On March 8, 2019, the New York Department of Taxation and Finance released an Advisory Opinion ruling that an online marketplace operator that facilitates taxable software sales is a “vendor” liable to collect sales tax. The Department relied on a rarely-used portion of the definition of “vendor,” which states that “when in the opinion of the commissioner it is necessary for the efficient administration of [the sales tax law] to treat any salesman, representative, peddler or canvasser as the agent of the vendor . . . the commissioner may, in his discretion, treat such agent as the vendor jointly responsible . . . for the collection and payment of the tax.” According to the Department, treating a software marketplace operator as a vendor will improve the efficiency of sales tax administration because the software marketplace operator “is in a better position” than a seller of software on the marketplace to collect the tax. The Department further stated in a footnote that a 1999 Advisory Opinion — which ruled that an online marketplace operator facilitating sales of tangible goods was not a “vendor” for New York sales tax purposes — was inconsistent with the new Advisory Opinion and therefore should no longer be followed.
SALT Shaker
Shaking things up in state and local tax
SALT Shaker
Shaking things up in state and local tax