Economic Nexus in New York State
State laws on economic nexus vary which imposes a compliance burden on businesses operating in multiple states. Our research team has all the information you need as it relates to economic nexus in New York.
With the South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now able to collect sales tax from eCommerce businesses who have a “significant presence (or nexus)” in their state. Prior to this ruling, nexus was defined as having a physical presence (ex: brick and mortar store, employee, or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state. This expanded concept of triggering sales tax responsibility because of a business’s economic activity is now referred to as economic nexus.
Bottomline, this now means that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
With regard to New York’s economic nexus provisions, here is a summary:
- Threshold: $500,000 per year in gross revenue AND makes sales into New York in more than 100 separate transactions in the last 4 quarters.
- Includable Sales – Gross receipts from sales of tangible personal property; Marketplace sales included towards the threshold for individual sellers
- Grace Period – Sellers must register within 30 days after meeting the threshold and begin to collect tax 20 days thereafter
- Summary: Sellers that meet both the sales and transaction number thresholds are required to register for a New York sales tax permit, collect sales tax on sales that ship into New York, and remit sales tax to the state.
If you have met the economic threshold requirement in New York, here are suggested next steps:
- Register for a sales tax permit in New York. Learn more about registering here.
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Start filing your monthly sales tax return to New York. Learning more about filing here.
As always, sales tax varies by state and if you have questions about your sales tax obligations or would like to outsource the burden, please reach out to our team.