Does an out-of-state manufacturer have to register and collect New York sales tax if its only New York contact is an occasional trade show demo and orders shipped by mail or common carrier?

Plain-English summary

ESP Inc., a Rhode Island manufacturer of solder paste, solder cream, paste flux, and dispensing accessories, asked whether it must collect New York sales tax on goods delivered to New York customers by U.S. mail or common carrier. ESP has no New York office, owns no New York property, and doesn't solicit business through employees, contractors, or agents there. Its only New York presence is participating in a trade show roughly once every other year, where its products are demonstrated but not sold or offered for sale. It doesn't send maintenance staff into New York (equipment is serviced elsewhere), and it doesn't deliver anything into New York except by mail or common carrier. Customers find ESP through national trade publications and then order by phone or mail, both handled outside New York.

New York's "vendor" definition under Tax Law § 1101(b)(8)(i) sweeps in an out-of-state seller under several different tests -- for example, soliciting business through employees or agents, regularly and systematically distributing catalogs or advertising with enough additional connection to satisfy constitutional nexus, or regularly/systematically delivering property in New York by means other than mail or common carrier. Critically, a seller who solely delivers by mail or common carrier (clause (D)) or solely solicits via catalogs/advertising (clause (E)) gets special treatment under Tax Law § 1131: even if that alone made them a "vendor," they wouldn't become a "person required to collect tax" until 20 days after they'd be required to register.

On these facts, the Department found that even though demonstrating products at a trade show can be a form of solicitation, ESP's minimal, infrequent New York contact -- combined with delivering exclusively by mail or common carrier -- wasn't enough to require registration or tax collection. The opinion leans on its own prior ruling on substantially similar facts, Electron Fusion Devices, Inc., which reached the same conclusion.

What this means for you

Out-of-state manufacturers and mail-order/e-commerce sellers

Minimal, occasional New York contact (like an infrequent trade show appearance where you demo but don't sell) combined with delivery solely by mail or common carrier can keep you outside New York's vendor-registration and tax-collection requirements. But this is a narrow, fact-specific safe harbor -- regular in-state solicitation, sales staff, property, or non-mail/carrier delivery would change the analysis.

Companies exhibiting at New York trade shows

Simply demonstrating your product at a New York trade show, without actually selling there, is not by itself enough to trigger a New York collection obligation -- as long as you don't otherwise have a regular New York presence.

Accountants and tax professionals

This is a useful nexus checklist opinion, applying the multi-clause "vendor" definition in § 1101(b)(8)(i) and tying the outcome to the near-identical Electron Fusion Devices precedent -- helpful for advising clients on the line between "occasional presence" and "regular/systematic" New York solicitation.

Common questions

Q: Does demonstrating a product at a trade show create nexus by itself?
A: The opinion acknowledges trade show demonstrations "may be considered a form of solicitation," but on these particular facts (infrequent, no sales at the show, no other New York activity) it wasn't enough to require registration.

Q: What would change the answer?
A: Any additional activity sufficient to satisfy the statutory and constitutional nexus tests in § 1101(b)(8)(i) -- e.g., regular in-state sales solicitation, New York employees or agents, in-state property, or delivering goods into New York by means other than mail or common carrier.

Q: Can another out-of-state seller rely on this ruling?
A: No. This advisory opinion binds the Department only with respect to ESP Inc. and the exact facts it described.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(8)(i) (definition of vendor, clauses A-F)
• Tax Law § 1131 (persons required to collect tax; property/services the use of which is taxable)

Prior rulings and cases referenced:

• Electron Fusion Devices, Inc., Adv Op Comm T&F, October 1, 1996, TSB-A-96(62)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a96_83s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-96 (83) S
Sales Tax
December 26, 1996

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S961022C

On October 22, 1996, the Department of Taxation and Finance received a Petition for
Advisory Opinion from ESP Inc., 14 Blackstone Valley Place, Lincoln, Rhode Island, 02865-1145.
The issue raised by Petitioner, ESP Inc., is whether Petitioner, a Rhode Island corporation,
is liable to collect New York State and local sales tax on goods that are delivered via U.S. mail or
common carrier to New York customers.
Petitioner submits the following facts as the basis for this Advisory Opinion. Petitioner is
a manufacturer of solder paste, solder cream, paste flux and dispensing accessories which are used
in various manufacturing applications. Petitioner does not maintain a place of business in New York
State nor does it have an ownership interest in property in New York. Petitioner states that it does
not solicit business by employees, independent contractors, agents or other representatives in New
York State. Petitioner may, however, participate in a trade show in New York once every other year,
at which its products are demonstrated, but not sold or offered for sale. Also, Petitioner does not
send maintenance personnel into New York to service equipment. The equipment is serviced outside
of New York. Petitioner does not regularly or systematically deliver property or services in New
York by means other than U.S. mail or common carrier.
Petitioner advertises in national trade publications and as a result of these advertisements is
contacted by telephone and mail by customers worldwide who wish to order Petitioner's products.
The telephone is answered outside of New York State. Also, the mailing address is located outside
of New York State.
Section 1101(b) of the Tax Law provides, in part:
(b) 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:
*

