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  1. #1
    Affiliate Manager Bradley.Senkovich's Avatar
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    Tax question
    Ok, Company based in Florida.
    Sells product to New Yorker.
    We do not have it in stock.
    We get it from a supplier we have to direct ship it to our customer.
    that drop ship supplier is actually in NY.

    Supplier questions about having to charge taxes because it's within their state.
    Even though I am the one who got paid by the customer from NY who in turn paid the supplier to direct ship it to that customer....

    would I or would I not owe taxes. I think its no. but with some states you never know. I'd rather not get caught with this issue often.

  2. #2
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    Do NOT rely on advice you may receive here. Consult with an attorney familiar with New York's sales tax law.

    I am not an expert in sales tax. I would guess that the duty to collect sales tax in a state is "all or nothing," meaning that they would expect you to collect sales tax on either all shipments or no shipments to the state's residents. Thus, if New York law provides that contracting with a New York distributor for direct shipment of a single order to a single customer creates a "physical presence" or "nexus," then you'd probably need to collect sales tax on ALL shipments to New York residents, not just those shipped from a New York distributor.

    Note that an attorney might advise you that New York interprets their laws in a particular way, but the attorney might also advise you that New York's interpretation is "probably" incorrect or that the law appears to be unconstitutional. Of course, New York will disagree and might take action against you based on its interpretation, which might cost you a lot of money. Of course, it's also possible that even New York believes that you are violating their sales-tax law, they might elect not to initiate any enforcement action.

    Your question is really not about a single transaction; it should be about whether fulfilling a single transaction in a particularly unusual way might impact all your sales to New York residents.

    "Drop-shipment" merchants should be aware that some distributors might elect to arrange for shipment from a different location than you expect, so you should certainly make sure that you understand the potential adverse sales-tax effects if a distributor elects to arrange for a particular order to be shipped from a warehouse within the customer's state. Consult with an attorney who is familiar with sales-tax law.

  3. #3
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    FYI, there is a discussion of this issue in a "white paper" prepared by a Streamlined Sales Tax Project committee: http://www.streamlinedsalestax.org/i...pments_ip2.pdf

  4. #4
    Affiliate Manager Bradley.Senkovich's Avatar
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    Thanks for the follow up. the two previous posts helped a lot.

    I found this out while trolling SAS. I think I am safe as long as I do not generate more then $10k per quarter in NY.

    this one is interesting
    http://nyaffiliatevoice.com/2008/10/...ates-step-one/

    and this is the actual law
    http://nystax.gov/pdf/memos/sales/m08_3s.pdf

    Very interesting read. But it would definitely muck things up if we had the stream lined tax AND this other tax to deal with.

    jeez new york stop being ahead of your time....

  5. #5
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    No! No! No!

    Do not confuse the "Amazon tax" with other tax law. The "Amazon Tax" is intended to extend sales-tax collection duties of merchants who don't otherwise have such duties, if they merchant pays web publishers (affiliates) in the state for referring more than $10,000 in sales to state residents. If you are liable under a different theory, the law does not exempt you from sales-tax collection duties.

    Consult with a competent attorney.

  6. #6
    Affiliate Manager Bradley.Senkovich's Avatar
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    Intelligible newyork tax attorney... /add checklist

  7. #7
    Advocate mellie's Avatar
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    Mark is correct Bradley, the"Amazon" Internet Tax law is a separate issue from your case. Consult a NY sales tax attorney. Hodgson Russ is the firm I recommend.
    Melanie
    President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
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