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Tina
Tina, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 33167
Experience:  17 years legal experience including consumer protection law.
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I am considering setting up an ecommerce website through which

Customer Question

I am considering setting up an ecommerce website through which merchants from outside the US (the "Merchants") will sell goods to customers in the US.
My LLC that will own the business (the "WebCo") is registered and completely located in NY.
My question is whether as a consequence of the WebCo being located in NY, US, the Merchants need to register, collect and pay-in sales tax in NY; is it that the WebCo needs to register, collect and pay-in sales tax?
Submitted: 2 years ago.
Category: Consumer Protection Law
Expert:  Infolawyer replied 2 years ago.
Hello, is it doing business in NY?
Customer: replied 2 years ago.
The WebCo is in NY. Customers from anywhere in the US will be able to buy goods through (please note, it is "through" not "from") the website.
Expert:  Infolawyer replied 2 years ago.
Does it have offices or customers in NY?
Customer: replied 2 years ago.
I presume you mean the WebCo. Office: yes. As I noted earlier, the merchants who list their product on the website will sell directly to the customers. So, in the sense that there will be no transfer of goods from the WebCo to the final buyer, there will not be any "customer" that the WebCo will have.Except IF the position in law is that these buyers are "deemed" customers of WebCo.
Expert:  Infolawyer replied 2 years ago.
Based on facts provides would need to register, pay and collect sales tax.
Otherwise risk being pursued for payment plus penalty, interest, costs and legal fees. Let me know if that is clear.
Customer: replied 2 years ago.
Thank you but I am afraid that doesn't give me any meaningful clarity.Why will the WebCo be needing to register when it is not the seller on record as evidenced by the invoice?
Expert:  Infolawyer replied 2 years ago.
It would only need to do so in capacity as seller or as agent for seller.
If seller is doing so then the site need not. Is that clearer?
Customer: replied 2 years ago.
That second point is obvious.The WebCo is not an "agent" of the Marchants. It is just a service provider providing listing services and transacting platform. Is there something that creates deemed agency here? What I am looking for is the specific reference to what creates this obligation on WebCo. - code reference, case laws or such.
Expert:  Infolawyer replied 2 years ago.
If not an agent and not collecting sales for them, then it on the seller to be doing the withholding. You may want to make this clear on the site and in dealings with both buyers and sellers.
Customer: replied 2 years ago.
Thank you for trying but not sure this consultation is going anywhere.As I had specifically mentioned that I needed an "urgent" and "detailed" response. This has turned out to be neither. So, except if you can give me a specific response immediately about what creates this obligation, let's end this discussion.
Expert:  Tina replied 2 years ago.
Hello and welcome,
NY state law does impose sales tax on some specific services, such as interior design and investigative services, but none of these classifications involve what you are referring to, so your services would not typically be subject to tax. Here is a link to a website listing the goods and services subject to sales tax in NY:
http://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/quick_reference_guide_for_taxable_and_exempt_property_and_services.htm
This assumes you are only providing a service and the actual seller of the goods is collecting and paying sales taxes.
As an aside, if you are doing business in other states besides NY, some do impose a sales tax on most or all services. Those states include Connecticut, Iowa, South Dakota, Texas and West Virginia, which have gradually broadened their tax base and extended the sales tax to include a variety of consumer services.
I hope this helps clarify the situation for you. My goal is to provide you with excellent service – if you feel you have received anything less, please reply back as I am happy to address follow-up questions. Kindly rate my service when I have answered your questions so I will be compensated for my time assisting you. Thank you!
Tina