Presumption applicable to definition of sales tax vendor
Legislation enacted in 2008 creates a rebuttable presumption that certain sellers of taxable property or services are sales tax vendors who are required to register for sales tax purposes and collect state and local sales taxes.
Under the presumption, a seller of taxable property or services is presumed to be a vendor if the seller enters into agreements with residents of New York State under which residents receive a commission or other consideration based on completed sales for referring potential customers to the seller by links on a Web site or otherwise, and the value of the sales in New York State made by the seller through those agreements totals more than $10,000 in the preceding four sales tax quarters.
Amazon.com and Overstock.com filed suit challenging the constitutionality of this law soon after its enactment. In March of 2013, the Court of Appeals, New York’s highest court, upheld the constitutionality of the legislation. On December 2, 2013, the United States Supreme Court declined to hear the appeals of Amazon.com and Overstock.com (Overstock.com v. New York Department of Taxation and Finance, 20 NY3d 586 (2013), cert. denied 82 USLW 3109, 2013 WL 4522065 (December 2, 2013)). This action makes the decision of the Court of Appeals upholding the statute the final resolution of the litigation. Consequently, the law is in full force and effect and businesses already registered as sales tax vendors as a result of the 2008 legislation should continue to collect and remit sales tax.
Any business with a tax collection obligation under this law that is not already a New York sales tax vendor must register and collect tax. To register, see Register as a sales tax vendor. Most businesses should enter a principal NAICS code in the Non-store Retailer category, such as 454111, Electronic Shopping, or 454113, Mail-Order Houses, on the application. Under the Tax Department’s voluntary disclosure program, eligible taxpayers who owe back taxes and haven't filed related returns can avoid monetary penalties and possible criminal charges.
Additional information
Technical memoranda
- TSB-M-08(3), New Presumption Applicable to Definition of Sales Tax Vendor
- TSB-M-08(3.1), Additional Information on How Sellers May Rebut the New Presumption Applicable to the Definition of Sales Tax Vendor as Described in TSB-M-08(3)S
- TSB-M-09(3)S, Definition of a Sales Tax Vendor is Expanded to Include Out-of-State Sellers with Related Businesses in New York State
FAQs that address specific scenarios:
- Conditions that cause sellers to fall under the presumption of being a sales tax vendor under Chapter 57 of the Laws of 2008
- Whether a resident representative must register as a sales tax vendor
- How sellers who are presumed to be vendors under this law register for sales tax purposes
- Whether the sale of data or information delivered to customers in New York State (e.g., lists of e-mail addresses and customer contact information) is subject to sales tax.
- An affiliate network service provider that has an office and employees located in New York State enters into a contract with an Internet based retailer (the seller) located outside of New York State.
