N.Y. Comp. Codes R. & Regs. Tit. 20 § 526.10 - Vendor

Tax Law, § 1101(b)(8)

(a) Persons included.
(1)
(i) A person making sales of tangible personal property the receipts from which are subject to tax is a vendor.

Example 1:

Auctioneers, door to door salesmen, independent brokers, and operators of service stations, retail stores, restaurants, etc., are vendors.

Example 2:

An independent manufacturer's representative, representing many clients and acting on his own behalf, who solicits orders from New York State customers is a vendor.

Example 3:

An individual who collects and sells antiques as a hobby and uses a room in his home one day a week for display and sales purposes is a vendor.

(ii) A person making sales of services, the receipts from which are subject to tax, is a vendor. This may include a person entering this State from outside the state to perform services on property located in this State.

Example 4:

S company (a shopping mall management company) hires B Company (a parking lot maintenance company located in New Jersey) to patch, seal and line-strip the parking lots of nine malls managed by S Company at various locations throughout New York. B Company is a vendor because it is providing a service in New York subject to tax.

Cross-references:

For exemption of certain sales at a person's residence, see Part 528 of this Title.

For the status, as a vendor, of a person performing services outside the state but delivering such services in the State, see paragraphs (3), (4), (5) and (6) of this subdivision.

(2)
(i) A person maintaining a place of business in the State making sales, whether at such place of business or elsewhere, to persons within the State of tangible personal property or services, the use of which is tax, is a vendor.
(ii) A person shall be considered to be maintaining a place of business in the State if it, either directly or through a subsidiary, has a store, salesroom, sample room, showroom, distribution center, warehouse, service center, factory, credit and collection office, administrative office or research facility in the State.
(3) A person who solicits business by employees, independent contractors, agents or other representatives and by reason thereof makes sales to persons within the State of tangible personal property or services, the use of which is subject to tax, is a vendor.

Example 5:

A California based company uses independent manufacturers' representatives, who are residents of New York State, to sell its product in New York. The California company is a vendor.

(4)
(i) A person who solicits business by the distribution of catalogs or other advertising matter, without regard to whether such distribution is the result of regular or systematic solicitation, if such person has some additional connection with the State which satisfies the nexus requirement of the United States Constitution and by reason thereof makes sales to persons within the State of tangible personal property or services the use of which is subject to tax, is a vendor.
(ii) For purposes of subparagraph (i) of this paragraph, the additional connection with the State a person may have in order to qualify as a vendor shall include, but not be limited to:
(a) the operation of a retail stores in the State;
(b) the presence of traveling sales representatives in the State;
(c) the presence of employees, independent contractors or agents in the State;
(d) the presence of service representatives in the State;
(e) the maintenance of a post office box in the State for receiving responses to such person's solicitations; or
(f) the maintenance of an office in the State, even if such office performs no activities related to the sales solicited by such person.

Example 6:

Company K is engaged in the mail-order retail sale of computer hardware and software in New York State. Sales are solicited in New York by means of direct mail advertising sent from the company's Oregon headquarters. Company K has no property or employees in New York State. The hardware and software are sent to New York customers via common carrier. Customers of Company K who experience problems using a product purchased may contact the company by phone in Oregon for assistance. In certain instances, and at no charge to the customer, Company K will send a computer expert employed by it in Oregon to New York State and provide technical assistance at the customer's premises. Company K is a vendor because of its having service representatives in the State. The result would be the same if, alternatively, Company K had an independent contractor or agent based in New York State or elsewhere provide technical assistance at the customer's premises on Company K's behalf.

Example 7:

Company S, with its main office in Nevada, has a mail order business that solicits sales in New York State via catalogs mailed directly to customers in New York. Customer orders are sent to, and all orders are filled from, the mail order headquarters in Nevada. Company S also operates retail stores in New York. Company S is a vendor for purposes of both the mail order business and the retail stores.

Example 8:

B Company is a manufacturer and mail-order retailer of specialty sporting equipment and has its main office in Wyoming. B Company solicits sales in New York via catalogs mailed directly to customers in New York. Customer orders are sent to, and all orders are filled from, the mail-order headquarters in Wyoming.

