Like most states, New York permits resellers to purchase items tax free if the goods are to be resold. Such items must then be documented on a New York resale certificate. In order for your business to participate, you may have to register as a seller and obtain a Sales Tax Certificate of Authority, which gives you permission to collect sales tax. You can then apply for the New York resale certificate, also called a sales tax exemption certificate.
Obtaining a Certificate of Authority
In New York, if you have a connection to the state (see more on this below) and sell taxable services or tangible property—even from a home-based business or temporarily, such as at craft fairs—the state requires that you register with the state Department of Taxation and Finance using the Business Person and Responsible Contact Questionnaire (Form DTF-17.1) to obtain a Sales Tax Certificate of Authority before opening up shop.
Tangible property includes most any physical item, such as artwork, flowers, clothing, and motor vehicles. Many services that involve repairing or maintaining tangible personal property and real property, such as car repair, dog grooming, and snow plowing, are also subject to sales tax.
The requirement to register as a vendor in New York also applies if you have “some additional connection with the state," which includes maintaining a place of business, soliciting business in the state through employees or agents, or regularly delivering products to customers in the state using your own vehicle, even if you are an out-of-state vendor. Moreover, if you sell through catalogs but have such a connection with the state, operate a hotel, or receive amusement charges, you must also register your business in New York.
If you are an out-of-state vendor without ties that require you to register with the state, you do not need a Certificate of Authority to use a resale certificate. Instead, you may use Resale Certificate (Form ST-120), but you must supply your registration number from the state in which you have registered your business to collect sales tax.
For more information about who must register as a vendor in New York, see the state's Tax Bulletin (ST-175).
New York Resale Certificate (Form ST-120)
Once your business is registered with the state and has a Certificate of Authority, you may use a Resale Certificate to purchase items without paying sales tax, as long as you intend to resell them and collect sales tax from buyers.
Within 90 days of purchase, you must provide the seller with a resale tax certificate. You can use a “blanket certificate" if you make many purchases from the same seller. New York has several different kinds of exemption certificates, so you must be sure you're using the correct one for the transaction type. All exemption certificates require specific information, including both the purchaser's and seller's names and addresses, date, and purchaser's signature. Note that New York also accepts electronic sales tax exemption certificates.
There are no fees associated with obtaining a Certificate of Authority or using a resale certificate.
New York takes operating without a Certificate of Authority seriously: violations could result in a penalty of up to $10,000.
Expiration of a New York Resale Certificate
While a resale certificate itself doesn't expire, a Certificate of Authority is valid for a maximum of three years and is “renewable at the the discretion of the Department of Taxation and Finance."
Determining whether you need to collect sales tax in New York and how to do it properly can be complicated, particularly as a reseller, so you may wish to consult an attorney or online service provider to help you through the process.