Gavin Howe
New York's marketplace facilitator law requires marketplaces to collect sales tax on behalf of sellers on online marketplaces. This means that if a seller is based in New York or has sales tax nexus in the state, they are required to hold a New York sales tax permit and file sales tax returns. Online sales platforms like Amazon and eBay are considered marketplace facilitators under New York law, and they will collect sales tax on all sales delivered into the state, regardless of the seller's nexus status. This law does not affect the sales tax registration requirements for existing sellers, and sellers must still collect sales tax from buyers on taxable items and send it to New York State.
| Characteristics | Values |
|---|---|
| Definition of marketplace facilitators | A marketplace facilitator is defined as a "listing or otherwise making available listing or otherwise making available for sale the tangible personal property of the marketplace seller through a marketplace owned or operated by the marketplace facilitator; and processing sales or payments for marketplace sellers" |
| Examples of marketplace facilitators | Amazon, eBay, Walmart |
| Who needs to register for sales tax | Any person who sells taxable tangible personal property or taxable services, even if they make sales from their home, are a temporary vendor, or only sell once a year |
| Sales tax registration requirements | If you are a marketplace seller and meet any of the sales tax registration requirements for vendors selling taxable goods and services, you must register and file periodic sales tax returns even if a marketplace provider will remit the sales tax due on sales they facilitate for you |
| Sales tax collection by marketplace facilitators | The marketplace facilitator will collect sales tax on all sales delivered into New York, regardless of the nexus status of the seller |
| Impact on existing sellers' sales tax registration | New York's marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. If you have a nexus in New York, you are still required to hold a New York sales tax permit and file sales tax returns on due dates |
| Cancellation of sales tax permit | If you only make marketplace sales in New York and the marketplace collects sales tax from buyers on your behalf, you may be able to cancel your sales tax permit. It is recommended to check with the state or a tax expert before cancelling |
| Sales tax on short-term rental unit occupancy | Effective March 1, 2025, sales tax, including the New York City unit fee, applies to collections of rent by an operator or booking service for short-term rental units |
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What You'll Learn
Sales tax registration requirements
If you are a marketplace seller and meet any of the sales tax registration requirements for vendors selling taxable goods and services, you must register and file periodic sales tax returns. This is true even if a marketplace provider remits the sales tax due on sales facilitated on your behalf.
If you are a marketplace provider located in New York State, you are required to register for sales tax and collect tax on taxable sales of tangible personal property that you facilitate for marketplace sellers. If you are a marketplace provider with no physical presence in New York State, you must register for sales tax if, in the previous four sales tax quarters, your cumulative total of gross receipts from sales made or facilitated of tangible personal property delivered into the state exceeded $500,000.
Even if you are not required to register for sales tax, you must collect sales tax from the buyer and send it to New York State if the item is taxable. This applies to sales of motor vehicles, boats, and snowmobiles from your home, which are also subject to sales tax. In most circumstances, the seller does not have to register or collect and remit the sales tax. The purchaser will pay any sales tax due directly to the Department of Motor Vehicles (DMV) when the vehicle, boat, or snowmobile is titled and registered. However, if you sell a boat, snowmobile, or ATV that does not require registration at the DMV, you must collect the sales tax and send it to New York State using Form ST-131, Seller's Report of Sales Tax Due on a Casual Sale.
New York's marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. So, if you live or otherwise have sales tax nexus in New York, you are still required to hold a New York sales tax permit and file sales tax returns on due dates set for you by the state. However, if you are registered to collect sales tax in New York and only make marketplace sales in New York, you may be able to cancel your sales tax permit. It is recommended to check directly with the state or a sales tax expert before cancelling your sales tax registration.
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Sales tax collection by online marketplaces
New York's marketplace facilitator law states that marketplace facilitators in New York must collect New York sales tax on behalf of third-party sellers. This means that if you sell on a platform like Amazon or Walmart, these platforms will collect sales tax from your New York buyers and remit it to the state. This law applies to all sales delivered into New York, regardless of the nexus status of the seller.
A marketplace facilitator is defined as a person or entity that lists or makes available for sale the tangible personal property of a marketplace seller through a marketplace they own or operate and processes sales or payments for these sellers. Tangible personal property refers to any physical personal property that has a material existence and can be perceived by the human senses, such as something you can see and touch. Examples include furniture, vehicles, boats, and snowmobiles.
If you are a marketplace seller and meet the sales tax registration requirements for vendors selling taxable goods and services, you must register and file periodic sales tax returns even if a marketplace provider remits the sales tax on sales they facilitate for you. However, if you only make sales through marketplaces and they collect sales tax from buyers on your behalf, you may only need to file a "zero return," indicating that you have no sales tax to remit to the state.
