United States

New York releases guidance for remote sellers in response to Wayfair

TAX ALERT  | 

On Jan. 15, 2019, the New York Department of Taxation and Finance released Notice N-19-1, explaining that remote sellers with certain sales activity in New York are required to register and remit New York state and local sales taxes. The Notice is the state’s first guidance since the South Dakota v. Wayfair decision eliminated the physical presence standard for establishing sales tax nexus on June 21, 2018.

The Notice explains that existing provisions of New York State Tax Law became effective after the Wayfair decision. New York statutes define sales tax vendors to include persons who regularly or systematically solicit business in the state. A person is presumed to be soliciting business if, for the immediately preceding four quarterly periods ending on the last day of February, May, August and November:

  • The cumulative total of a person's gross receipts from sales of tangible personal property delivered in the state exceeds $300,000, and
  • The person made more than 100 sales of tangible personal property delivered in the state

The sales and transaction thresholds had previously been enacted by the state, but were generally unenforced due to the physical presence requirement. Remote sellers should also note that exceeding both thresholds is required, unlike many other states that require a remote seller to register and collect if either the sales or transaction thresholds were exceeded.

The Notice recommends that if a business meets or exceeds the sales and transaction thresholds, and has not yet registered as a New York vendor, the business should do so now. The department anticipates that additional information on these provisions will be forthcoming.

Takeaway

The Notice is New York’s first substantive response to Wayfair, but noticeably does not provide an enforcement date. While it appears that New York’s remote vendor provisions became enforceable on June 21, 2018, it is not clear whether the state will enforce collection from that date, the date of the Notice, or another date. Additionally, the current provisions of the New York State Tax Code only refer to “tangible personal property,” not sales of property and services. Taxpayers exceeding the sales and transaction thresholds should consider registering and understand that further guidance is likely.

Almost seven months after the Wayfair decision, over 35 other states have addressed an enforcement date for economic sales tax nexus. It is anticipated that most states that have not yet addressed a remote seller threshold will do so in the 2019 state legislative sessions. Upcoming enforcement dates include Wyoming (Feb. 1), California (April 1), and Texas (Oct. 1).     

For more information on economic sales tax nexus, please read our article, Wayfair, sales tax, and economic presence laws.

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