SALT Report 1411 – The New York Department of Taxation and Finance issued a tax bulletin that provides information for businesses regarding their sales tax responsibilities.
Every person who sells taxable tangible personal property or taxable services must register with the Tax Department before beginning business. In some cases, sellers of taxable property or services are presumed to be sales tax vendors and are required to register and collect state and local sales taxes.
Business can register through the Online Permit Assistance and Licensing (OPAL) website. This will allow you to submit your application for a Certificate of Authority online which you must apply for at least 20 days before you begin operating your business or before purchasing assets of another business.
Buying an Existing Business
If you are buying or acquiring the business assets of an existing business do not pay the seller until you contact the Tax Department. The Department will check to see if the seller owes any taxes. Failure to do so may make you liable for the seller’s sales tax debts.
Collection of Sales Tax
Once you register for sales tax purposes, you become a trustee for New York State. As a trustee you:
- Have a responsibility to collect the proper amount of sales tax from customers and to pay the tax you have collected to New York State with your sales tax return
- Must pay the full amount of sales tax that you collect or that you are required to collect, even if you haven’t yet been paid the tax by your customers
- Should maintain a separate bank account for sales tax receipts, and
- Should never use the sales tax money you collect to make other purchases or to pay any of your business or personal expenses
New York Tax Law imposes personal responsibility for the payment of sales and use taxes on the responsible persons of a business. Responsible persons can be owners, officers, directors, employees, partners, or members of a business. Being personally liable means that the Tax Department can take your personal assets to satisfy the outstanding sales and use tax liabilities of the business.
Filing Sales Tax Returns
Once you are registered for sales tax purposes in New York, you must file sales and use tax returns quarterly, monthly, or annually with the department. Sales Tax Web File is a fast and easy way to file sales and use tax returns and make payments. Quarterly and monthly sales tax filers are required to Web File, as are annual filers beginning with the return due March 20, 2012.
Failure to Keep Adequate Records
If your records are considered inadequate, you may be subject to:
- An estimated audit methodology to determine if the correct tax was reported on your sales tax returns,
- Penalties and interest if additional tax is found to be due, and
- Criminal penalties if you willfully failed to maintain proper records.
You may also have your Certificate of Authority suspended or revoked. If that happens, you will no longer be allowed to make taxable sales of tangible personal property or services, or tax-exempt purchases in the state.
For Further Information: