New York and California have both adopted provisions that will require E-Commerce facilitators/providers (i.e. Amazon, eBay, etc.) to collect and remit sales tax on taxable sales made by businesses who use their marketplace. This is great news for sellers who ONLY make sales through a marketplace facilitator, as the responsibility to collect and remit sales tax generally does not fall on them.
These two jurisdictions have different timelines for when the new law will go into effect:
New York:
- Applies to sales occurring on and after June 1, 2019
California:
- Applies to sales occurring on and after October 1, 2019
Sellers who make sales to customers located in New York or California through their own website or their place of business are subject to the following economic nexus rules:
New York Threshold:
- $300,000 in total sales and more than 100 orders
- In the immediately preceding four quarters
California Threshold:
- $500,000 of total sales
- For the preceding or current calendar year
If the above thresholds are met, you are required to register for sales tax and begin collecting and remitting sales tax on taxable sales. If you make sales to New York and California customers through a marketplace provider AND through your own website or place of business, the marketplace provider will collect and remit sales tax on the sales they facilitate. You will be obligated to collect and remit sales tax on the sales you facilitate.
Please note that any previous physical presence nexus rules continue to apply in both states even if these economic thresholds are not met.
If you would like to learn more about how these changes may impact your business, please contact a Sax advisor at (973) 472-6250, or contact our firm’s in-house advisors on sales and use tax and state tax nexus, Peggy Tilles (ptilles@saxllp.com) or Mathew Giordano (mgiordano@saxllp.com).