Charging sales tax for licensed software in NY state?


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I am about to send an invoice/purchase order for a company to lease our software for a year. Both companies are in NY - must I charge sales tax and if so, how much? A pointer to the appropriate website would also help.

Thanks

Tax Software Licensing

asked Mar 10 '11 at 01:45
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Tim J
8,334 points

3 Answers


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It depends. If you are selling off the shelf (not custom) software and you are both in NY, you definitely have to collect sales tax. It is determined by the county of the purchaser. You then also have to submit quarterly sales tax returns (if you fail to do this, you have to pay a $50 penalty each time).

Services, however, are not necessarily taxed. So it depends on what you are actually leasing or selling.

Regardless, you most definitely need to talk to an accountant in NY state preferably.

answered Mar 10 '11 at 02:00
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Michael Pryor
2,240 points
  • Thanks. I already left a msg with our accountant. The software could be considered custom, but may also be "off-the-shelf". There is a service component to the cost as well. It might be easier just to collect tax and file/submit. – Tim J 6 years ago
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Are you registered as a collector of sales tax in NY? If you just collect sales tax without having registered with the NY State (and city, maybe) tax authorities, it could be considered criminal fraud. (Sounds harsh, but that's how it is.)

answered Mar 10 '11 at 04:18
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User6492
1,747 points
  • Not yet, but what if there is an intent? I don't want to hold up the sale just to get that registration. – Tim J 6 years ago
  • @Tim Just go online at nystax.gov and apply. My opinion is you are fine to collect the tax provided you've applied for the registration. I'm not a lawyer, but I think your intent means this will never even become an issue. – Michael Pryor 6 years ago
  • That's is what my accountant just said. There is a number to call too - for questions: 518-485-2889 I may call them tomorrow and ask what their opinion is of my service/software. – Tim J 6 years ago
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This link seems to help, though I guess we are in for lots of hassle.

answered Mar 10 '11 at 02:07
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Tim J
8,334 points

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