Does an out-of-state manufacturer that only makes wholesale sales for resale, and whose sole New York presence is two traveling sales representatives, have to register as a New York sales tax vendor?

Plain-English summary

An out-of-state manufacturer of wholesale paper products asked whether it needed to register for New York sales and use tax. Its products are made outside New York and sold only to retailers and distributors, never directly to end consumers — so it makes no taxable retail sales at all. Its only connection to New York is two sales representatives who solicit orders: one who lives in the Buffalo area covering upstate New York and western Pennsylvania, and one who lives in New Jersey covering New York City, Long Island, Westchester, New Jersey, and eastern Pennsylvania. Both carry non-sellable product samples for display purposes; the company also has one company car and some office equipment in the state.

The Department held that these two traveling sales representatives are enough, by themselves, to create the physical presence needed to satisfy the constitutional nexus test, so the manufacturer must register as a New York vendor — even though every one of its actual sales is a wholesale sale for resale rather than a taxable retail sale. Registration is triggered by nexus plus making sales for resale, not by whether any of those sales happen to be taxable.

Because the manufacturer's only obligation is the resale side of the business (it collects no sales tax from customers), it must file an annual information return rather than quarterly or monthly sales tax returns. However, if it also has taxable purchases subject to use tax, the filing frequency for those depends on the dollar amounts involved: it moves to quarterly filing once its use tax due in an annual period exceeds $3,000, and to monthly filing if its taxable purchases subject to use tax reach $300,000 or more in any quarter.

What this means for you

Out-of-state manufacturers, wholesalers, and distributors

Even a small in-state sales force — here, just two representatives working from home offices, one of whom doesn't even live in New York — is enough physical presence to require sales tax registration. Selling only for resale doesn't get you out of the registration requirement; it just changes what you have to file once registered.

Businesses that sell exclusively for resale

If you're registered only because you buy or sell for resale and have no taxable sales of your own, your default filing obligation is a once-a-year information return, not a full quarterly or monthly sales tax return — unless your own use-tax liability on taxable purchases crosses the regulatory dollar thresholds, in which case you have to step up to quarterly or monthly filing for that portion.

Accountants and tax professionals

This is a straightforward nexus-and-registration opinion built on 20 NYCRR § 526.10(a)(4)'s "traveling sales representatives in the state" example, combined with the resale-only annual-filer rule of Tax Law § 1136(a)(3) and the filing-frequency thresholds in 20 NYCRR § 533.3. Note this predates the U.S. Supreme Court's 2018 Wayfair decision — physical presence (the sales reps) was the operative nexus test at the time, not economic nexus.

Common questions

Q: If I only sell for resale and have no taxable sales, do I still have to register for sales tax in New York?
A: Yes, if you have nexus with the state (such as sales representatives soliciting business here) and you're purchasing or selling tangible personal property for resale — registration doesn't depend on whether any of your sales are actually taxable.

Q: How few employees does it take to create nexus?
A: Here, two sales representatives working from home offices and carrying only non-sellable samples were enough. There's no minimum headcount exemption.

Q: What return do I file if I'm registered only because I sell for resale?
A: An annual information return, unless your use-tax liability from taxable purchases exceeds the dollar thresholds that require quarterly or monthly filing instead.

Q: Can other out-of-state sellers rely on this specific outcome?
A: No. This advisory opinion binds the Department only for the petitioner on the facts described, though the underlying nexus and filing-frequency rules are of general application.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(8)(i) (definition of "vendor")
• Tax Law § 1131 (definitions; persons required to collect tax)
• Tax Law § 1134(a)(1) (registration requirement)
• Tax Law § 1136(a)(3) (annual return for resale-only registrants)
• 20 NYCRR § 526.10(a)(4) (nexus via traveling sales representatives)
• 20 NYCRR § 533.3 (monthly/quarterly/annual filing thresholds)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_45s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(45)S
Sales Tax
October 19, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980330A

On March 30, 1998, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Company A, c/o Ernst & Young LLP, 99 Wood Ave., PO Box 751, Iselin,
New Jersey 08830-0471.
The issues raised by Petitioner, Company A, are as follows:
1) Whether the activities of Company A require that it register for New York sales and use tax
purposes.
2) If Company A is required to register for New York sales and use tax purposes, what filing period
would be required (i.e., monthly, quarterly or annually)?
Petitioner submits the following facts as the basis for this advisory opinion.
Petitioner is a manufacturer and distributor of wholesale paper products used in a specialized
industry. Petitioner's products are manufactured outside the State and are then sold to retailers
and/or other distributors located both inside and outside the State. Petitioner never directly sells its
products to the ultimate consumer. Therefore, Petitioner does not have any taxable sales.
The activities of Petitioner within the boundaries of New York State are limited to those
conducted by only two employees. Both employees are sales representatives responsible for the
solicitation of sales from within and without New York State. The first sales representative ("Rep

1") resides in or around Buffalo, New York while the second sales representative ("Rep #2")

resides in the State of New Jersey. The sales territory of Rep #1 is inclusive of Western
Pennsylvania and all the counties of upstate New York. The sales territory of Rep #2 is inclusive
of New York City, Long Island, Westchester County, New Jersey and Eastern Pennsylvania. Both
representatives are permitted to and do carry product samples. These product samples are used for
display purposes in the solicitation of sales. At no time may these samples be sold to any individual
or company.
Petitioner does not own or lease any real property within New York State. Personal property
owned by Petitioner within New York State is limited to that of a company vehicle and general
office equipment (i.e., fax machine, computer, etc.) needed by Rep #1 in performing his everyday
duties. Office supplies (i.e., paper, pens, etc.) needed by Rep #1 are obtained through a local office
supply store. Office supplies and other general expenses (i.e., phone bill, travel expenses, etc.) are
reimbursed to Rep #1 through a periodic expense report. Petitioner does not provide any other
remuneration to Rep #1 with regard to his home office expenses (i.e., rental reimbursement).