*

*

(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

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TSB-A-96 (83) S
Sales Tax
December 26, 1996

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;
(E) A person who regularly or systematically solicits business in this state by
the distribution, without regard to the location from which such distribution
originated, of catalogs, advertising flyers or letters, or by any other means of
solicitation of business, to persons in this state and by reason thereof makes sales to
persons within the state of tangible personal property, the use of which is taxed by
this article, if such solicitation satisfies the nexus requirement of the United States
constitution;
(F) A person making sales of tangible personal property, the use of which is
taxed by this article, where such person retains an ownership interest in such property
and where such property is brought into this state by the person to whom such
property is sold and the person to whom such property is sold becomes or is a
resident or uses such property in any manner in carrying on in this state any
employment, trade, business or profession.
Section 1131 of the Tax Law provides, in part:
(1) "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. Said
terms shall also include any officer, director or employee of a corporation or of a
dissolved corporation, any employee of a partnership, any employee or manager of
a limited liability company, or any employee of an individual proprietorship who as
such officer, director, employee or manager is under a duty to act for such

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Sales Tax
December 26, 1996

corporation, partnership, limited liability company or individual proprietorship in
complying with any requirement of this article; and any member of a partnership or
limited liability company. Provided, however, that any person who is a vendor solely
by reason of clause (D) or (E) of subparagraph (i) of paragraph (8) of subdivision (b)
of section eleven hundred one shall not be a "person required to collect any tax
imposed by this article" until twenty days after the date by which such person is
required to file a certificate of registration pursuant to section eleven hundred thirty­
four.
*
*
*
(4) "Property and services the use of which is subject to tax" shall include: (a)
all property sold to a person within the state, whether or not the sale is made within
the state, the use of which property is subject to tax under section eleven hundred ten
or will become subject to tax when such property is received by or comes into the
possession or control of such person within the state; (b) all information services,
protective and detective services and interior decorating and design services as such
services are described in subdivision (c) of section eleven hundred five, rendered to
a person within the state, whether or not such services are rendered from or at a
location within the state; (c) all services rendered to a person within the state,
whether or not such services are performed within the state, upon tangible personal
property the use of which is subject to tax under section eleven hundred ten or will
become subject to tax when such property is received by or comes into possession
or control of such person within the state; (d) all property sold by a person making
sales described in clause (F) of subparagraph (i) of paragraph eight of subdivision (b)
of section eleven hundred one of this article to a person described in such clause (F)
who purchases such property at retail, whether or not the sale is made within the
state; and (e) all telephone answering service rendered to a person within the state,
whether or not such services are performed within the state, the use of which is
subject to tax under section eleven hundred ten or will become subject to tax when
such service is received by or comes into possession or control of such person within
the state.
In this case, Petitioner does not maintain a place of business in New York State nor does it
have ownership interest in property in New York. Petitioner may participate at a trade show in New
York once every other year, at which Petitioner's products are demonstrated, but not sold. Petitioner
does not otherwise solicit business by employees, independent contractors, agents or other
representatives in New York State. Also, Petitioner does not send maintenance personnel into New
York to service equipment. Petitioner does not regularly or systematically deliver property or
services in New York by means other than U.S. mail or common carrier. Petitioner does advertise
in national trade publications and as a result of these advertisements is contacted by telephone and
mail by customers worldwide who wish to order Petitioner's products. Electron Fusion

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Sales Tax
December 26, 1996

Devices. Inc., Adv Op Comm T&F, October 1, 1996, TSB-A-96(62)S, concluded, based on
substantially similar facts, that an out-of-state vendor was not required to collect sales tax on sales
delivered to customers in New York.
Although demonstrating products at trade shows may be considered a form of solicitation,
under the facts presented above and assuming no other activities by Petitioner sufficient to satisfy
the statutory and constitutional provisions, Petitioner is not required to register as a vendor and is
not liable to collect New York State and local sales tax on its goods that are delivered via U.S. mail
or common carrier to New York customers.

Dated: December 26, 1996

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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