B Company maintains an office in New York whose only function is to sell advertising space in the company's quarterly publication that contains information of interest to sporting enthusiasts. E Company is a vendor because it maintains an office in New York State.

Example 9:

Company U is a photo developer located in Delaware. It solicits business in New York by means of advertising packets included with the Sunday supplements of local newspapers within New York. Customers are directed to enclose their film and payment in a preaddressed envelope. The address is that of a post office box in the city in New York where the newspaper offices are located. The contents of the various post office boxes are forwarded daily to Company U's processing plant in Delaware. Company U is a vendor because of its additional connection with New York. (See also paragraph [6] of this subdivision.)

(5)
(i) A person who makes sales of tangible personal property or services, the use of which is subject to tax, and who regularly or systematically delivers such property or services in the State by means other than the United States mail or common carrier is a vendor.
(ii) For purposes of this paragraph, a person is presumed to be regularly or systematically delivering property or services in the State if the cumulative total number of occasions such person or his agent came into the State to deliver property and/or services exceeded 12 during the immediately preceding four quarterly sales tax reporting periods ending on the last day of February, May, August and November. As a result, on the first day of each quarterly sales tax reporting period (December, March, June and September) a person must determine whether this presumption has been met.

Example 10:

A company in Ohio makes weekly deliveries of business forms in its own trucks to its customers in New York. The forms were ordered by mail or telephone. The company is presumed to be regularly or systematically delivering property in the State and is therefore presumed to be a vendor.

Example 11:

A furniture reupholsterer located in New Jersey offers free pick-up and delivery service to its customers. Between September 15, 1988 and March 5, 1990, the reupholsterer came into New York to deliver furniture, reupholstered at its New Jersey factory, on 16 occasions as follows:

Job No. Delivery Date
1 September 15, 1988
2 September 15, 1988
3 September 19, 1988
4 September 22, 1988
5 October 5, 1988
6 November 8, 1988
7 March 10, 1989
8 March 28, 1989
9 April 5, 1989
10 June 15, 1989
11 June 21, 1989
12 July 13, 1989
13 August 24, 1989
14 August 28, 1989
15 February 9, 1990
16 March 5, 1990

As can be seen from the above chart, 14 of the occasions the reupholsterer came into New York were during the period September 15, 1988 through August 28, 1989.

Accordingly, as of September 1, 1989, the reupholsterer is presumed to be regularly or systematically delivering services in the State and is therefore presumed to be a vendor. This is so because during the immediately preceding four quarterly sales tax reporting periods ending on November 30, 1988, February 28, 1989, May 31, 1989 and August 31, 1989, the reupholsterer came into the State on more than 12 occasions to deliver its service.

(Note, the number of times the reupholsterer came into New York to pick up furniture to reupholster is not used in determining status as a vendor; only delivery trips are considered.)

(iii) Notwithstanding the provisions of subparagraph (ii) of this paragraph, if a person can demonstrate to the satisfaction of the commissioner that he cannot reasonably be expected to effect deliveries of property and/or services on more than 12 occasions during the next succeeding four quarterly sales tax reporting periods, such person will not be presumed to be regularly or systematically delivering property or services in the State.

Example 12:

H Corporation, located in New Jersey, has two stores. Store No. 1 is in southern New Jersey and Store No. 2 is situated close to the New York City metropolitan area. It is economically practicable only for Store No. 2 to access the New York marketplace. During the period September 1, 1988 through August 31, 1989, Store No. 2 regularly delivered property into New York within the meaning of section 526.10(a)(5)(ii) of the Sales and Use Tax Regulations. However, on July 1, 1989 H Corporation decided to close Store No. 2 effective August 31, 1989. H Corporation will not be presumed to be regularly or systematically delivering property or services in the State and therefore will not be presumed to be a vendor and will not be required to register as such provided it does not otherwise qualify as a vendor in New York. (For cancellation of a vendor's certificate of authority, see section 539.2[e] of this Title.)

