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Businesses required to collect sales tax must know the correct sales tax rate to apply when they sell taxable goods and services.
This bulletin explains:
How to identify the rates and compute sales tax
To determine the total amount of tax due on a sale, multiply the amount of the taxable sale by the combined state and local sales tax rate, and if applicable, the additional Metropolitan Commuter Transportation District (MCTD) tax rate. Round the amount of tax due up or down to the nearest cent.
The combined rate equals the state rate (currently 4%) plus any local tax rate imposed by a city, county, or school district (plus the MCTD rate, if applicable). The jurisdiction (locality) where the item is delivered usually determines the local rate. The point of delivery is where ownership (title) and/or possession of the item is transferred by the seller to the purchaser. The local rate that applies to services is the jurisdiction where the service is delivered or where the property on which the service is performed is delivered. The local rate that applies to rent and amusement charges is the rate in effect in the jurisdiction in which the hotel or place of amusement is located.
An additional ⅜% (0.375%) sales tax applies to taxable sales within the MCTD. New York City and the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester are in this district. The same rules that determine the local taxing jurisdiction (discussed above) are used to determine if a taxable sale is subject to the additional MCTD rate.
The sales tax on motor vehicles, including cars, trucks, certain boats, boat trailers, RVs, and motorcycles, is calculated using the rate in effect in the jurisdiction where the vehicle owner is a resident. This is normally the address of the person that the vehicle will be registered to.
Special rules also apply to florists who make sales using a florist telephonic or telegraphic delivery association. These services are generally used when a customer places an order for flowers in one state or jurisdiction, and the order information is forwarded to a florist closer to the delivery address in another jurisdiction or state to be filled. In these sales, the sales tax must be calculated based on where the order is placed, not on where the flowers are actually delivered. For more information see TSB-M-82(31)S, Flowers By Wire - Regulation Section 526.7.
Example: Mrs. L lives in Saratoga County and travels to a mall located in Albany County to purchase a new television. The sales tax due is based on the combined state and local rate in effect in Albany County because that is where Mrs. L took ownership and possession of the television, even though the television will be used in Mrs. L’s home in Saratoga County.
Example: Mr. W lives in Dutchess County but works in White Plains in Westchester County. At lunchtime, he brings his car to a shop near work to have the oil changed. Sales tax will be collected at the combined state, Westchester County, City of White Plains, and MCTD rates because those are the combined rates in effect where he took possession of the car on which the maintenance service was performed. If the repair shop delivered the car to him in Dutchess County, then the Dutchess County rate would have applied instead of the Westchesster County and White Plains rates. The MCTD rate would still apply since Dutchess County is in the MCTD.
Example: Mrs. B shops online and orders a new tea pot from an Internet retailer. The tea pot will be delivered to her home in Erie County. Mrs. B’s purchase will be subject to sales tax at the combined state and Erie County rate since the tea pot is being delivered to her there.
You can use two resources to find the correct combined state and local sales tax rates:
We provide these resources as a convenience to help with the collection of sales tax. However, it is your responsibility as a business required to collect tax to make sure that the tax rate and jurisdiction reporting code are correct when collecting, reporting, and remitting sales tax.
See also, Tax Bulletin Taxable Receipt (TB-ST-860) for more information on the computation of sales tax due.
Jurisdiction reporting codes and rate changes
When you file your sales and use tax returns, you must report the sales tax collected for each jurisdiction separately. The Tax Department has assigned a specific reporting code for tax due for each local jurisdiction, which allows for proper accounting of the tax collected. The reporting code changes whenever the rate in a jurisdiction changes. While you are responsible for using the correct jurisdiction code, as long as you use the sales tax returns available from the Tax Department for the reporting period you are filing, either from our Web site or through Web File, the correct codes and rates will be provided to you.
You can learn about rate changes in a few different ways:
Subscription service – You can register to receive e-mail notifications related to sales tax, including rate changes. These e-mail notifications include links to recently updated Web content and publications that list sales tax rates for localities.
Locality rate change postcards – If you are registered for sales tax purposes, we will mail you a postcard notifying you of any sales tax rate change for any locality where you recently reported sales tax or compensating use tax on your sales tax return. The postcard will include a brief announcement of the change, and will include references to notices, publications, and memorandums (available on our Web site) that provide detailed information on the change. The locality rate change postcard will contain a detailed explanation of the change in a locality rate, the effective date of the change, any special instructions or changes for collecting the tax at the new rate, and any changes in reporting requirements.
Sales tax form instructions – A reminder about rate changes occurring during the sales tax quarter is included on the first page of the instructions for your sales tax returns and schedules.
Sales tax publications – A number of publications include listings of the sales tax rates by jurisdiction. A list of these publications is on the sales tax publications page of our Web site. In most cases, when we update a publication, we mail out a postcard to notify businesses that are affected by the change. The postcard refers businesses to the updated publication posted on our Web site. Also see Tax Bulletin Sales Tax Rate Publications (TB-ST-820) for a complete listing of rate publications.
Other sales taxes and fees
Certain businesses may be required to collect one or more of the additional sales and use taxes and fees described below. These taxes and fees must be collected and remitted in the same manner as the state and local sales taxes. The sales tax returns and schedules have separate lines and reporting codes for you to report the additional sales taxes and fees separately.
