New York Sales Tax Guide
Chapter 8: Understanding New York sales tax rules for shipping & handling
Are you an ecommerce seller doing business in New York? If so, you’ll need to understand when you should collect sales tax on shipping and delivery charges for goods delivered to customers in the state. Like many other states, New York draws a clear line between taxable and exempt purchases when it comes to sales tax.Is Shipping Taxable in New York?
Like most states (and most everything in the world of sales and use tax), the answer is…it depends. There are a number of factors that impact whether the New York Department of Taxation and Finance will require you to collect sales tax on shipping and handling. We’ll outline some of those situations below. As is always the case, specific questions on shipping in New York and sales tax should be taken directly to a tax professional familiar with New York tax laws.New York Shipping Taxability
In New York, the term shipping also refers to delivery, handling, postage, and transportation. As a seller, if you include a shipping charge on a customer’s receipt for a taxable product, that shipping charge is also considered taxable.Impact of Delivery Methods
According to the Department of Taxation and Finance, when a customer purchases taxable goods in New York and has them delivered, they should always pay sales tax on the delivery charges, but the seller of the goods isn’t always responsible for collecting it.
If the seller ships the item, hires a third party such as a common carrier to deliver it, or arranges for prepaid freight, the seller should charge the purchaser sales tax on the delivery charges. But if the customer arranges for delivery him- or herself, the seller isn’t responsible for sales tax on those delivery charges. Instead, the company that is providing the delivery service will have to collect the tax.Shipping-Exempt Purchases
If the item you sell is exempt from taxes, you should not charge sales tax on the shipping or delivery. The same holds true if a purchaser provides you with an exemption certificate — since the purchase is exempt, the shipping charges should also be tax-free. But sometimes customers order a combination of both taxable and exempt products, and then the shipping is handled differently.
In order for the shipping charges on the exempt goods to be waived, you have to allocate a portion of the shipping charges to the exempt goods using the sales price or weight. If you instead present the customer with a single shipping charge on an invoice that covers both taxable and exempt goods, the entire shipping charge is taxable.Local Taxability
New York has 84 local jurisdictions, and most of them have different sales tax rates and rules. But according to a representative at the New York State Tax Department, “If a product is exempt from state tax but subject to local tax, such as a clothing item priced under $110 in a county that did not elect the exemption, local tax would be applied to the price of the item, plus any charge for shipping and delivery.” Hmmm, thanks for the clarification.
Notwithstanding the previous example, New York sales taxes are pretty easy to navigate. But the representative from the tax department suggests checking their online bulletin if you need more clarity.