(6)
(i) A person who regularly or systematically solicits business in the State by the distribution to persons within the State, by mail or otherwise, without regard to the location from which such distribution originated or in which the materials were prepared, of catalogs, advertising flyers or letters, or by any other means of solicitation of business from persons in this State, and by reason thereof makes sales to persons within the State of tangible personal property, the use of which is subject to tax, is a vendor. Such a person is a vendor even though such person has no additional connection with the State (see paragraph [4] of this subdivision).
(ii) For purposes of this paragraph, the phrase "any other means of solicitation" includes but is not limited to:
(a) advertisements which are directed at persons in this State or which can reasonably be expected to result in sales of tangible personal property to persons in this State such as advertisements placed in newspapers or periodicals circulated in this State or advertisements broadcast in or into this State by a radio or television station or by cable television; and
(b) a telecommunication or television shopping system which is transmitted in or into this State by cable television or other means of broadcasting.

Example 13:

A furniture store in Vermont places advertisements in newspapers which are published or circulated in New York State. Such advedtisements constitute "any other means of solicitation".

Example 14:

A clothing store in northern New Jersey advertises its merchandise on radio and television stations which have an audience in the metropolitan New York City area. Such advertisements constitute "any other means of solicitation". It does not matter whether the stations are located inside or outside New York State.

(iii) Any person who solicits business in this State under the circumstances described in paragraph (4) of this subdivision will qualify as a vendor whether or not he regularly or systematically solicits business in this State within the meaning of this paragraph.
(iv) For purposes of this paragraph, a person is presumed to be regularly or systematically soliciting business in the State if, for the immediately preceding four quarterly sale ending on the last day of February, May, August and November, the cumulative total of such person's gross receipts from sales of property delivered in the State exceeds $300,000 and such person made more than 100 sales of property delivered in the State.

Example 15:

Company P, a mail-order house located in Utah, solicits sales in New York only through its mail-order catalogs sent four times a year directly to resident addresses in New York State. All orders are filled in Utah and sent via U.S. mail to New York. Company P began soliciting business in New York in September 1989 and during the period September 1, 1989 through August 31, 1990, Company P has the following gross sales (summarized by sales tax quarterly filing period) to customers in New York.

Gross Sales in New York
Period Number of Sales Dollar Amount
9/1/89 - 11/30/89 700 $ 42,000
12/1/89 - 2/28/90 1,300 $ 71,000
3/1/90 - 5/31/90 1,500 $ 81,000
6/1/90 - 8/31/90 1,800 $ 97,000
Totals (9/1/89 - 8/31/90) 5,300 $291,000

Although Company P's number of sales of property delivered in New York exceeded 100 during the four quarterly sales tax reporting periods, its dollar volume of sales for this period was only $291,000. Accordingly, Company P is not presumed to be regularly or systematically soliciting business in the State and therefore is not presumed to be a vendor for the quarter beginning September 1, 1990. Nor is Company P a vendor pursuant to paragraph (4) of this subdivision because it has no additional connection with New York State:

Example 16:

Assume the same facts as in example 15 except that the period is December 1, 1989 through November 30, 1990. The sales data for that period is as follows:

Gross Sales in New York
Period Number of Sales Dollar Amount
12/1/89 - 2/28/90 1,300 $ 71,000
3/1/90 - 5/31/90 1,500 $ 81,000
6/1/90 - 8/31/90 1,800 $ 97,000
9/1/90 - 11/30/90 2,200 $114,000
Totals (12/1/89 - 11/30/90) 6,800 $363,000

Since Company P's number of sales delivered in New York for the period 12/1/89 - 11/30/90 exceeded 100 and the gross receipts from these sales exceeded $300,000, Company P is presumed to be regularly or systematically soliciting business in this State and is therefore presumed to be a vendor for the quarter beginning December 1, 1990.

Example 17:

Company Q is a computer manufacturer and retailer located in California that solicits sales in New York State through advertisements placed in national computer technology magazines. Customers interested in Company Q's computers may request the product-line catalog by filling in and mailing a request form to California. All orders are filled in California and shipped via common carrier.

During the period September 1, 1989 through August 31, 1990, Company Q had the following sales (summarized by sales tax quarterly filing period) to customers in New York.

