[Kelly_W]

Hi guys!

I have a strange tax question. It isn’t directly related to the CPA exam but that’s why I posted here.

If a manufacturer based in Texas, makes a sale in which the product is shipped to New York (the manufacturer does not have a selling representative in NY nor a facility) then will there be any sort of franchise or income tax the manufacturer owes to NY?

Thanks!

[Kelly_W]

There has to be a Tax expert here somewhere!!! lol

[dleonard1991]

I'm not completely positive about this as I do not have my CPA and am still in progress of getting my Masters. With that being said I recently took an income tax course that dealt with these issues. I am fairly certain that you are supposed to charge a “use tax” which is the same rate as what the sales tax is in NY. Don't quote me on this but from my memory that is what I remember.

https://www.nysscpa.org/cpajournal/2008/808/essentials/p48.htm

In most states, out-of-state vendors are required to collect a “use tax” rather than a sales tax. Collection obligations and rates of use tax are identical to those of sales tax. Generally, if sales tax applies, use tax does not, and vice versa. To avoid confusion, this article refers to both sales and use taxes as only “sales tax,” although in many cases “use tax” is the precise tax at issue.

[jelly]

It would be up to the NY recipient to remit use tax, if the particular item is subject to it. If the NY recipient is a wholesaler/reseller, a lot of the time use tax won't be due.

It doesn't sound like the TX company has any nexus in NY, so the TX company would not owe anything to NY.

Couldn't pass again!

[Author]

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