where you have nexus. Here’s more about what constitutes nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      If you don’t have any nexus in New Jersey, then you don’t have to charge sales tax to buyers in NJ. Hope this helps!

  • Asher Touriel

    Hi Mark
    Thank you for your interesting posts.
    However -I am confused.
    I am talking about a business registered and operated in NY and sells and ships to states other than NY-let’s say NJ.
    I know that business should not add sales tax (based on experience) however,,…that business still has nexus to NY, so it has to collect NY sales tax.
    Do you agree?
    you were very clear when you mentioned the destination based concept..but you referred to in side NY only.
    Thank you
    Asher

  • Valentina

    Hi, I live in New York, and my business imports flowers from South America. We have no office in NY, but I live there, and I work in the business that has no offices or warehouses in the US, everything is in South America. Would I still need to collect tax for NY on my sales?

  • Abe

    Hello,
    If one was to be a subcontractor, third or forth wheel, and is issued work in regards to fixing up foreclosed homes, how would one go about his/her taxes, would they set aside for sales tax for NY? Even if you are technically not the owner of a company.

    • Hey Abe,

      It sounds like you may be thinking about income tax rather than sales tax. Sales tax is a tax on products sold. I recommend asking an accountant regarding income tax. I hope this helps!

  • Nir Portal

    Hello

    I have shop in etsy.com. I have green card in USA but i live in America and only 3 months a year I stay in USA (New York). I ship my items from there Armenia. I use my USA bank account to receive money from buyers on my USA account. Please help me how to figure out how should i pay taxes, and how to figure out how much % i should pay, know it`s different depends on state, and it would be great if i making an appointment with an accountant but unfortunately i`m not in USA right now;( and soon it tax paying time. please help me

    Thanks

    • Hi Nir,

      I think you may be thinking about income tax rather than sales tax (which is what we deal with.)

      I recommend checking out the Etsy forums for some good advice on income tax.

      When it comes to sales tax, it sounds like you may have sales tax nexus in New York. Start with this eGuide about sales tax: http://www.taxjar.com/guides/intro-to-sales-tax/

      I hope these resources point you in the right direction!

  • Ryan Naylor

    Hi Mark. I’m actually starting an online marketplace. The merchants/store owners will be retail stores from 4 bordering counties. Are the laws different since I will not be selling items myself? Thank you.

    • This can get a bit complicated, but basically if you aren’t the “merchant of record” then it will be up to your marketplace merchants to collect sales tax. You will need to give them a way to collect the sales tax through your platform. We actually have an API for that here at TaxJar. You can find out more about it at: http://www.taxjar.com/marketplaces

      • Ryan Naylor

        Thank you, will check it out.

  • Lyn

    Hi Mark! Thank you SO much for all this information. I was coming from a different situation. I was looking to place an order at a website where the business is located near NY City. The order was for over $100, the majority of it being clothing. One thing you did not address is if clothing is sold (or bought, in my case). The NYS tax is NOT collected if the item is under $120 (I think that’s the amount). The only amount collected is the COUNTY tax. As you have already pointed out, that differs from county to county. When I went to close out the order, I noticed a VERY HIGH tax being applied and promptly called the company. They informed me they charge a flat rate of 8% for tax which I found totally unacceptable. Thanks to your information, I was able to find a resource to point to them that they are in error. Do you have the exact NYS tax code that I could quote? Thank you again! Great resource. Btw, I sell Avon, so I have to deal with sales tax from sales as well… Thankfully, my customers all live in my county!

    • Great! We’re so glad to help. You can read more about the NYS clothing exemption here: http://taxjar.wpengine.com/the-new-york-clothing-sales-tax-exemption-demystified/ And this is NYS’s publication about it: http://www.tax.ny.gov/pdf/publications/sales/pub718c.pdf I’m glad you were able to save some money and put a retailer on the right track. Good luck with your Avon business!

      • Lyn

        Thank you! I placed my order w/the company over the phone to assure they charged me properly. When all was said and done, I paid $4.11 instead of $8.40 in sales tax. According to the customer service person I spoke with (who seemed to be a bit annoyed with me for pursuing this), my taxes would have been adjusted to the proper rate when it billed to my credit card. There was nothing on the site that said that. A note to all your readers who are starting an online business: make sure your customers understand the process, or you might lose a customer.

        • Glad you were able to get this straightened out!

  • zz4j9m

    I live in Illinois but am setting up an online shop for a nonprofit based in Texas. The nonprofit is going to sell items that will be shipped from Buffalo (always) by members of the nonprofit. Does that give the online shop “nexus in New York” (sounds like it should be the title of Woody Allen’s next movie)? So the group members doing the shipping from Buffalo would be the ones with nexus, and the site should charge taxes based on recipient location?

    • Ha! Yes, sounds like the Woody Allen title “nexus in New York” would apply here because they’re keeping a stock of goods and people shipping those goods (i.e. working directly on the business) in New York. Of course, we already recommend you check with an accountant or the New York Department of Revenue if you have any question. And then, if they have nexus in New York, they should register for a sales tax permit there and charge sales tax based on the sales tax rate at the buyer’s location. I hope this helps!

    • Ha! Yes, sounds like the Woody Allen title “nexus in New York” would apply here because they’re keeping a stock of goods and people shipping those goods (i.e. working directly on the business) in New York. Of course, we already recommend you check with an accountant or the New York Department of Revenue if you have any question. And then, if they have nexus in New York, they should register for a sales tax permit there and charge sales tax based on the sales tax rate at the buyer’s location. I hope this helps!

  • zz4j9m

    I live in Illinois but am setting up an online shop for a nonprofit based in Texas. The nonprofit is going to sell items that will be shipped from Buffalo (always) by members of the nonprofit. Does that give the online shop “nexus in New York” (sounds like it should be the title of Woody Allen’s next movie)? So the group members doing the shipping from Buffalo would be the ones with nexus, and the site should charge taxes based on recipient location?

  • kerstin

    so for tax reason I just count the sales that I made in NY when paying NY sales tax right? Not what I sold outside of NY?

    • Hi Kerstin,

      Just to clarify, you would charge your customers sales tax in states where you have sales tax nexus. Then remit that back to the state of New York when filing your sales tax returns. And if you don’t have nexus in any other states, you wouldn’t charge sales tax to buyers in those states. Here’s more in our Sales Tax 101 Guide: http://www.taxjar.com/guides/intro-to-sales-tax/

  • argentique

    Does anyone know any online shopping cart service that can calculate NY sales tax automatically, besides Shopify? They charge a minimum of $108 per year plus transaction fees just for a buy button! How are people operating in NY selling online, without breaking any laws or having to manually calculate tax?

    It is shocking to me that the big guys like Paypal make you set up manual tables for tax calculation. My understanding is that that would not be possible in NY, as you need specific address to look up each time. Different tax zones exist even within zip codes.

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