It's important to note that New York's marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. Therefore, if you have sales tax nexus in New York, you are still required to hold a New York sales tax permit and file sales tax returns by the due dates set by the state.
Additionally, if you have collected New York sales tax from buyers through your own online store or brick-and-mortar store, you must remit that amount to the state. This can be done using Form ST-131, Seller's Report of Sales Tax Due on a Casual Sale.
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Sales tax returns
In the state of New York, marketplace facilitators like Amazon and Walmart are required to collect sales tax on behalf of third-party sellers for items delivered to New York. This means that if you are a marketplace seller, you may not have to register for sales tax or file sales tax returns if your marketplace facilitator collects sales tax from buyers on your behalf. In this case, you may only need to file a "zero return" to indicate that you have no sales tax to remit to the state.
However, if you make sales outside of a marketplace or if your marketplace does not collect sales tax for you, you must register with the Tax Department and obtain a Certificate of Authority to collect sales tax on your taxable sales. You must also file periodic sales tax returns on due dates set by the state.
It is important to note that even if you are not required to register for sales tax, you must still collect sales tax from the buyer and send it to New York State if the item is taxable. This includes sales of motor vehicles, boats, and snowmobiles from your home, which are subject to sales tax. In most cases, the purchaser will pay the sales tax directly to the Department of Motor Vehicles (DMV) when the vehicle is titled and registered. However, if the vehicle does not require DMV registration, you must collect the sales tax and remit it to the state using Form ST-131, Seller's Report of Sales Tax Due on a Casual Sale.
Additionally, sales tax applies to retail sales of certain tangible personal property and services. Tangible personal property refers to physical items that can be seen and touched, such as furniture or electronics. If you sell these types of items, you must register with the Tax Department and collect and remit sales tax, even if you only sell occasionally or at craft fairs.
Finally, it is always recommended to check directly with the state or a tax expert to ensure you are complying with all applicable sales tax laws and requirements.
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Sales tax permits
In New York, every person who sells taxable tangible personal property or taxable services must register with the Tax Department and obtain a Certificate of Authority. This includes sales made from your home, temporary vendors, or those who sell only once a year.
If you are a marketplace seller, you must register and file periodic sales tax returns even if a marketplace provider will remit the sales tax due on sales they facilitate for you. A marketplace provider is a person or entity that facilitates the sale of tangible personal property by marketplace sellers.
If you only sell on online marketplaces like Amazon or eBay, and they collect sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. However, you may still be required to file periodic sales tax returns.
If you sell on online marketplaces and your own online store, you must collect sales tax from buyers who purchase from your online store.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a "zero return." This is a return showing that you do not have any sales tax to remit to the state. If you no longer have any sales tax to remit to the state of New York, it is recommended to check directly with the state to determine if you can cancel your sales tax registration.
If you are required to register for sales tax purposes but fail to do so and operate a business without a valid Certificate of Authority, you will be subject to a penalty. The maximum penalty for operating a business without a valid Certificate of Authority is $10,000, imposed at a rate of up to $500 for the first day of business without a valid certificate, plus up to $200 per day for each day after.
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Taxable tangible personal property
In New York, marketplace facilitators like Amazon and eBay are required to collect sales tax on behalf of third-party sellers for all sales delivered to the state. This is regardless of the seller's nexus status.
If you are a marketplace seller in New York, you must register and file periodic sales tax returns even if a marketplace provider will remit the sales tax due on sales they facilitate for you.
Tangible personal property refers to corporeal personal property that has a material existence and can be perceived by the human senses. This includes:
- Raw materials such as wood, metal, rubber, and minerals.
- Manufactured items such as gasoline, oil, chemicals, jewelry, furniture, machinery, clothing, vehicles, appliances, lighting fixtures, and building materials.
- Artistic items such as sketches, paintings, photographs, moving picture films, and recordings.
- Coins and other numismatic items when purchased for purposes other than use as a medium of exchange.
- Postage stamps when purchased for purposes other than mailing.
- Precious metals in the form of bullion, ingots, wafers, and other forms.
It is important to note that gas, electricity, refrigeration, and steam are not considered tangible personal property for the purpose of the tax imposed on utility services.
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Frequently asked questions
A marketplace seller is someone who sells taxable tangible personal property or taxable services.
Examples of taxable tangible personal property include sales of motor vehicles, boats, and snowmobiles.
Online sales platforms like Amazon and eBay are considered marketplace facilitators under New York law. This means that the marketplace facilitator will collect sales tax on your behalf for all sales delivered into New York.
In this case, you may only be required to file a "zero return" for the marketplaces that do not collect sales tax on your behalf. This is a return showing that you do not have any sales tax to remit to the state.
If you are a marketplace seller and meet any of the sales tax registration requirements, you must register and file periodic sales tax returns even if a marketplace provider will remit the sales tax for you. You can register with the Tax Department through New York Business Express.
