Can a mail-order company that used to have traveling sales representatives in New York, but no longer has any physical presence there, stop collecting New York sales tax and surrender its vendor registration?

Plain-English summary

Journey Education Marketing, Inc., a Texas company reselling educational software, used to have a Texas-based representative who traveled to New York to meet customers and attend trade shows (though that person couldn't actually accept orders — all orders were processed at the Texas headquarters). Since the end of 1999, Journey stopped sending any representatives into New York and no longer attends New York trade shows. Its remaining sales activity is entirely mail order and internet: catalogs, promotional mailings, and its website, with all orders accepted in Texas and all items shipped by common carrier or delivered electronically. Anticipated New York sales are under $750,000 a year. With no representatives, employees, or other physical presence left in the state, Journey wanted to formally cancel its New York sales tax registration.

New York's vendor definition can reach a catalog/mail-order seller with no in-state presence — but only if it also has "some additional connection with the state" satisfying the U.S. Constitution's nexus requirement, such as traveling sales reps or other in-state agents. Journey's nexus originally came from exactly that kind of in-state representative presence. Because that presence has genuinely ended, and assuming Journey truly has no other physical contact with New York going forward, the Department agreed that catalog and website solicitation alone doesn't create nexus, so Journey is no longer required to be registered or to collect tax. It can surrender its Certificate of Authority and file a final return under the Department's standard close-out procedure.

What this means for you

Mail-order and e-commerce sellers exiting a state's physical presence

Ending your last connection to physical presence in a state — traveling reps, employees, agents — can end your sales tax nexus there even if you keep selling into the state by mail, catalog, or website, as long as those remote channels alone don't independently create nexus under that state's rules. Document exactly when the physical presence ended, since that's the operative fact.

Businesses withdrawing a sales tax registration

Surrendering your Certificate of Authority and filing a final return is the correct mechanical process once nexus genuinely ends — but get an advisory opinion or otherwise confirm your own facts match this pattern before assuming withdrawal is appropriate, since continuing web/catalog sales into the state don't disqualify you only if there's truly no other in-state connection.

Accountants and tax professionals

Remember this ruling predates the more expansive post-2018 "economic nexus" standards (Wayfair-era rules based purely on sales volume/transaction count) that many states, including New York, later adopted for remote sellers — a mail-order company with Journey's exact facts today would need to separately check whether it now has nexus purely from its dollar volume of NY sales, independent of any physical presence question.

Common questions

Q: Does selling to New York customers by catalog and website alone create nexus?
A: Not by itself under the physical-presence framework applied in this 2002 ruling — it requires "some additional connection" like in-state representatives, though note the important caveat below about later economic-nexus rules.

Q: What ended this company's nexus with New York?
A: The company's traveling sales representative stopped visiting the state, and it discontinued attending New York trade shows and any other physical presence, ending the additional connection required for catalog/mail-order solicitation to create nexus.

Q: Can the company surrender its Certificate of Authority?
A: Yes — once it has no physical presence and no in-state representatives, it may surrender its Certificate of Authority and file a final return under the Department's standard withdrawal rules.

Q: Does this ruling still reflect current law for remote sellers?
A: Not entirely — New York and most states have since adopted economic nexus standards based on sales volume that didn't exist when this 2002 opinion was issued, so a similar company today would need to separately check whether its sales volume alone creates nexus.

Q: Can another mail-order company rely on this ruling for its own withdrawal?
A: No. It's binding only on this petitioner's specific facts (and reflects law as of 2002); another company should confirm its own facts and check current nexus rules before withdrawing its registration.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4) (retail sale)
• Tax Law § 1101(b)(8)(i)(C), (D) (vendor; catalog solicitation with nexus)
• Tax Law § 1131(1) (persons required to collect tax)
• 20 NYCRR § 526.10(a)(4) (catalog solicitation vendor rule)
• 20 NYCRR § 533.1(f) (surrender of certificate of authority)
• 20 NYCRR § 533.3(e) (final returns)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_19s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(19)S
Sales Tax
June 26, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010619A

On June 19, 2001, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Journey Education Marketing, Inc., 1325 Capital Parkway #130, Carrollton, TX
75006.
The issue raised by Petitioner, Journey Education Marketing, Inc., is whether, under the
circumstances presented, a mail-order company with no offices or employees in New York State is
relieved of any future sales and compensating use tax collection obligations.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is in the business of reselling educational software products. For a period of time,
Petitioner had a representative based in Texas who traveled to New York State to meet customers
and occasionally to attend trade shows, but who did not have authority to accept sales orders. All
orders were accepted at the corporate office in Carrollton, Texas. Petitioner is currently registered
as a vendor with the State of New York for sales and use tax purposes.
Petitioner has discontinued all representatives traveling in New York and in most other
states. Petitioner’s representatives no longer attend trade shows in New York. Petitioner has not
employed salespeople or independent sales representatives who solicit sales in New York since
December 31, 1999. Petitioner states it has no other physical presence in New York.
Sales activity has been concentrated into mail order sales and sales will only be solicited
through catalogs and other promotional materials, which are sent directly to consumers, educators,
and educational institutions, and through Petitioner’s Internet Web site. All items sold are delivered
to customers by common carrier or electronically via the Internet. All orders are accepted at
Petitioner’s corporate headquarters located in Carrollton, Texas. Petitioner anticipates that taxable
sales in New York State will be less than $750,000 on an annual basis. Petitioner would like to
formally withdraw its sales tax registration in New York because it no longer has a physical
presence in the state, and no longer has employees or independent representatives soliciting sales
in the state.
Applicable Law and Regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by
subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
hundred ten, the following terms shall mean:

