Overall, the topic of collecting online sales tax is not as cut and dry as some would first assume, with ambiguous meanings and regulations, often confusing business owners. And hopefully, that’s where we come in to help!
In our series we have talked about multiple states, including Nevada, Washington and Colorado, and how each one handles the issue surrounding online sales tax for their state; up next in the lineup is New York.
A Summary of New York’s Online Sales Tax Law
New York was the first state in the country to enact a law for larger internet retailers (back in 2008). This law is referred to as the “Amazon Law,” based on the large internet retailer that used to have physical presence in very few states and therefore wasn’t required to collect sales tax. Amazon has now changed its business model and has worked with many states to collect sales tax. However, over the past several years, many states enacted “Amazon Laws” or “click through” statutes to get ahead of the company and internet retailers. New York was simply the first!
Specifically, this law requires an out-of-state business with no physical presence to collect sales tax if they:
- Have a “click through” arrangement with a business or seller located in New York that pays for customer referrals obtained via a link on the New York seller’s website.
- The out-of-state seller exceeds $10,000 gross sales from the click through agreement to New York customers during the preceding 12 months.
Click here for more information about click through arrangements.
Beyond the Amazon Law that was passed in 2008, New York has also established that nexus goes beyond a direct physical presence in the state and includes any “persons” who has an affiliation with an in-state business. According to New York, an affiliated person has a direct or indirect ownership with one or more businesses in the state.
How New York Legislation Impacts Online Retailers
Overall, between the Amazon Law and New York’s definition of nexus, the majority of retailers who sell to consumers in New York are responsible to collect and remit sales tax.
As we have discussed in previous posts, Congress is working on a solution to the internet sales tax debate, however it’s taking long enough that states are beginning to develop their own solutions. Stay tuned for the last post in our series, which will discuss how Massachusetts is approaching online sales tax in its state.
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects. To learn more, contact us today at www.MilesConsultingGroup.com.
