Guide to sales tax returns in New York State

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  1. Introduction
  2. How to find your return due date
  3. How to prepare your New York sales tax return
    1. Identify taxable sales transactions
    2. Identify jurisdictions
  4. How to complete and file a New York sales tax return

With aspects such as varying jurisdictional rates and unique taxability rules, New York State's intricate sales tax laws make it challenging to file an accurate return. New York has a base sales tax rate of 4%, yet many counties and cities charge additional sales taxes. Because of this, your business must track every customer's address so that the correct amount of tax is collected and reported accurately on your returns.

Completing a New York sales tax return is a three-step process. Businesses must start by identifying their filing frequency and due dates. They must then prepare the return, before finally filing and remitting the sales tax. Following this process will help you to prepare for and complete your return smoothly and accurately.

What's in this article?

  • How to find your return due date
  • How to prepare your New York sales tax return
  • How to complete and file a New York sales tax return

How to find your return due date

The timing for filing a return depends on quarterly gross receipts and annual sales tax liability. Most businesses are required to file New York sales tax returns on a quarterly basis. When they first register for sales tax, a filing schedule will be assigned.

These are the sales tax quarters in New York:

  • First quarter: December to February
  • Second quarter: March to May
  • Third quarter: June to August
  • Fourth quarter: September to November

Once you begin filing returns, your filing frequency may change if your total taxable receipts amount to US$300,000 or more in one quarter, or if you owe New York US$3,000 or less in sales tax over a full tax year. Note that the sales tax year for New York runs from March to February, rather than syncing up with the calendar year.

Sales tax returns are due on the 20th day of the month following the end of a filing schedule period. For example, if you're on a quarterly filing schedule, the return for the December to February quarter will be due on 20 March.

Some high-volume businesses file quarterly New York sales tax returns but have to make monthly prepayments. Any business with an annual sales tax liability of over US$500,000 may be required to make prepayments using the PrompTax programme. The New York State Department of Taxation and Finance will send a letter if you are required to participate in the prepayment programme. If you fail to make prepayments after receiving this letter, you could face significant penalties, such as interest on tax owed.

How to prepare your New York sales tax return

The first step in preparing a return is to collect the sales information for the tax period – this may be a month, a year or a quarter. The New York Department of Taxation and Finance online filing system outlines a list of the fields that businesses need to complete in order to prepare the return. This can be a time-consuming process, so ensure that you allocate plenty of time for data collection.

In general, filing a sales tax return requires the following sales transaction information:

  • Gross sales
  • Taxable sales by type
  • Non-taxable sales by type
  • Deductions such as delivery charges
  • Total amount of sales taxes collected

Some businesses will have special circumstances that require one or more schedules to be added to the return. For example, New York City taxes some services that the state does not. In these scenarios, businesses will need to complete Schedule N, which will require additional information.

Identify taxable sales transactions

Businesses will need to know two things to complete their New York sales tax return: how much they sold – both in total sales and in taxable sales – and who they sold to.

If the amount of taxable sales does not reach economic nexus thresholds in New York, then a sales tax return might not be required. You can find out whether economic nexus applies to you by checking the list of sales tax registration requirements on the New York Department of Taxation and Finance website.

In addition to meeting economic nexus thresholds, if a business has employees, an office or a warehouse located in New York State and is selling taxable goods and/or services, then the business must collect sales taxes on all taxable transactions, file returns and pay the appropriate amount to the state.

Most tangible products are taxable in New York, with a few exceptions such as groceries and medicines. Most services are not taxable, with the exception of property repair and maintenance, such as plumbing repair or landscaping services. For more details, see the list of taxable products and services provided by the state of New York.

Identify jurisdictions

In addition to collecting and remitting state sales tax, it is likely that businesses will also have to consider local sales tax. Any time that a sale is made to a buyer located in a county or jurisdiction that charges more than the base 4% state tax, businesses will have to collect the extra tax for that county.

For example, Albany County charges an extra 4% of sales tax on top of New York State's 4%. This means that businesses must collect 8% of sales tax for transactions with buyers in Albany County.

Each business must track a customer's jurisdiction and charge them the appropriate tax at the time of the sale. Otherwise, the incorrect amount of sales tax will be remitted and the business will still owe money to New York, which will come out of its revenue. Sellers who only make occasional sales in New York may be able to get by with the Jurisdiction/Rate Lookup by Address tool on the New York Department of Taxation and Finance website. For businesses making a significant number of sales in New York, an automated tax solution can be beneficial to calculate, collect and track sales tax.

How to complete and file a New York sales tax return

The final step to completing a sales tax return in New York is to file and remit tax. Even if you owe nothing, you're still required to file a sales tax return for each tax period or you will receive a US$50 penalty. If you fail to file when you do owe taxes, penalties will quickly add up – to as much as 30% of the tax due for that return.

The New York Department of Taxation and Finance has an online filing system that will outline what information to fill in to generate the return. To file a sales tax return online, start by logging in and following the prompts. Once you have completed the return, it's time to remit the total calculated sales taxes for that return, minus any monthly prepayments that have already been made. Businesses that are required to e-file their sales tax returns are also required to make electronic payments rather than sending a paper cheque.

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