Does an out-of-state seller whose products are sold and shipped through an online marketplace (and stored at a New York fulfillment center) have to register for and collect New York sales tax?

Plain-English summary

A Louisiana company sells scopes and binoculars through a big online marketplace ("Company X"). It has no offices or employees in New York, but Company X may store its inventory at a New York fulfillment center and ships orders from there. Company X publicly states that it calculates, collects, and remits state sales tax on third-party sellers' transactions in marketplace-collection states, including New York. The seller asked whether it has to collect and remit New York sales tax.

The Office of Counsel concluded the company is a marketplace seller and does not need to register or collect New York sales tax — provided Company X (the marketplace provider) is collecting and remitting on the sales it facilitates, and the company makes no other sales into New York. Under New York's marketplace law, a provider that facilitates a sale (provides the forum and collects the receipts) must collect the tax, and that relieves the seller of the duty for those facilitated sales. Company X's public collection commitment matches the Commissioner's approved language in TSB-M-19(2.1)S, which substitutes for a Form ST-150 certificate. Sales shipped to customers outside New York are not subject to New York tax at all.

The opinion is careful about one thing: it did not decide whether the seller has nexus with New York. Storing goods at an unaffiliated fulfillment center, where the center only accepts orders, handles inquiries, bills/collects, and ships, does not by itself create nexus — but nexus is fact-dependent, so the Department declined to rule on it. The marketplace-collection result holds regardless.

What this means for you

Out-of-state sellers on marketplaces (Amazon, etc.)

If a marketplace facilitates your New York sales and collects/remits the tax (which the major platforms do), you generally don't have to register or collect on those sales — even if your inventory sits in a New York fulfillment center. Confirm the platform's public collection statement covers New York. If you make other New York sales off-platform, those can trigger your own registration and collection duties.

The fulfillment-center "safe harbor"

Merely having your goods stored at, and shipped by, an unaffiliated fulfillment center whose role is limited to accepting orders, answering inquiries, billing/collecting, and shipping does not by itself create nexus. (If the center is affiliated with you, or does more, the analysis changes — and nexus is always fact-specific.)

Accountants and tax professionals

The marketplace provider's collection obligation under Tax Law § 1101(e) is independent of the seller's own nexus. A provider's Form ST-150 or Commissioner-approved public agreement language (TSB-M-19(2.1)S) relieves the seller for facilitated sales. Watch the economic-nexus thresholds ($500,000 and 100 sales over the prior four quarters) for any non-facilitated sales.

Common questions

Q: My inventory is stored in New York by the marketplace. Do I have to register?
A: Generally no, if the marketplace collects and remits New York tax on those sales and you make no other New York sales. The opinion did not decide nexus, but the marketplace collection relieves you for facilitated sales.

Q: Who actually remits the tax?
A: The marketplace provider. It must collect and remit on all taxable New York sales it facilitates, regardless of whether you'd otherwise have to register.

Q: What about my sales shipped to customers outside New York?
A: Those are not subject to New York sales tax.

Q: Does this mean I never have New York obligations?
A: Not necessarily. If you make sales into New York outside the marketplace, you may have to register and collect on those, and you should track the economic-nexus thresholds.

Citations and references

Statutes and guidance:
- Tax Law § 1101(b)(8), (b)(8)(iv) (vendor/nexus; economic-nexus presumption)
- Tax Law § 1101(e), (e)(1), (e)(2) (marketplace provider/seller; facilitated sales)
- Form ST-150, Marketplace Provider Certificate of Collection
- TSB-M-19(4)S (economic nexus); TSB-M-19(2.1)S (marketplace collection; approved public-agreement language)
- South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao.htm
• Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/24-52s.htm
• Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a24-52s.pdf

Original ruling text

TSB-A-24(52)S
Sales Tax
November 12, 2024

The Department of Taxation and Finance received a Petition for Advisory Opinion from [ REDACTED ] (“Petitioner”). Petitioner asks whether it must collect and remit sales tax on sales of tangible personal property to consumers within or outside New York State that are stored in the State by a third-party fulfillment provider.

We conclude that Petitioner is a marketplace seller and does not need to register for sales tax purposes or collect and remit sales tax if sales tax is being collected and remitted on sales facilitated by its marketplace provider, and it makes no other sales in New York State.

Facts

Petitioner sells a variety of scopes and binoculars. Petitioner is based in Louisiana and does not have any offices or employees in New York State. Petitioner has an agreement with Company X to facilitate the sale of Petitioner’s products on Company X’s website. Company X may store Petitioner’s product at a New York facility prior to purchase by New York or out-of-state consumers. Upon receipt of a consumer order from Petitioner’s inventory, Company X fulfills and ships the products. Company X publicly states on its website that it “will be responsible to calculate, collect, remit and refund state sales tax on sales sold by third party sellers for transactions destined to states where Marketplace Facilitator and/or Marketplace collection legislation is enacted.”

Analysis

In general, businesses that sell tangible personal property or taxable services to customers in New York are required to register for sales tax purposes and collect and remit sales tax if they have nexus with New York State. Tax Law § 1101(b)(8). Nexus may be established in various ways, including the presence of property, employees, or representatives in the State or by the solicitation of sales in the State. An entity may have nexus if it regularly or systematically solicits business in New York State, even if it has no physical presence in the State. See Tax Law § 1101(b)(8)(iv); TSB-M-19(4)S; see generally, South Dakota v. Wayfair, Inc. et al., 138 S.Ct. 2080, 2099-2100 (2018). For example, the Tax Law creates a presumption that an entity with no physical presence in New York State but has cumulative sales of $500,000 and has made or facilitated 100 or more sales of tangible personal property within the State in the previous four sales tax quarters must register for sales tax purposes, collect sales tax, and remit the same to the Department. See Tax Law § 1101(b)(8)(iv); TSB-M-19(4)S. However, the presence of a seller’s property on the premises of an unaffiliated fulfillment center in this State does not create nexus for the seller if the services provided by the fulfillment center are limited to (i) the acceptance of orders; (ii) responses to consumer correspondence and inquiries; (iii) billing and collection activities; or (iv) the shipment of orders from an inventory of products offered for sale. Because determinations about nexus turn on multiple factors and are heavily fact-dependent, we cannot provide an opinion about whether Petitioner has nexus with New York.

A marketplace provider that has nexus with New York is required to collect and remit sales tax on all taxable sales of tangible personal property that it facilitates for marketplace sellers, regardless of whether the marketplace seller is required to register for sales tax purposes See Tax Law § 1101(e). A sale is facilitated by the marketplace provider if it “provides the forum in which, or by means of which, the sale takes place or the offer of sale is accepted, including a shop, store, or booth, an internet website, catalog, or similar forum; and…[the marketplace provider] or an affiliate … collects the receipts paid by a customer to a marketplace seller for a sale of tangible personal property, or contracts with a third party to collect such receipts.” Tax Law § 1101(e)(1). A marketplace seller is a “person…who has an agreement with a marketplace provider under which the marketplace provider will facilitate sales of tangible personal property by such person…” Tax Law § 1101(e)(2).

A marketplace provider shall either execute and deliver to a marketplace seller Form ST-150, Marketplace Provider Certificate of Collection, or have a publicly available agreement approved by the Commissioner stating the marketplace provider will remit tax on marketplace seller sales made to consumers in New York. If the marketplace provider delivers Form ST-150 or posts approved public agreement language, the marketplace seller is relieved from its obligation to remit sales tax on sales to New York customers that are facilitated by the marketplace provider. In addition, the marketplace seller would not be required to register for sales tax if it makes no sales to New York customers other than those facilitated by the marketplace provider. TSB-M-19(2.1)S Sales Tax Collection Requirement for Marketplace Providers contains the Commissioner’s approved language for a publicly available agreement between a marketplace provider and marketplace seller.

In this matter, Company X and Petitioner have agreed that Company X will advertise and facilitate sales of Petitioner’s products through its website. Accordingly, Company X is a marketplace provider and Petitioner is a marketplace seller. Company X is required to collect sales tax on sales of Petitioner’s tangible personal property sold through its website. Company X publicly states on its website that it “will be responsible to calculate, collect, remit, and refund sales tax on sales sold by third party sellers for transactions destined to states where Marketplace Facilitator and/or Marketplace collection legislation is enacted.” Company X includes New York on the list of states that it will collect and remit sales and use tax on behalf of its sellers. The website’s language is consistent with the publicly available agreement language in TSB-M-19(2.1)S.

Therefore, Petitioner does not need to collect and remit sales tax on New York sales facilitated by Company X‘s website and will not be required to register for sales tax purposes as long as it makes no other sales in New York State. Sales of tangible personal property delivered to customers outside the State are not subject to New York State and local sales taxes.

DATED: November 12, 2024

MARY ELLEN LADOUCEUR
Principal Attorney

Note: An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set forth therein and is binding on the Department only with respect to the person or entity to whom it is issued and only if the person or entity fully and accurately describes all relevant facts. An Advisory Opinion is based on the law, regulations, and Department policies in effect as of the date the Opinion is issued or for the specific time period at issue in the Opinion. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.