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Software Sales Tax in New York 🇺🇸

How do I solve my tax liability?
Agony Rating
Sales Tax Rate
Taxable Goods
Highest Penalty

How likely am I to get caught for owing sales tax in New York?

Very likely. Businesses who sell SaaS or downloadable software to customers in New York are very likely to be liable for sales tax.

What is the sales tax threshold in New York?

The current sales tax threshold in New York is $500,000.

Is SaaS taxable in New York?

Yes. You owe tax for the sale of cloud software subscriptions to customers in New York.

Are software downloads taxable in New York?

Yes. You owe tax for the sale of software downloads to customers in New York.

Are eBooks taxable in New York?

No. You don't owe tax for the sale of eBooks to customers in New York.

Are digital downloads taxable in New York?

No. You don't owe tax for the sale of digital downloads to customers in New York.

Registering for Sales & Use Tax in New York

😬🌶️🌶️ It's complicated

The registration process in the Big Apple is more sophisticated than in some other states, in the fact that it isn’t a solely paper-based system. 

That being said, it’s far from painless. The registration form is long and requires a lot of specific information – to the point where it might be easier to get a tax agent to help you.

Filing & Remittance of Sales & Use Tax in New York

😬🌶️🌶️ It's complicated

Filing frequency: Variable depending on the value of sales

Filing in New York is either annual, quarterly, or monthly, depending on the value of your sales into the state. 

Unfortunately, the filing system in New York can be quite complex. You’ll need to manage tax exemptions by manually checking your customer’s exemption certificates and ensure you’re compliant across cities and counties within New York state.

When calculating how much tax you owe, you'll need to understand how and where the tax rate varies across New York State. The base state sales tax rate is 4% but depending on buyer location within the state, it can be as much as 8.9%.

Penalties for Sales & Use Tax non-compliance in New York

😐🌶️ It stacks up

In New York, penalties for non-compliance are strongly affected by the total amount of sales into the state. 

A late payment can see you served a heavy fine, with interest on the tax owed. This might not seem like such a problem but it means even if you send a payment on the day it’s due, it could be deemed late because you need to allow time for the department of revenue to receive and process the funds.

If a business is caught deliberately evading tax responsibilities, the penalties can be up to 200% of the amount owed.

Had enough yet? There's more…

How to become sales tax compliant globally 🗺

Three Routes to Compliance for SaaS Executives

SaaS executives have a choice of three routes to global tax compliance. Get the guide to walk through the options for your team.

Download the guide »

Don't Worry, Ask Hugo

As CFO of Paddle, Hugo's finance team manages global tax compliance for $100M's of ARR from over 2,000 software businesses. Ask your questions in our live webinar.

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How can Paddle help?

Paddle can take all your responsibility & liability for sales tax off-your hands. Our global entities, finance team, and $160k+ year spend on agents, tooling, and accountants is ready for you.

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