SALT Report 1407 – The New York Department of Taxation and Finance issued a sales and use tax bulletin regarding the North American Industry Classification System (NAICS) codes. The NAICS is an industry classification system used to classify businesses according to their primary business activity, using a six-digit code. This bulletin explains how the Department uses NAICS codes and how a business can determine their six-digit code.
All businesses that plan to sell taxable goods or services in New York must register with the Tax Department and apply for a sales tax Certificate of Authority. When applying for a Certificate of Authority, a business must select an NAICS code that best describes their business.
The Tax Department uses NAICS codes to:
- Identify vendors that should be targeted to receive important information related to specific industries, and
- Help collect, compile, and analyze statistical data reports related to taxation issues
How to Determine Your NAICS Code
When you register for a Certificate of Authority through the Online Permit Assistance and Licensing (OPAL) website, the system will help you select the correct code based on the choices you make in a series of drop-down boxes. The NAICS code you choose should be the one that most closely relates to your principal business activity. Your principal business activity is that which generates your greatest New York State gross sales.
Also, if a business has another business activity that is unrelated to the primary business activity, the business can choose a secondary NAICS code when registering for a Certificate of Authority. The department uses NAICS codes to identify vendors that should be targeted to receive important information related to specific industries; and help collect, compile, and analyze statistical data related to taxation issues.
Changing NAICS Codes
Businesses can change their NAICS code by contacting the department. Reasons for changing NAICS codes include a change in the nature of a business’s principal activity or finding that a different NAICS code better reflects the business’s current principal business activity.
If a business registers multiple locations and plans to file a single sales tax return covering all locations, it should choose an NAICS code that reflects the principal business activity when all the locations are combined together. If a business registers multiple locations and plans to file a separate sales tax return for each location, it should choose an NAICS code that reflects the principal business activity at each specific business location.
If a taxpayer registers a business located outside New York, the taxpayer should select the NAICS code based on the business activity that generates the greatest New York state gross sales.
A list of NAICS codes can be found in Publication 910 – NAICS Codes for Principal Business Activity for New York State Tax Purposes.
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