Does a New York precious-metals broker have to collect New York sales tax on bullion it brokers or sells to New York customers, including drop-shipments from an out-of-state supplier?

Plain-English summary

Buffalo Refining Associates dealt in precious and strategic metals — bullion, coins, ingots — both as a broker and as a seller for its own account. It asked how New York sales tax applies to three situations: (1) brokering a sale between an out-of-state refiner and a New York resident, where the refiner ships the metal directly to the New York client (a drop-shipment); (2) selling and delivering metal to a New York dealer that holds a sales-tax vendor identification number; and (3) selling and delivering metal to a customer with no identification or exemption certificate.

The Department held the petitioner is a vendor and must collect the tax unless a proper certificate is taken.

• Sales tax is a "destination tax." Under 20 NYCRR 525.2(a), the point of delivery — where the vendor transfers possession to the purchaser — controls both whether tax applies and the rate. Metal delivered to a New York customer is delivered in New York.
• The broker is a "vendor." By finding customers, communicating offers, arranging the deals, and also selling for its own account, the petitioner is a "vendor" under § 1101(b)(8) — the Department cited Alan Drey Company, Inc. v. State Tax Commission, 67 A.D.2d 1055. A vendor is a "person required to collect tax" under § 1131(1), and must collect it from the customer under § 1132(a).
• Everything is presumed taxable without a certificate. Section § 1132(c) presumes all receipts taxable until the contrary is shown, and lets a vendor treat a sale as exempt only if it takes a properly completed resale or exemption certificate from the purchaser. Otherwise the sale is "deemed a taxable sale at retail."
• Applying that: in issue (2), the dealer's valid vendor/exemption certificate lets the petitioner sell without collecting tax; in issues (1) and (3), the petitioner must collect the State and local tax on metal delivered to the New York customer.

What this means for you

Brokering a sale can make you the tax collector. You don't have to take title to be a "vendor." If you arrange sales and also sell on your own account, New York can treat you as a vendor required to collect sales tax — even on a drop-shipment where an out-of-state supplier ships straight to your New York customer.

Delivery in New York is what counts. Because the tax is a destination tax, metal (or any tangible property) delivered to a customer in New York is a New York sale. The out-of-state location of the refiner or supplier doesn't remove the transaction from New York tax.

A valid exemption certificate is your only safe harbor. Every sale is presumed taxable. To sell without collecting tax — for example to a dealer buying for resale — you must actually take and keep a properly completed resale or exemption certificate. Without it, the sale is deemed taxable and the collection burden falls on you.

Note the era. This 1981 opinion predates later changes; New York now provides a specific exemption for certain bullion sales above a threshold. Confirm the current treatment of precious-metals sales before relying on this result for a present-day transaction.

Common questions

Q: I'm only the middleman — the out-of-state refiner ships to my customer. Why do I owe collection duty?
A: Because arranging the sale (and selling on your own account) makes you a "vendor" under § 1101(b)(8), and the metal is delivered to a customer in New York. As a vendor you're a person required to collect the tax.

Q: My customer is a dealer buying for resale. Do I still collect?
A: Only collect if the dealer doesn't give you a proper certificate. If you take a properly completed resale/exemption certificate, you can sell without collecting; without it, § 1132(c) deems the sale taxable.

Q: Does it matter that the supplier is outside New York?
A: No. New York's sales tax is a destination tax — delivery to your New York customer is the taxable event, regardless of where the supplier sits.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) — tax on receipts from every retail sale of tangible personal property
• Tax Law § 1101(b)(5) — "sale" is a transfer of title or possession for consideration
• Tax Law § 1101(b)(8) — definition of "vendor"
• Tax Law § 1131(1) — vendors are persons required to collect tax
• Tax Law § 1132(a) — vendor must collect tax from the customer
• Tax Law § 1132(c) — presumption of taxability; resale/exemption certificate requirement
• 20 NYCRR 525.2(a) — sales tax as a "destination tax"

Case cited:

• Alan Drey Company, Inc. v. State Tax Commission, 67 A.D.2d 1055

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_52s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(52)S
Sales Tax
November 17, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810415A

On April 15, 1981, a Petition for Advisory Opinion was received from Buffalo Refining
Associates, 223 Ellicott Square Building, Buffalo, New York 14203.
The issues raised are:
(1)

Whether Petitioner when acting as a broker for the sale, purchase or acquisition of
precious or strategic metals in the form of bullion, coins, ingots or other physical
forms, between a refiner located outside of New York State and a New York State
resident consumer, is obligated to assess, collect or report New York State sales tax
on any transaction Petitioner shall be instrumental in negotiating;

(2)

Whether it is permissible for Petitioner to sell and deliver precious or strategic metals
in the form of bullion, coins, ingots or other physical forms to any New York State
corporation, business or individual with a tax identification number or tax exemption
certificate without assessing, collecting or reporting New York State sales tax; and

(3)

Whether Petitioner is required to assess, collect and report New York State sales tax
on sales where Petitioner delivers possession of precious metals or strategic metals
in the form of bullion, coins, ingots or other physical forms to any customer not
having a tax identification number or tax exemption certificate.

