Marketplace providers (i.e., Amazon and EBay) with taxable sales into New York must collect and remit sales tax once they meet the same sales thresholds as remote sellers, the state tax department said in newly issued guidance.
In a May 31 technical memorandum, the Department of Taxation and Finance stated that marketplace providers with over $300,000 in gross receipts from sales of tangible personal property into New York and more than 100 sales in the past four sales tax quarters must collect and remit sales tax. Similarly, the tax department in January issued guidance saying that remote sellers with over $300,000 in sales of tangible personal property into the state and more than 100 transactions in the previous four sales tax quarters must register with the agency and collect and remit sales tax.
Marketplace providers are required to collect and remit sales tax as of June 1. The guidance defines a marketplace provider as one who facilitates the sale of tangible personal property by a marketplace seller by providing a website or forum for such a sale and by contracting with the third party seller to collect the receipts paid by the customer on their behalf.
Under state law, marketplace providers are required to collect and remit sales tax only on sales of tangible personal property, including pre-written computer software. However, they are not required to collect tax on sales of services, transportation, hotel occupancy, restaurant food or admissions to amusement venues.
Based on the above, a marketplace seller who is registered to collect New York sales tax is relieved from the duty to collect tax on a sale of tangible personal property, and should not include the receipts from the sale in its taxable receipts, if the sale was facilitated by a marketplace provider that is registered to, and will, collect sales tax on all taxable sales of the marketplace seller that are facilitated by the marketplace provider. For example, according to Amazon’s website, as of June 1, it will, as a marketplace provider, be responsible for collecting and remitting New York sales tax on sales of third party sellers for transactions destined to the state. It should also be noted, that 33 other states currently have, or will have in effect by the end of the year, similar marketplace provider legislation.
Please contact Alan Goldenberg at 212-897-6421, or your Friedman partner, with any questions you may have.