For a mail-order seller, does New York sales tax depend on where the product is delivered or on where the buyer lives?

Plain-English summary

Peter Knych, who sells tangible personal property through the mail, asked two questions:

1. Must he collect New York sales tax when a Vermont resident buys his product and directs it to be delivered to a New York address?
2. Must he collect New York sales tax when a New York resident buys his product and directs it to be delivered to a Vermont address?

The Department held that the delivery point — not the buyer's residence — controls.

• New York sales tax is a "destination tax." Under 20 NYCRR 525.2(a)(3), "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."
• Delivery to a New York address is taxable. A taxable sale occurs when delivery is made to an address within New York, regardless of the purchaser's state of residence. So the seller must collect both the New York State sales tax and any local sales tax in effect where the product is delivered.
• Delivery outside New York is not taxable (by New York). When delivery is made to an address outside New York, the sale is deemed to take place at the point of delivery and no New York sales tax applies, again regardless of where the purchaser resides.

What this means for you

Ship-to address decides New York sales tax, not the customer's home state. For a mail-order or remote seller, look at where you deliver the goods. A New York delivery is taxable even for an out-of-state customer; an out-of-state delivery is outside New York's sales tax even for a New York customer.

Charge the local rate at the delivery location. Because delivery controls both the incidence and the rate, a New York delivery means collecting the state tax plus the local tax in effect at that specific delivery locality — not the rate where your business sits or where the buyer lives.

This opinion addresses only New York's tax. That a New York resident's out-of-state delivery escapes New York sales tax does not mean no tax is due anywhere — the destination state's own tax (and any New York use-tax questions on later New York use) are separate issues outside this opinion.

Common questions

Q: My out-of-state customer wants the item shipped to a New York address. Do I collect New York tax?
A: Yes. Delivery to a New York address is taxable regardless of the buyer's residence, and you must collect the state tax plus the local tax at the delivery location.

Q: My New York customer wants the item shipped out of state. Do I collect New York tax?
A: No. When delivery is made outside New York, no New York sales tax applies, regardless of where the buyer lives.

Q: Which local rate do I use on a New York delivery?
A: The local rate in effect at the place of delivery — because the delivery point controls both whether the tax applies and the applicable rate.

Citations and references

Statutes and regulations:

• 20 NYCRR 525.2(a)(3) — New York sales tax is a "destination tax"; the point of delivery controls the tax incidence and the rate

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a87_7s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-87(7)S
Sales Tax
January 26, 1987

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S861119A

On November 19, 1986, a Petition for Advisory Opinion was received from Peter Knych, 25
Rowley St., Rochester, New York 14607.
Petitioner, who sells tangible personal property through the mail, asks if he must collect New
York State sales tax when he sells his product to a Vermont resident who instructs him to deliver his
product to a New York State address and if he must collect New York State sales tax when he sells
his product to a New York resident who instructs him to deliver his product to a Vermont address.
Section 525.2(a)(3) of the sales tax regulations states that:
The sales tax is 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)(3)).
Thus, a taxable sale occurs when delivery is made to an address within New York State
regardless of the state of residence of the purchaser. Moreover, when delivery is made to an address
outside of New York State, the sale is deemed to take place at the point of delivery and no New York
sales tax would be imposed regardless of the state of residence of the purchaser.
Accordingly, when Petitioner mails his product to a New York address, he is required to
collect both the New York State sales tax and any local sales tax that may be in effect in the locality
to which he mails his product. There is no New York sales tax applicable to sales that are mailed
to addresses outside of New York State.

DATED: January 26, 1987

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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

RODERICK G. W. CHU, COMMISSIONER
GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (3/83)