Gross Sales in New York
Period Number of Sales Dollar Amount
9/1/89 - 11/30/90 21 $ 76,000
12/1/89 - 2/28/90 22 $ 81,000
3/1/90 - 5/31/90 20 $ 73,000
6/1/90 - 8/31/90 28 $ 92,000
Totals (9/1/89 - 8/31/90) 91 $322,000

Although Company Q's gross receipts from sales in New York exceeded $300,000 for the period 9/1/89 - 8/31/90, its number of sales delivered in New York was less than 100 for this period. Accordingly, Company Q, is not presumed to be regularly or systematically soliciting business in the State and therefore is not presumed to be a vendor for the quarter beginning September 1, 1990. Nor is Company Q a vendor pursuant to paragraph (4) of this subdivision because it has no additional connection with New York State.

Example 18:

Assume the same facts as in Example 17 except that the period is December 1, 1989 through November 30, 1990: The sales data for that period is as follows:

Gross Sales in New York
Period Number of Sales Dollar Amount
12/1/89 - 2/28/90 22 $ 81,000
3/1/90 - 5/31/90 20 $ 73,000
6/1/90 - 8/31/90 28 $ 92,000
9/1/90 - 11/30/90 36 $119,000
Totals (12/1/89 - 11/30/90) 106 $365,000

Since Company Q's number of sales delivered in New York for the period from 12/1/89 - 11/34/90 exceeded 100 and the gross receipts from these sales exceeded $300,000, Company Q is presumed to be regularly or systematically soliciting business in the State and is therefore presumed to be a vendor for the quarter beginning December 1, 1990.

(v) Notwithstanding the provisions of subparagraph (iv) of this paragraph, if a person can demonstrate to the satisfaction of the commissioner that he cannot reasonably be expected to have gross receipts in excess of $300,000 or more than 100 sales of property delivered into New York over the next succeeding four quarterly sales tax reporting periods, such person will not be presumed to be regularly or systematically soliciting business in the State.

Example 19:

Company L, located in Montana, was the exclusive manufacturer and retailer of a unique product for which it held a patent. Company L solicited its sales only through advertisements placed in national technology magazines. All orders were filled from Montana and shipped via common carrier. Although Company L sold products in New York besides its patented product, 90% of its sales in New York were of the patented product. The other 10% of the company's sales were of ancillary products which customers ordered from Company L as a matter of convenience when placing their main order. These other products were readily available from other suppliers. During the period September 1, 1988 through August 31, 1989, Company L had the following sales to customers in New York (summarized by quarterly sales tax reporting period):

Gross Sales In New York
Period Number of Sales Dollar Amount
9/1/88 - 11/30/88 6,200 $810,000
12/1/88 - 2/28/89 600 $ 52,000
3/1/89 - 5/31/89 500 $ 43,000
6/1/89 - 8/31/89 400 $ 33,000
Total (9/1/88 - 8/31/89) 7,700 $938,000

Due to a technological breakthrough by one of its competitors in January 1989, Company L's patented product was made obsolete and demand for this product virtually disappeared. News of the demise of Company L's product was cited in a technology magazine article featuring the product of Company L's competitor.

Although Company L's sales activities in New York in the last four sales tax quarters would otherwise require Company L to register as a sales tax vendor, as a result of the loss of sales volume from its main product, Company L can demonstrate that its sales in the next four quarters will not exceed the $300,000/100 transaction threshold. Therefore Company L is not presumed to be a vendor for the period beginning September 1, 1989.

(7)
(i) A person who makes sales of tangible personal property, the use of which is subject to tax, where such person retains an ownership interest in the property and the property is brought into this State by the purchaser who is or becomes a resident of this State or uses the property in any manner in carrying on any employment, trade, business or profession in this State, is a vendor. (For registration requirements see section 539.2[g] of this Title).
(ii) For purposes of this paragraph, a person retains an ownership interest in tangible personal property where such person has any right with respect to the use or possession of, or dominion and control over, such tangible personal property, such as a title holder, lessor, sub-lessor, franchisor, sub-franchisor, licensor, sub-licensor, or a trustee of such property. A person who retains a security interest in tangible personal property is not deemed to retain an ownership interest in such property.

Example 20:

A non-New York Corporation leases a number of motor vehicles to a wholly owned subsidiary, also a non-New York Corporation. The subsidiary has the right to, and does, sublease the motor vehicles to a New York State company for use in New York State. Since the subsidiary corporation also has the right to lease the motor vehicles, the same right as the parent corporation which is the owner, the subsidiary corporation is deemed to retain an ownership interest in such property and is a vendor under section 1101(b)(8)(i)(F) of the Tax Law.