In issue (1) Petitioner acts only in the capacity of a broker between a local resident, who
wishes to purchase 100 ounces of fine silver bullion, and an out-of-state supplier. Petitioner performs
the following:
(a)

Quotes the current price, including Petitioner's commission, to the client (local
resident);

(b)

Accepts the client's order and payment for the 100 ounces of silver (excluding local
sales tax); and

(c)

Forwards the order along with payment (excluding commission) to the out-of-state
supplier.

After receiving the order and payment, the out-of-state supplier fills the order and ships 100
ounces of silver bullion directly to Petitioner's New York State client. Neither Petitioner nor the out­
of-state supplier charges or collects New York sales tax.

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-81(52)S
Sales Tax
November 17, 1981

In issue (2), Petitioner makes delivery directly to its New York State customer. The customer,
in this case, is a dealer and, as such, either has or is requested to obtain a sales tax vendor
identification number. Upon presenting the sales tax vendor identification number to Petitioner, the
customer makes payment and takes delivery of the silver. Sales tax is not charged or collected by
Petitioner.
In issue (3) Petitioner sells and delivers silver bullion to its customer. Petitioner charges,
collects and reports all State and local sales taxes.
Section 1105(a) of the Tax Law imposes a tax on the "receipts from every retail sale of
tangible personal property, except as otherwise provided in this article."
Section 1101(b)(5) of the Tax Law defines the terms "sale, selling or purchase" as "Any
transfer of title or possession or both . . . for a consideration, or any agreement therefor . . . ". The
Sales and Use Tax Regulations describes the sales tax as: "A 'Destination Tax', that is, the point of
delivery or the point at which possession is transferred by the vendor to the purchaser or designee
controls both the tax incident and the tax rate." 20 NYCRR 525.2(a).
Section 1101(b)(8) of the Tax Law defines the term "vendor", in relevant part, as:
"(A)

A person making sales of tangible personal property or services, the receipts of 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."

Section 1131(1) of the Tax Law provides that: "Persons required to collect tax" or "persons
required to collect any tax imposed by this article" shall include: every vendor of tangible personal
property or services; . . ." Section 1132(a) of the Tax Law states, in part: "Every person required to
collect the tax shall collect the tax from the customer when collecting the price . . . to which it
applies . . . ."
Section 1132(c) of the Tax Law states, in part: "For the purpose of the proper administration
of this article and to prevent evasion of the tax hereby imposed, it shall be presumed that all receipts
for property . . . are subject to tax until the contrary is established, and the burden of proving that any
receipt . . . is not taxable hereunder shall be upon the person required to collect tax or the customer.
Unless (1) a vendor shall have taken from the purchaser a certificate in such form as the tax
commission may prescribe, signed by the purchaser and setting forth his name and address and . .
. , the number of his registration certificate, together with such other information as said commission
may require, to the effect that the property or service was purchased for resale or for some use by
reason of which the sale is exempt from tax under the provision of section eleven hundred fifteen,
. . . the sale shall be deemed a taxable sale at retail."

-3­
TSB-A-81(52)S
Sales Tax
November 17, 1981

Petitioner is engaged in strategic or precious metals transactions as a broker and receives
compensation for its services of finding customers desiring to purchase such metals from a refiner
or producer, communicating offers between the parties and arranging the specific details of the
transaction. Petitioner also makes sales for its own account to dealers and ultimate consumers. Such
activities render Petitioner a "vendor" within the meaning and intent of section 1101(b)(8) of the Tax
Law. Alan Drey Company, Inc. v. State Tax Commission 67 AD 2d 1055. Thus, Petitioner is a
"person required to collect tax" pursuant to section 1131(1) of the Tax Law.
Accordingly, Petitioner, whether acting as broker or seller, must collect the State and local
sales tax on all sales of precious or strategic metals delivered to customers within New York State,
unless Petitioner receives a properly completed exemption certificate from its customers. Tax Law
1132(c).

DATED: October 29, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau