N.Y. Tax Law 1178 – Seller and third party liability
* § 1178. Seller and third party liability. (a) (1) A certified service provider is the agent of a seller, with whom the certified service provider has contracted, for the collection and remittance of sales and use taxes. As the seller's agent, the certified service provider is liable for sales and use tax due each member state on all sales transactions it processes for the seller except as set out in this section.
Terms Used In N.Y. Tax Law 1178
- Agreement: means the streamlined sales and use tax agreement. See N.Y. Tax Law 1171
- Certified automated system: means software certified jointly by the states that are signatories to the agreement to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction. See N.Y. Tax Law 1171
- Certified service provider: means an agent certified jointly by the states that are signatories to the agreement to perform all of the seller's sales tax functions. See N.Y. Tax Law 1171
- Fraud: Intentional deception resulting in injury to another.
- Probable cause: A reasonable ground for belief that the offender violated a specific law.
- Seller: means any person making sales, leases, or rentals of personal property or services. See N.Y. Tax Law 1171
- State: means any state of the United States and the District of Columbia. See N.Y. Tax Law 1171
- Use tax: means the compensating use tax imposed pursuant to article twenty-eight of this chapter and pursuant to the authority of article twenty-nine of this chapter, to the extent covered by the streamlined sales and use tax agreement authorized and directed to be entered into by section eleven hundred seventy-three of this article. See N.Y. Tax Law 1171
(2) A seller that contracts with a certified service provider is not liable to the state for sales or use tax due on transactions processed by the certified service provider unless the seller misrepresented the type of items it sells or committed fraud. In the absence of probable cause to believe that the seller has committed fraud or made a material misrepresentation, the seller is not subject to audit on the transactions processed by the certified service provider. A seller is subject to audit for transactions not processed by the certified service provider. The member states acting jointly may perform a system check of the seller and review the seller's procedures to determine if the certified service provider's system is functioning properly and the extent to which the seller's transactions are being processed by the certified service provider.
(b) A person that provides a certified automated system is responsible for the proper functioning of that system and is liable to the state for underpayments of tax attributable to errors in the functioning of the certified automated system. A seller that uses a certified automated system remains responsible and is liable to the state for reporting and remitting tax.
(c) A seller that has a proprietary system for determining the amount of tax due on transactions and has signed an agreement establishing a performance standard for that system is liable for the failure of the system to meet the performance standard.
* NB Not effective per letter by DOT received August 30, 2006