Sales tax requirements for marketplace providers

A marketplace provider generally must be registered with the Tax Department as a New York State sales tax vendor.

A marketplace provider has all the obligations and rights of a sales tax vendor under the Tax Law, including, but not limited to:

• obtaining a Certificate of Authority;
• collecting tax;
• filing returns;
• remitting the tax due; 
• the right to accept exemption certificates; and
• the right to receive a refund.

A marketplace provider must also:

• provide a properly completed Form ST-150, Marketplace Provider Certificate of Collection, to marketplace sellers within 90 days of sales it facilitates; or
• have a publicly available agreement with its marketplace sellers that includes the following statement or one that is substantially similar:
  [Marketplace provider name] is a registered New York State sales tax vendor and will collect sales tax on all taxable sales of tangible personal property that it facilitates for delivery to a New York State address.
• keep records and cooperate with the Tax Department to ensure proper collection and remittance.

Liability relief for marketplace providers

A marketplace provider is relieved of liability for failure to collect the correct amount of tax to the extent it can show the error was due to incorrect or insufficient information provided by a marketplace seller. If the marketplace provider and marketplace seller are affiliated, this relief of liability does not apply.

Marketplace providers and sellers are affiliated if:

• one person has an ownership interest of more than 5%, whether direct or indirect, in another; or
• an ownership interest of more than 5%, whether direct or indirect, is held in each person by another person or by a group of persons that are affiliated persons with respect to each other.

A marketplace seller is not responsible for collecting New York State sales tax on sales of tangible personal property facilitated by a marketplace provider that take place in New York State or are delivered to a New York State address if the marketplace seller:

• received a Certificate of Collection from the marketplace provider, or
• the marketplace provider has a publicly available agreement with the marketplace seller stating the provider will collect sales tax on these sales.

However, a marketplace seller who is a registered New York State vendor is still responsible for collecting sales tax on:

• taxable transactions facilitated by a marketplace provider that do not involve the sale of tangible personal property;
• sales of tangible personal property in New York State, and taxable transactions, not facilitated by a marketplace provider.

A marketplace seller who is a registered New York State sales tax vendor must:

• report its sales of tangible personal property facilitated by a marketplace provider on its periodic sales tax returns as nontaxable sales (see New York State sales tax forms), and
• keep the Certificate of Collection and records about its sales facilitated by marketplace providers.

Liability relief for marketplace sellers

A marketplace seller who is registered with the Tax Department is relieved of liability to collect tax on a sale of tangible personal property if:

• the marketplace seller has received, in good faith, a properly completed Form ST-150, Marketplace Provider Certificate of Collection, from the marketplace provider (or the marketplace provider has a publicly available agreement); 
• the sale was facilitated by the marketplace provider; 
• any failure of the marketplace provider to collect the proper amount of tax on a sale was not the result of the marketplace seller providing the marketplace provider with incorrect or insufficient information; and
• the marketplace seller and marketplace provider are not affiliated.

Does the requirement to collect sales tax on third-party sales of tangible personal property apply only to online marketplaces?

No. Businesses such as consignment shops, auctioneers, flea markets, or vendors with leased departments may also be included under the definition of a marketplace provider. If you have one of these businesses, you and your marketplace sellers should review the requirements concerning the Certificate of Collection and reporting sales on your periodic sales tax returns.

As a marketplace provider, do I collect tax on sales I facilitate for all marketplace sellers or only those located in New York State?  

You must collect tax on all taxable sales of tangible personal property delivered to a New York State address, regardless of the location of the marketplace seller. This includes sellers located in and outside New York State.

How do I know what transactions qualify as taxable sales of tangible personal property?

Tangible personal property means any kind of physical personal property that has a material existence and is perceptible to the human senses (in other words, something you can see and touch). See Tax Bulletin Quick Reference Guide for Taxable and Exempt Property and Services (TB-ST-740).

Does the requirement to collect sales tax on third-party sales apply to platforms that allow third parties to make sales of hotel occupancies, ride share services, or restaurant meals?  

No. The marketplace provider requirements only apply to sales of tangible personal property. Hotel occupancy, services and restaurant food are not considered tangible personal property. However, platforms that sell hotel and short-term rental unit occupancies may be required to collect sales tax. See Tax Bulletin Hotel and Motel Occupancy (TB-ST-331) and Sales tax on short-term rental unit occupancy.

Does the requirement to collect sales tax on third-party sales apply to platforms that allow third parties to rent passenger cars?  

No. Passenger car rentals are excluded from this requirement.

I am a marketplace provider that facilitates sales for a marketplace seller that is a registered New York State sales tax vendor. Who is responsible for collecting sales tax on the facilitated sales?

As the marketplace provider, you are responsible for collecting and remitting tax on the sales you facilitate for a marketplace seller.

As a marketplace provider, how do I report sales that I facilitate for marketplace sellers on my New York State sales tax return?

Report these taxable sales the same way as taxable sales made directly by a retailer. See Tax Bulletin Filing Requirements for Sales and Use Tax Returns (TB-ST-275).

I am a marketplace provider. What records do I need to keep for taxable sales that I facilitate?

See Tax Bulletin Recordkeeping Requirements for Sales Tax Vendors (TB-ST-770).  Additionally, you must keep records that identify the marketplace seller for each sale that you facilitate.

I am a marketplace provider who provides order picking, pickup, and delivery services. I collect sales tax on all taxable sales I facilitate. The marketplace seller, a retailer that is a registered New York State sales tax vendor, is also collecting sales tax on any taxable items and other charges, and shows the tax collected on the receipt. Can I apply for a refund of the sales tax I paid to the retailer?

Yes. You may be eligible for a refund or credit. To submit a claim, file Form AU-11, Application for Credit or Refund of Sales or Use Tax, with your sales tax return. You must provide documentation that both you and your marketplace seller collected tax on the transaction. For more information, see Tax Bulletin How to Apply for a Refund of Sales and Use Tax (TB-ST-350). Also see Tax Bulletin Taxable Receipt – How Discounts, Trade-ins, and Additional Charges Affect Sales Tax (TB-ST-860).

What is a Certificate of Collection and why do I need one?

Each marketplace provider facilitating sales of tangible personal property must issue you, the marketplace seller, a Certificate of Collection. This lets you know you do not have a sales tax collection requirement on sales the marketplace provider facilitates. It also allows you to document why you did not collect tax on sales of taxable items. Alternatively, the marketplace provider can provide a publicly available agreement specifying the marketplace provider will collect sales tax on all taxable sales of tangible personal property it facilitates for delivery to a New York State address.

I am a registered sales tax vendor and make taxable sales in my retail store and on several online marketplaces. When I file my sales tax return, how do I account for the transactions where the marketplace provider has collected sales tax for me?

Include these sales on your sales tax return as gross sales and nontaxable sales. For specific information, see the return instructions.

My home-based business in New York State sells handmade items solely through a marketplace provider that collects sales tax on my behalf. Do I need to register as a sales tax vendor?

Yes. You still need to apply for a Certificate of Authority to be a sales tax vendor and file periodic returns even if the tax was collected for you. Include sales facilitated by a marketplace provider on your sales tax return in your gross sales and services amount and in your nontaxable sales. See Tax Bulletin Do I Need to Register for Sales Tax (TB-ST-175).

My out-of-state business has no storefront or other physical presence in New York State, but I make sales on several large online marketplaces that are delivered by common carrier into New York State. Do I need to register as a New York State sales tax vendor?

Certain out-of-state businesses are not required to register for sales tax. See Registration requirement for businesses with no physical presence in New York State.