How New York Sales Tax Applies To What You Sell
Whether an item is taxable turns on categories that are not intuitive. Getting the category wrong is the retailer's liability, not the customer's.
New York's sales tax is collected by the seller and remitted to the State. The tax is the customer's, in principle. The obligation to have collected it correctly is entirely the retailer's, and an assessment years later lands on the business.
Registration comes first
Before making taxable sales you must register with the Department of Taxation and Finance and receive a Certificate of Authority. It has to be displayed at the place of business, and selling without one carries penalties.
Categories that catch people
Clothing and footwear are treated differently from most retail goods in New York, with an exemption that applies below a threshold — and the State and local portions of the tax do not always follow the same rule, which is why the same jumper can be taxed differently in different counties.
Food is another. Grocery food is generally exempt while prepared food is generally taxable, and the boundary between them turns on details like whether an item is heated, or sold with utensils. Businesses that sell both need to be confident about which side each item sits on.
Services are taxable only when specifically enumerated. Many are; many are not. The instinct that goods are taxed and services are not is wrong often enough to be dangerous.
Rates are local
The combined rate is the State rate plus the local rate for the jurisdiction where the sale is delivered, and local rates vary. A retailer shipping across New York State cannot apply a single rate to everything.
Filing, and the records behind it
Filing frequency depends on the volume of tax collected, and the Department sets it. Keep records that let you show what was sold, at what rate, and why an exemption applied — including exemption certificates from wholesale customers. In an audit, an exemption you cannot document is a sale you should have taxed.
Rates, thresholds and category rules change. Confirm current figures with the Department before relying on any of them.
This is general information, not tax advice. Rates and thresholds change; confirm current figures with the agencies linked below or with your accountant.
