Marketplace providers to collect New York sales tax for third-party sellers, June 2019

Update 6.25.2019: Senate Bill 6615, signed into law on June 24, 2019, increases the sales tax economic nexus threshold from $300,000 to $500,000. The threshold change is effective June 21, 2018, for remote sellers, and June 1, 2019, for marketplaces.

Update 6.4.2019: The sales tax collection requirement for marketplace providers took effect June 1, 2019. See this New York Department of Taxation and Finance bulletin for more details.

Update 4.29.2019: The New York Department of Taxation and Finance has published FAQs related to registration requirements for businesses with no physical presence in NYS. Economic nexus is enforced in New York as of June 21, 2018, "the date of the United States Supreme Court decision in Wayfair." It applies to all remote sellers meeting the $300,000 sales and 100 transactions threshold (described below) in the immediately preceding four quarters. Sales made through a marketplace should be included when calculating the threshold. The department recommends remote sellers review their New York sales after the conclusion of each sales tax quarter to determine if the threshold has been met; remote sellers must file a certificate of registration within 30 days after the date the threshold was met and begin to collect tax 20 days after that.

The New York State Assembly and Governor Andrew Cuomo have agreed on the FY 2020 budget, which the governor is calling “probably the broadest, most sweeping state plan that we have done.” It includes a provision requiring certain remote marketplace providers to collect and remit New York sales tax.

Under S.1509, a marketplace provider with no presence in New York is required to obtain a certificate of authority and collect and remit tax on sales of tangible personal property made or facilitated in New York if, in the immediately preceding four quarterly periods ending on the last day of February, May, August, and November, it:

• Made or facilitated more than $300,000 in cumulative total gross receipts from sales of property delivered in New York; or
• Made or facilitated more than 100 sales of property delivered in New York.

A marketplace seller that receives a properly completed certificate of collection (as mandated by the tax commissioner) certifying that the provider is registered to collect sales tax and will collect sales tax on all the marketplace seller’s taxable sales is “relieved from the duty to collect tax” on those sales. These sales should be excluded from the seller’s sales tax returns.

Finally, a list of marketplace providers whose certificates of authority have been revoked will be published on the Department of Taxation and Finance’s website. If necessary, “to protect sales tax revenue,” a marketplace seller that sells through a provider with a revoked certificate of authority may be required to collect and remit sales tax. Additional details are provided in the text of the bill.

Early versions of the measure had the collection requirement for marketplace providers taking effect September 1, 2019. However, the effective date of the final version is June 1, 2019.

New York is one of more than 20 states considering a sales tax collection requirement for marketplace facilitators. See the list of states here.