Passenger car rentals – statewide special tax
There is an additional 6% state-only sales or use tax on the short-term rental of a passenger car rented within New York State, or rented outside New York State for use within New York State. (Prior to June 1, 2009, the rate was 5%.) Short-term rental means any rental for less than one year. See N-90-26, Special Tax on the Rental of Passenger Cars.
Passenger car rentals – special supplemental tax
Beginning June 1, 2009, in addition to the statewide 6% passenger car rental tax, there is a 5% special supplemental tax on all passenger car rentals where delivery occurs within the MCTD, or where the passenger car is rented outside the MCTD for use within the MCTD. See TSB-M-09(6)S, Special Supplemental Tax on the Rental of Passenger Cars Within the Metropolitan Commuter Transportation District.
Entertainment and information services provided by telecommunications service
An additional 5% sales tax is imposed on entertainment and information services provided by telecommunications service that are received by the customer in an exclusively aural manner (for example, 800 or 900 telephone number services). See N-93-20, Increase in Tax Rate Applicable to Entertainment and Information Services Provided by Means of Telephony and Telegraphy.
Parking services sold in New York City
Charges for parking services in New York City are subject to sales tax at a higher rate than most other sales. The tax rate of 10 ⅜% is due in Bronx, Brooklyn (Kings County), Queens, Staten Island (Richmond County), and in the borough of Manhattan for Manhattan residents. Parking within the borough of Manhattan for nonresidents is subject to an additional 8% city sales tax for a total tax rate of 18 ⅜%.
For more information about the additional parking tax in Manhattan, including exemptions and exclusions, see:
Fee on hotel occupancy in New York City
In addition to the state and local sales taxes on hotel occupancy, a hotel unit fee in the amount of $1.50 per unit per day applies to hotels located in New York City. These fees are reported on Schedule N and attached to your tax return. See TSB-M-05(2)S, Fee on Hotel Occupancy in New York City, for additional information on the hotel unit fee, and for the definition of a unit in a hotel.
Sales taxes imposed by certain school districts
Certain school districts in New York State impose sales tax on utilities and utility services. A school district’s utility tax is in addition to the similar tax imposed by the state and by the county and/or city in which the school district is located. You can look up the combined tax rate on utility service sold in a school district by entering the delivery address of the utility or utility service in our online Sales Tax on Utilities Jurisdiction and Rate Lookup.
When you enter the address, you’ll find a description of the applicable utility or utility service. These services fall into three categories:
The school districts that impose these taxes, and the applicable tax rates, are detailed in the Schedules B and B-ATT and Schedules T and T-ATT that must be filed as an attachment to your sales tax return. (Note: The Qualified Empire Zone Enterprise (QEZE) exemption is no longer available after September 1, 2009.)
For specific residential rate information, see Publication 718-R, Local Sales and Use Tax Rates on Residential Energy Sources and Services.
New York City taxes on certain services
New York City imposes local sales tax on certain services performed or delivered in New York City, including:
For more information about these taxable services, see the section entitled Sales Taxes Imposed Only within New York City in Publication 750, A Guide to Sales Tax in New York State.
You must file Schedule N, Selected Services in New York City, as an attachment to your sales tax return to report sales and remit the sales tax due on the above services that fall within the special rules for New York City sales. There are three versions of this schedule depending on whether you file annually, quarterly, or part-quarterly (monthly).
Note: Interior decorating and design services performed within New York City are subject to the state portion of the sales tax only and are not subject to the New York City local sales tax. For more information see TSB-M-95(13)S, Repeal of New York City’s Sales Tax on Interior Decorating and Design Services.
Other local taxes
New York State laws authorize other local jurisdictions to impose locally administered taxes, such as taxes on hotel occupancy, energy, and telecommunications. These taxes are not administered by the Tax Department and are not reported on or paid with your state sales tax return. The individual localities impose, administer, and collect these taxes. When starting a business, you should contact the village, town, city, and county clerk to learn about local taxes. If you need information about local taxes or other local laws, contact your local government.
References and other useful information
Tax Law: Sections 1101(b)(28); 1109; 1132(b); 1210; 1211; and 1218
Regulations: Sections 525.3; 526.7; 530.1; and 533.4(b)
Publication 718, New York State Sales and Use Tax Rates by Jurisdiction
Publication 718-R, Local Sales and Use Tax Rates on Residential Energy Sources and Services
Publication 750, A Guide to Sales Tax in New York State
TSB-M-82(31)S, Flowers by Wire - Regulation Section 526.7
TSB-M-85(14)S, Exemption from New York City Additional Tax on Parking, Garaging, and Storing of Motor Vehicles
TSB-M-91(7)S, State and Local Sales Tax Imposed on Parking Fees
TSB-M-95(13)S, Repeal of New York City’s Sales Tax on Interior Decorating and Design Services
TSB-M-96(13)S, Change in the New York City Parking Tax Exemption for Manhattan Residents
TSB-M-01(3)S, Expanded Exclusion for Parking Charges Paid by Homeowners' Association Members
TSB-M-05(2)S, Fee on Hotel Occupancy in New York City
TSB-M-08(14)S, Sales Tax Treatment of a Lease or Rental of Real Property for the Purpose of Parking, Garaging, or Storage of Motor Vehicles
TSB-M-09(6)S, Special Supplemental Tax on the Rental of Passenger Cars Within the Metropolitan Commuter Transportation District