Collecting sales tax with a Certificate of Authority

If you run your business in New York State and you sell goods or services that are subject to sales tax, you'll need to register with the New York Taxation and Finance Department and apply for a Certificate of Authority.

What is an NYS Certificate of Authority?

An NYS Certificate of Authority is specific to sales taxes and gives you the right to collect tax on any goods and services you sell which are subject to New York's sales tax. With a NYS Certificate of Authority, you'll also be able to issue or accept NYS sales tax exemption certificates.

New York State's Certificate of Authority for sales tax purposes should not be confused with certificates of authority for the purpose of "foreign qualification." A certificate of authority for the purpose of foreign qualification is a document you have to obtain if you plan to do business in a state other than the one in which you originally registered or formed your business.

These other certificates of authority give you the authority to run your business in the applicable state. If you'll need to collect and remit sales tax in that state, you'll likely also have to apply for the relevant permit—often called a seller's permit or vendor's permit—in addition to obtaining a certificate of authority.

Who needs to apply for a NYS Certificate of Authority?

Whether or not you need a Certificate of Authority hinges entirely on whether you'll be making sales of goods or services that are subject to New York's sales tax. Even if you make only occasional sales, for example, you only sell goods once a year at an annual craft fair, you'll still need to apply for a Certificate of Authority if the sales you make are taxable sales.

If your business isn't located in New York State, you may still need to obtain a Certificate of Authority if your business meets certain criteria. If you have any doubts as to whether you need a NYS Certificate of Authority, it's important that you check with the New York State Department of Taxation and Finance. Not applying for a Certificate of Authority when you're required to can have serious consequences.

When do you need to obtain a NYS Certificate of Authority?

Registering with the NYS Taxation and Finance Department and applying for a Certificate of Authority is something you must do before you can make any taxable sales. If you're starting a new business and plan to sell either goods or services that will be subject to New York's sales tax, you'll need to apply for your Certificate of Authority at least 20 days before you make any taxable sales.

If you run your business from multiple locations, you'll also need to obtain a separate Certificate of Authority for each of your locations. Unless you're running each location as a separate business entity, the individual Certificates of Authority you obtain for each of your separate locations will contain the same sales tax identification number.

How to apply for a NYS Certificate of Authority?

Registering with the NYS Taxation and Finance Department and applying for a Certificate of Authority can be done online through New York State's business portal, the New York Business Express. There is no cost involved in the process.

During the registration and application process, you'll be required to fill out Form DTF-17.1, Business Contact and Responsible Person Questionnaire. For this form, you'll need contact information and ownership and profit distribution percentages for each business contact. You'll also need the social security number of each responsible person, along with the date they assumed business responsibilities and a summary of their main business duties.

To complete the application, you'll also need the following information:

• Your reason for applying
• Your business's contact information
• Your business's entity type, for example, LLC
• The date you plan to start selling taxable goods and services
• Bank account information for the account where you'll deposit sales taxes collected
• Any relevant license or permit numbers
• Your tax preparer's information, if you'll be using one to prepare your sales tax returns

Processing time is approximately five days, and if your application is approved, your Certificate of Authority will be mailed to you.

What happens after you obtain a Certificate of Authority?

Once you've received your Certificate of Authority you'll need to:

Display your Certificate of Authority. You must display your Certificate of Authority in a prominent position at your place of business. You must do this even if you don't have a permanent physical business location; for example, if you use a cart to sell your goods, you must prominently display your Certificate of Authority on your cart.

Collect sales tax. You must begin collecting sales tax on the sales of any goods or services which are taxable.

Keep sales tax records. You must keep up-to-date records that are both accurate and complete. While you won't be required to send in your records with your return, you'll need to provide these records if your return is audited.

File sales tax returns. The requirement to file sales tax returns on time applies even if you end up not opening up for business or if you never make a taxable sale. Even if you haven't made any taxable sales, you'll be assessed a late filing penalty if you don't file your sales tax return as required.

New York State requires all businesses making taxable sales to register with the NYS Taxation and Finance Department and obtain a Certificate of Authority. It's important that you obtain your Certificate of Authority before you begin making any taxable sales, as New York does not permit you to make taxable sales until you have a Certificate of Authority.