On March 31, the New York State Legislature and Gov. Andrew Cuomo signed a $175 billion budget, which, among other things, significantly changes the legal obligations regarding sales tax collection for “internet marketplace providers.”
According to the New York Times, the budget measure requires that online marketplace providers that facilitate third-party retail sales, such as Amazon, eBay, and Etsy, collect and remit sales tax on marketplace sales made to buyers in New York State even if the seller is located outside New York State. Providers that are not based in New York and do not facilitate sales exceeding $300,000 in gross receipts or 100 sales to buyers in the state are exempt from this requirement. This change is projected to generate $160 million in additional sales tax collection annually for local governments and another $320 million to help fund the Metropolitan Transportation Authority.
“We believe the marketplace sales tax plan will help the state’s independent bookstores and, indeed, all Main Street retailers,” said David Grogan, director, ABFE, advocacy and public policy for the American Booksellers Association. “According to the latest Civic Economics study, Prime Numbers: Amazon and American Communities, Amazon’s total sales, including marketplace sales, resulted in almost 4,800 displaced retail shops in New York State alone. This amounted to more than 521 million in lost sales tax as well. Clearly, the marketplace tax will help level the playing field for our independent bookstores and, importantly, it will leave the tax collection to large marketplaces like Amazon.”
In a statement, Retail Council of New York State President and CEO Ted Potrikus said, “It’s not a new tax. It’s not a tax on the Internet. No mom-and-pop-shop, no individual seller on an auction site, and no struggling start-up will have to lift a finger to comply. This proposal is good for New York business.”
New York is the latest among a growing number of states that now require online marketplaces to collect and remit sales tax on sales by third-party sellers. Those states include Alabama, Connecticut, Iowa, Minnesota, Nebraska, New Jersey, Oklahoma, Pennsylvania, South Dakota, and Washington, as well as the District of Columbia.