New York State Sales Tax
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Hi Etsy sellers!
I did a little research because I wanted to clarify the new sales tax addition to checkout. I live in New York state and I sell vintage clothing, shoes, & accessories. If you live in NYS & sell clothing and shoes, & accessories, NEW or VINTAGE please read.
Maybe I missed it, but Etsy doesn't make it clear that you should only charge YOUR STATE'S sales tax when you are shipping to a customer who also lives in YOUR STATE.
In NYS these are the rules for clothing and shoes:
PURCHASES OF CLOTHING AND/OR SHOES LESS THAN $110 ARE SALES TAX EXEMPT.
PURCHASES OF CLOTHING AND SHOES $110 or more the tax rate is 8.875%
PURSES & Other leather accessories GET THE WHOLE 8.875% no matter what the price
Again, these rules are for sales that happen within the state of New York. If you are in NY and your customer is in Montana, you don't have to charge sales tax at all.
Here is a helpful link. Download the PDF in the Tax Rates section. The link says "State website":
I know this is long, I apologize. I hope it's helpful though!
Posted at 11:43 am Aug 28, 2010 EDT
Well that makes it darn near impossible to tax correctly using this system doesn't it. Sorry. :(
Not that you can calculate tax correctly for NYS anywhere anyway. Other than manually. I wish NYS would simplify it so at the very very least a zip code could be used to figure the tax rate. OK enough ranting.
Posted at 11:49 am Aug 28, 2010 EDT
It is up to each seller to know and follow the laws their business should, it's not Etsy's job to do that.
There's no way for them to know all the sales tax laws... even what you posted is inaccurate for all NY--what you quoted was for items sold in or shipped to NY City, not NY State.
In NYC clothes up to $110 may be exempt but where I am there is still local tax on those items, just no state tax, so I would still pay 3.75% sales tax on a $10 item here.
If you shipped a $10 clothing item to me, you'd need to collect that 3.75% sales tax from me because NYS has destination-based sales tax. That means the rate you charge is based on the buyer's location if it is shipped, not the sellers.
NY does make it tough...
Posted at 1:09 pm Aug 28, 2010 EDT
More NY sales tax help here:
New York Sales Tax
New York Sales Tax–part 2
Posted at 1:10 pm Aug 28, 2010 EDT
Thanks for all the input. I may be totally wrong and things are a lot more complicated than I think for those of us running an online business in New York State. I do come from a retail background and ran a very busy online store for a New York based handbag company. We had a bookkeeping staff and an accounting firm that reviewed our books every quarter and we never based our tax collections on the location of the customer. We went by the rates that applied to our business location which was in NYC. Those are the rates that I posted in my initial message.
I'll definitely look into what GoTo is saying about variable rates based on the customer's address.
Thanks again everybody.
Posted at 7:19 pm Aug 28, 2010 EDT
It's sad to hear that a company big enough to have bookkeeping/accounting firm doing their paperwork didn't know the state law, but I've mentioned in the forums before that those who deal with income tax by profession don't necessarily have experience with/knowledge of sales tax laws. They are totally different types of taxes and the rules for sales tax for mail order businesses are different than the rules for in-person sales in many states.
Posted at 11:15 pm Aug 28, 2010 EDT
Boutique--they really aren't that bad, you'll understand them fine (start with the links above and you'll be well on your way).
Most likely those professionals didn't bother to see if the rules were different for the type of business they were working for which says a lot more about the quality of their work than about the laws.
Posted at 2:50 pm Aug 29, 2010 EDT