With aspects such as varying jurisdictional rates and unique taxability rules, New York State's intricate sales tax laws make it challenging to file an accurate return. New York has a base sales tax rate of 4%, yet many counties and cities charge additional sales taxes. Because of this, your business must track every customer's address so that the correct amount of tax is collected and reported accurately on your returns.
Completing a New York sales tax return is a three-step process. Businesses must start by identifying their filing frequency and due dates. They must then prepare the return, before finally filing and remitting the sales tax. Following this process will help you to prepare for and complete your return smoothly and accurately.
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The timing for filing a return depends on quarterly gross receipts and annual sales tax liability. Most businesses are required to file New York sales tax returns on a quarterly basis. When they first register for sales tax, a filing schedule will be assigned.
These are the sales tax quarters in New York:
Once you begin filing returns, your filing frequency may change if your total taxable receipts amount to US$300,000 or more in one quarter, or if you owe New York US$3,000 or less in sales tax over a full tax year. Note that the sales tax year for New York runs from March to February, rather than syncing up with the calendar year.
Sales tax returns are due on the 20th day of the month following the end of a filing schedule period. For example, if you're on a quarterly filing schedule, the return for the December to February quarter will be due on 20 March.
Some high-volume businesses file quarterly New York sales tax returns but have to make monthly prepayments. Any business with an annual sales tax liability of over US$500,000 may be required to make prepayments using the PrompTax programme. The New York State Department of Taxation and Finance will send a letter if you are required to participate in the prepayment programme. If you fail to make prepayments after receiving this letter, you could face significant penalties, such as interest on tax owed.
The first step in preparing a return is to collect the sales information for the tax period – this may be a month, a year or a quarter. The New York Department of Taxation and Finance online filing system outlines a list of the fields that businesses need to complete in order to prepare the return. This can be a time-consuming process, so ensure that you allocate plenty of time for data collection.
In general, filing a sales tax return requires the following sales transaction information:
Businesses will need to know two things to complete their New York sales tax return: how much they sold – both in total sales and in taxable sales – and who they sold to.
If the amount of taxable sales does not reach economic nexus thresholds in New York, then a sales tax return might not be required. You can find out whether economic nexus applies to you by checking the list of sales tax registration requirements on the New York Department of Taxation and Finance website.
In addition to meeting economic nexus thresholds, if a business has employees, an office or a warehouse located in New York State and is selling taxable goods and/or services, then the business must collect sales taxes on all taxable transactions, file returns and pay the appropriate amount to the state.
For example, Albany County charges an extra 4% of sales tax on top of New York State's 4%. This means that businesses must collect 8% of sales tax for transactions with buyers in Albany County.
The New York Department of Taxation and Finance has an online filing system that will outline what information to fill in to generate the return. To file a sales tax return online, start by logging in and following the prompts. Once you have completed the return, it's time to remit the total calculated sales taxes for that return, minus any monthly prepayments that have already been made. Businesses that are required to e-file their sales tax returns are also required to make electronic payments rather than sending a paper cheque.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.