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June 26, 2002

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(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such or as a physical component part of tangible
personal property . . . .
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(8) Vendor. (i) The term "vendor" includes:
(A) A person making sales of tangible personal property or services, the
receipts from which are taxed by this article;
(B) A person maintaining a place of business in the state and making sales,
whether at such place of business or elsewhere, to persons within the state of tangible
personal property or services, the use of which is taxed by this article;
(C) A person who solicits business either:
(I) by employees, independent contractors, agents or other representatives;
or
(II) by distribution of catalogs or other advertising matter, without regard to
whether such distribution is the result of regular or systematic solicitation, if such
person has some additional connection with the state which satisfies the nexus
requirement of the United States constitution;
and by reason thereof makes sales to persons within the state of tangible
personal property or services, the use of which is taxed by this article;
(D) A person who makes sales of tangible personal property or services, the
use of which is taxed by this article, and who regularly or systematically delivers
such property or services in this state by means other than the United States mail or
common carrier....
Section 1131(1) of the Tax Law provides, in part:
"Persons required to collect tax" or "person required to collect any tax
imposed by this article" shall include: every vendor of tangible personal property or
services; every recipient of amusement charges; and every operator of a hotel.
Section 526.10(a)(4) of the Sales and Use Tax Regulations provides, in part:

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(i) A person who solicits business by the distribution of catalogs or other
advertising matter, without regard to whether such distribution is the result of regular
or systematic solicitation, if such person has some additional connection with the
State which satisfies the nexus requirement of the United States Constitution and by
reason thereof makes sales to persons within the State of tangible personal property
or services the use of which is subject to tax, is a vendor.
(ii) For purposes of subparagraph (i) of this paragraph, the additional
connection with the State a person may have in order to qualify as a vendor shall
include, but not be limited to:
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(b) the presence of traveling sales representatives in the State;
(c) the presence of employees, independent contractors or agents in the State;
(d) the presence of service representatives in the State....
Section 533.1(f) of the Sales and Use Tax Regulations provides, in part:
Surrender of certificates and permits. (1) Certificates of authority must be
surrendered to the New York State Department of Taxation and Finance, Sales Tax
Registration Unit, W.A. Harriman Campus, Albany, NY 12227 within 20 days of the
registrant's ceasing to do business, and must accompany the final return. Ceasing to
do business means that the registrant is no longer operating the business even though
the business may continue.
(2) Upon surrendering the certificate of authority, the vendor must complete
the reverse side of the certificate and indicate the details of the sale or other
disposition of the business. Where a certificate of authority has been lost, stolen,
destroyed or is otherwise unreturnable to the department, the owner, partner or
responsible officer of a vendor which was issued such certificate is required to notify
the Sales Tax Registration Unit that such certificate cannot be returned, setting forth
the specific reasons for such failure. The notification must be in written form, signed
by the owner, partner or responsible officer and received within 20 days of the
registrant's ceasing to do business.
Section 533.3(e) of the Sales and Use Tax Regulations provides, in part:

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Final returns. (1) A vendor who ceases operation, sells his business, or
changes the organizational form of the business must file a final return within 20
days after the occurrence of such event.
(2) The return must indicate the actual period covered by the return,
calculated from the first day of the period in which the event occurred to the final
day of business.
(3) The final return is to be on a return for the period in which such event
occurs, and must be clearly marked at the top, "FINAL RETURN". Monthly filers
are also required to file a final quarterly return.
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(4) The final return is to be completed as set forth in paragraph (b)(3) of this
section.
(5) The final return must be accompanied with payment of all taxes due, from
the first day of the period to the final day of business, as well as any tax collected on
a bulk sale, penalties and interest due, and must be accompanied by the certificate
of authority to collect taxes.
Opinion
Petitioner has discontinued its practice of having sales representatives or sales agents in
New York State and it states that it now has no physical presence in New York. Petitioner will
continue to operate a mail order sales business, with anticipated taxable sales in New York of no
more than $750,000 on an annual basis. These mail order sales will be solicited through catalogs,
similar promotional mailings and Petitioner’s Internet Web site only. All mail order sales will be
delivered via common carrier or electronically via the Internet. Petitioner would like to formally
withdraw its sales tax registration in New York because, Petitioner states, it no longer has a physical
presence in the state and no longer has employees or independent representatives soliciting sales in
the state.
Since Petitioner solicits sales in New York State by the distribution of catalogs and other
advertising materials, Petitioner could be required to register as a vendor under Section
1101(b)(8)(i)(C)(II) of the Tax Law if it had an additional connection with New York State which
satisfies the nexus requirement of the United States Constitution. Petitioner’s nexus with New York
State ended when it no longer had employees or independent sales representatives working on its
behalf in the State and had no other physical presence in the State. Assuming Petitioner maintains
no other physical presence or contact in New York, as outlined in Section 526.10(a)(4)(ii) of the
Sales and Use Tax Regulations, Petitioner is no longer required to be registered or to collect tax.

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Petitioner may surrender its Certificate of Authority and file its final sales and use tax return in
accordance with the guidelines set forth in Sections 533.1 and 533.3 of the Sales and Use Tax
Regulations.

DATED: June 26, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.