Example 21:

ABC Equipment Leasing, Inc., a non-New York corporation whose only place of business is located outside New York State, leases a piece of construction equipment to a New York State contractor for one year. The contractor signs the lease and picks up the equipment at ABC Equipment Leasing Inc.'s premises on September 11, 1990 and returns to New York State on September 14, 1990. ABC Equipment Leasing, Inc. is a vendor as of September 14, 1990, the date the contractor brought the leased equipment into this State.

Example 22:

A New York State partnership whose only place of business is within New York State agrees to accept a non-New York State resident into the partnership in return for such person's contributing substantial capital, consisting of a computer system, to the partnership. The partnership takes delivery of the computer system outside New York and arranges for delivery of the system to its New York office. The non-New York resident does not receive any compensation other than becoming a partner.

The contribution of the computer system to the partnership for a partnership interest therein is not subject to sales or use tax in accordance with section 526.6(d)(1)(v) of this Part. Accordingly, although the new partner retains an ownership interest in the computer system, this partner is not a vendor pursuant to subparagraph (i) of paragraph (7) of this subdivision because the use of the computer by the partnership is not subject to tax.

Example 23:

Assume the same facts as in example 22 except that the non-New York resident, in addition to becoming a partner, receives specific monetary reimbursement on a monthly basis as partial reimbursement for conveying the computer system to the partnership. The non-New York resident has made a sale of tangible personal property the use of which is taxed by article 28 of the Tax Law, and has retained an ownership interest. Accordingly, the non-New York resident is a vendor pursuant to subparagraph (i) of paragraph (7) of this subdivision.

Example 24:

A non-New York corporation whose only place of business is located outside New York leases computer equipment to a non-resident of New York State for a two-year period. In the second year of the lease, the lessee becomes a New York resident and subsequently brings the computer equipment into New York State. The lessor is a vendor as of the date that the lessee brings the equipment into New York.

Example 25:

A non-resident of New York State leases a motor vehicle from a non-New York corporation whose only place of business is located outside New York State. During the term of the lease, the lessee brings the motor vehicle into New York State while on vacation. Although the lessor's property in which he has an ownership interest is in New York State, the lessor is not a vendor pursuant to subparagraph (i) of paragraph (7) of this subdivision. This is so because the lessee is not a resident of the State while using the property in the State and the property is not being used in the carrying on of any employment, trade, business or profession in the State.

Example 26:

A New York State resident leases a motor vehicle for three months from a non-New York corporation whose only place of business is located outside New York. The resident picks up the motor vehicle at the lessor's place of business and immediately returns to New York with the vehicle. The out-of-state lessor is a vendor when the motor vehicle is brought into New York State by the resident lessee.

Example 27:

A non-New York company whose only place of business is located outside New York State rents and occasionally delivers contracting equipment to persons located within New York. Between June 1, 1990 and May 31, 1991, the company delivered rented equipment into New York State on nine different occasions. On six other occasions New York residents rented and picked up equipment at the lessor's place of business and immediately returned to New York with such equipment. Although this company is not presumed to be a vendor by virtue of having made regular or systematic deliveries in New York within the meaning of paragraph (5) of this subdivision, this company is a vendor pursuant to subparagraph (i) of paragraph (7) of this subdivision. The company became a vendor as of the date the first New York resident lessee brought the rented equipment into New York.

Cross-reference:

For registration requirements of vendors under this paragraph see Part 533 and section 539.2(g) of this Title.

(8) Any other person making sales to persons within the State of tangible personal property or services the use of which is taxed, who may be authorized by the commissioner to collect the tax is a vendor.

Example 28:

A mail-order house that is not otherwise required to register voluntarily registers so that its customers will not be liable for the compensating use tax.

(9) New York State, including any of its agencies, instrumentalities, or public corporations or political subdivisions is a vendor when such entity sells services or property of a kind ordinarily sold by private persons, including sales of food and drink.

Example 29:

A municipality that makes sales of electricity to its residents is selling a service which is normally sold by private persons therefor, the municipality is a vendor.

Example 30:

The New York State Thruway Authority auctioning surplus vehicles and other property is a vendor because it is selling property of a kind ordinarily sold by private persons.

