Thursday, March 27, 2014

Who must be registered for sales tax purposes

If you will be selling property or services in New York State that are subject to sales tax, you may be required to collect the sales tax from the person to
whom you make the sale. In general, the sales tax you must collect and remit is computed using the combined state and local rate in effect in the locality where you deliver the taxable product or service to the customer. If you must collect sales tax on your sales, then you must register for sales tax purposes with the Tax Department and obtain a Certificate of Authority (see How to Register for New York State Sales Tax (TB-ST-360)).

You must also be registered for sales tax purposes to issue or accept most New York State sales tax exemption documents. For example, even though wholesalers may never collect sales tax because all of their purchases and sales are for resale (and, therefore, are eligible for exemption from sales tax), they must still be registered to legally issue and accept most exemption documents. For additional information on who must be registered for sales tax purposes, see Do I Need to Register for Sales Tax? (TB-ST-175).

If you are required to register for sales tax purposes but fail to do so and you engage in business without having obtained a valid Certificate of Authority,
you will be subject to a penalty. The penalty is up to $500 for the first day business is conducted without having obtained a valid Certificate of
Authority, plus up to $200 per day for each day thereafter. The maximum penalty for engaging in business without obtaining a valid Certificate of Authority is $10,000. See Sales and Use Tax Penalties (TB-ST-805).

If you change your organizational structure (for example, from a sole proprietorship to a corporation, a limited liability company, or a partnership), the new organization must register for sales tax purposes and obtain a new Certificate of Authority. The new business must obtain its own Certificate of Authority before it begins operating. You must also file a final return for your existing business and surrender the Certificate of Authority that was issued to the existing business. See Amending or Surrendering a Certificate of Authority (TB-ST-25) and Filing Period Indicators on Final Sales Tax Returns (TB-ST-270).

If you are purchasing, transferring, or assigning either part or all of the assets of an existing business, there are specific rules that apply to the transaction. For more info, read A Guide to Sales Tax in New York State.

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