New York is the birthplace of click-through nexus, one of the least favorite and most controversial forms of nexus. The state is aggressive with their sales tax policies so it is important to know when you, as an ecommerce retailer, will need to register with the state and how to go about doing so.
When making sales in New York that will be subject to sales tax, you must register with their Tax Department and obtain a Certificate of Authority. The Certificate of Authority is New York’s version of a sales tax license and it gives you the “authority” to collect tax on your sales. If you expect to make taxable sales in New York State, you must register with their Tax Department at least 20 days before you begin business.
Applying for a Certificate of Authority
To apply for a Certificate of Authority it is strongly suggested that you use the NYS License Center.
Before you begin the application process make sure you have the following information available:
- Reason for applying
- Contact information for the business
- Entity Type
- Date you will begin business for sales tax purposes
- Bank account information
- Business contacts’ and responsible persons’ information:
- Name, business title, home address, home phone number, ownership percentage, and profit distribution percentage.
In addition to the above information, you will also need the following information for each person related to the account:
- Social security number, effective date of assuming business responsibilities, and primary business duties.
Types of Certificates of Authority
The Tax Department issues two types of Certificates: regular and temporary. The type of Certificate you will need is based on the anticipated length that your business activities will last within the state. The same form and application process is used for both types of certificates; however, a temporary certificate is issued with a beginning and ending date.
A regular Certificate of Authority should be applied for if you have nexus within the state and will be making taxable sales. Please note that if you plan on making sales at a show or other event, such as a craft show, antique show, flea market, or sporting event, you should still apply for a regular Certificate, even if your sales are only on an occasional basis.
If you expect to make taxable sales in New York State for no more than six-months within any 12-month period, you should only apply for a temporary Certificate.
To request a temporary Certificate, you must indicate when you expect to begin and end your business operations. This scenario is less likely as an ecommerce retailer so confirm with the state if this is the Certificate you think you should apply for.
Once you receive your Certificate, you are considered to be in business even if you never make a sale. Therefore, you must file your sales tax returns on time, even if you have no taxable sales. The state insists it will charge penalties for late filing even if you owe no tax.
If you are still unsure of whether or not you should apply for a Certificate of any kind with the state of New York, please refer to their website for more details. When in doubt, it is always best to ask.