(10) Any organization or entity described in subdivision (a) of section 1116 of the Tax Law that makes taxable sales described in such section is a vendor.

Example 31:

A local church, that has an exempt organization certificate operates a food booth at a country fair. This is the only time during the year that they operate the booth. The church is considered to be a vendor.

Example 32:

An exempt organization selling tickets to a fund raising dinner at a hotel is not a vendor.

Example 33:

An exempt organization operating a used furniture store is a vendor.

(11) The United States, and any of its agencies or instrumentalities and the United Nations, or any international organization of which the United States is a member, is a vendor when such entity sells in the State services or property of a kind ordinarily sold by private persons, where authorized by law.
(12) Any salesman, representative, peddler or canvasser whom the commissioner may treat as the agent of the vendor, distributor, supervisor or employer under whom he operates or for whom he solicits business, or from whom he obtains tangible personal property sold by him, in the State is a vendor. Such person may be jointly responsible with his principal, distributor, supervisor or employer for the collection and payment of tax. See subdivision (e) of this section.
(b) Responsibilities of vendors.

Every vendor, unless specifically excluded by a section of the Tax Law or this Title, has certain obligations with respect to registration, collection of tax from customers, filing of returns and payment of tax. See Parts 532, 533, 539 and 540 of this Title.

(c) Interstate vendors.
(1) A person outside this State making sales to persons within the State, who maintains a place of business in the State as described in paragraph (2) of subdivision (a) of this section, or who the sales in New York as described in paragraph, (3) or (4) of subdivision (a) of this section, or who makes deliveries in New York as described in paragraph (5) of subdivision (a) of this section, is required to collect the tax on any taxable property or services delivered in New York.
(2) A person outside this State who solicits business in the State as described in paragraph (6) of subdivision (a) of this section is required to collect the tax on any taxable property or services delivered in New York.
(d) Any person who is a vendor either:
(1) solely by reason of having made regular or systematic deliveries of property or services in New York State as described in paragraph (a)(5) of this section; or
(2) solely by reason of having regularly or systematically solicited business in New York State as described in paragraph (a)(6) of this section;

shall not be "a person required to collect tax" until 20 days after the date by which such person is required to file a certificate of registration pursuant to section 1134 of the Tax Law. (For registration requirements see Part 539 of this Title.)

(e) Co-vendor.
(1) Every person operating a club or similar merchandising plan, or operating as an independent contractor representing a particular supplier selling tangible personal property is a vendor for sales tax purposes and must collect tax on merchandise sold by him.
(2)
(i) Such person shall undertake all of the responsibilities of a vendor, as listed in subdivision (b) of this section. The person supplying the merchandise to him is also deemed to be a vendor, and shall undertake all of the responsibilities, as listed in subdivision (b) of this section.
(ii) Both the representative and his supplier shall be jointly responsible for the collection and remitting of the taxes and filing of returns.
(3)
(i) A person supplying merchandise to a club plan secretary or independent vendor shall collect in advance from the club plan secretary or independent contractor a tax based on the retail selling price of the property at the tax rate in effect where possession of the property is taken by the club secretary or independent contractor.
(ii) A club plan secretary or independent contractor whose supplier has registered and is complying with the responsibilities of a vendor shall not be required to register as a vendor.
(f) Leased departments and concessions.
(1) Every person making sales from a concession or department leased from a vendor and operated under the name of another vendor, is for sales tax purposes a vendor required to register and file returns with the bureau.
(2) Leased departments and concessions which collect and account for their sales independently from the lessor-vendor must undertake all the responsibilities of a vendor, as listed in subdivision (b) of this section.
(3) If a leased department or concession must account for any pay over its receipts to the lessor-vendor, the lessor-vendor must report and remit the tax thereon to the bureau with its return. The leased department or concession must also file a return reporting only its sales and have attached thereto a statement to the effect that:
(i) it is a leased department or concession;
(ii) the lessor-vendor is responsible for reporting sales and remitting tax due; and
(iii) identifying the lessor-vendor by name, address and vendor identification number.

Both the leased department or concession and the lessor-vendor shall be jointly responsible for the collection and remitting of the taxes on the sales made by the leased department or concession.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 20 § 526.10

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