Updated 7.10.19: New York has increased its economic nexus sales threshold from $300,000 to $500,000. Additional details.
Some states are in danger of getting a bit of a reputation.
Take New York. In January 2019, the New York State Department of Taxation and Finance revealed it would use the power vested in it by the United States Supreme Court decision in South Dakota v. Wayfair, Inc. (June 21, 2018) to “immediately” enforce “certain existing provisions in the New York State Tax Law that define a sales tax vendor.” In other words, certain remote vendors could be liable for tax on their New York sales dating back to June 21, 2018.
(Note to the New York tax department: That’s the kind of thing a remote vendor would prefer to be informed of before June 2018, not in January 2019.)
Then, on May 31, 2019, the tax department announced (TSB-M-19(2)S) New York tax law requires “marketplace providers to collect sales tax on taxable sales of tangible personal property that they facilitate for marketplace sellers” effective June 1, 2019. In other words, this new requirement was in effect the very next day, which was a Saturday.
(Note to the New York tax department: That’s the kind of thing marketplace providers and sellers would prefer to be informed of before May 31, 2019.)
The notice explains that marketplace providers must comply with the collection requirement if they have a physical presence in New York or economic nexus with the state. Economic nexus is established for marketplace facilitators if, in the previous four sales tax quarters, they have more than $300,000 in cumulative gross receipts from sales of tangible personal property made or facilitated in New York and they made or facilitated more than 100 sales of tangible personal property delivered in the state.
To be fair, the June 1, 2019, effective date is clearly stated in New York Senate Bill 1509, enacted April 12, 2019 — though the first iteration of the measure listed September 1, 2019, as the effective date. Vigilant businesses may have been able to see this coming. Furthermore, marketplace providers affected by this change should probably already be collecting and remitting New York sales tax on their own sales in the state, if not their third-party sales, per the January 2019 announcement discussed above.
But that also means the tax department has had since April 12, 2019, to notify marketplace providers of the imminent change. So why would it wait until the day before? It’s a puzzle.