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Sales Tax
October 19, 2000

In addition, it can be presumed for purposes of this advisory opinion that Petitioner is
properly complying with the payroll withholding and unemployment compensation tax laws of New
York State.
The following is a listing of the job responsibilities of both Rep #1 and Rep #2:

C
C
C
C
C
C
C
C

Fulfill assigned sales quotas for all company distributed products.
Responsible to visit territorially designated customers for purposes of solicitation of
sales orders.
Confer with immediate supervisor (located outside State) on all matters affecting the
assigned sales territory.
Implement localized sales plan in order to meet annual sales quotas.
Provide feedback to Petitioner regarding its sales programs (i.e., summary of sales
by product) in order to better align itself for solicitation of future sales.
Advise Petitioner of trends and competitive activity within their assigned sales
territories.
Remit customer purchase requests to Petitioner for credit check, order processing,
shipping and billing.
Attend nationwide trade show conventions when and as directed by the Vice
President of Sales. These conventions are not held in New York State.

Applicable Law and Regulations
Section 1101(b)(8)(i) of the Tax Law defines "vendor," in part, as follows:
(A) A person making sales of tangible personal property or services, the
receipts from which are taxed by this article;
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(C) A person who solicits business either:
(I) by employees, independent contractors, agents or other representatives;
or
(II) by distribution of catalogs or other advertising matter, without regard to
whether such distribution is the result of regular or systematic solicitation, if such
person has some additional connection with the state which satisfies the nexus
requirement of the United States constitution;

-3TSB-A-00(45)S
Sales Tax
October 19, 2000

and by reason thereof makes sales to persons within the state of tangible personal
property or services, the use of which is taxed by this article....
Section 1131 of the Tax Law provides, in part:
Definitions–When used in this part IV,
(1) "Persons required to collect tax" or "person required to collect any tax
imposed by this article" shall include: every vendor of tangible personal property or
services....
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*

(4) "Property and services the use of which is subject to tax" shall include:
(a) all property sold to a person within the state, whether or not the sale is made
within the state....
Section 1134(a)(1) of the Tax Law provides, in part:
(i) Every person required to collect any tax imposed by this article ...
commencing business or opening a new place of business, (ii) every person
purchasing or selling tangible personal property for resale ... shall file with the
commissioner a certificate of registration, in a form prescribed by the commissioner,
at least twenty days prior to commencing business....
Section 1136(a)(3) of the Tax Law provides, in part:
However, a person required to register with the commissioner as provided in
section eleven hundred thirty-four only because such person is purchasing or selling
tangible personal property for resale, and who is not required to collect any tax or
pay any tax directly to the commissioner under this article, shall file an information
return annually in such form as the commissioner may prescribe....
Section 526.10(a)(4) of the Sales and Use Tax Regulations provides, in part:
(i) A person who solicits business by the distribution of catalogs or other
advertising matter, without regard to whether such distribution is the result of regular
or systematic solicitation, if such person has some additional connection with the
State which satisfies the nexus requirement of the United States Constitution and by
reason thereof makes sales to persons within the State of tangible personal property
or services the use of which is subject to tax, is a vendor.

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Sales Tax
October 19, 2000

(ii) For purposes of subparagraph (i) of this paragraph, the additional
connection with the State a person may have in order to qualify as a vendor shall
include, but not be limited to:
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*

(b) the presence of traveling sales representatives in the State;
(c) the presence of employees, independent contractors or agents in the
State ....
Section 533.3 of the Sales and Use Tax Regulations provides, in part:
(a) General. (1) Every person who is required to register with the Department
of Taxation and Finance, or who voluntarily registers, is required to file returns in
accordance with the provisions set forth herein.
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*

(b) Part quarterly filing. Part quarterly is hereinafter referred to as monthly.
Every person required to register whose taxable receipts, amusement charges, rents,
and purchases subject to use tax, total $300,000 or more in any quarter of the
preceding four quarters must file a monthly return each month. This monthly return
shall be long-form unless a person is eligible to use, and elects to use the short form.
Paragraph (1) of this subdivision discusses the long-form, and the short-form is
discussed in paragraph (2) of this subdivision. In both long form filing and short
form filing, the monthly return for the third month of a quarter must be combined
with the quarterly return as a single return.
(1) Long-form. A long-form return is based on the actual figures for each
month. Monthly long-form returns shall be filed on or before the 20th day of the
month following the month for which the tax is due. A properly completed monthly
long-form return must be prepared in accordance with the instructions provided by
the Department of Taxation and Finance. It shall include completed schedules, if
required. The return must show:
(i) the name, address and identification number of the vendor, recipient of
amusement charges or operator of a hotel;
(ii) gross amount, to the nearest whole dollar, of sales of tangible personal
property and services, food and drink, amusement charges and rents;

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Sales Tax
October 19, 2000

(iii) amount, to the nearest whole dollar, of taxable sales of tangible personal
property and services, food and drink, amusement charges and rents;
(iv) amount, to the nearest whole dollar, of purchases subject to use tax;
(v) amount of sales and use taxes;
(vi) credits claimed and prepayments, if any;
(vii) sales and use taxes due;
(viii) late filing charge, penalties and interest, if any, and total amount due;
(ix) the signature of the vendor, officer or employee of the vendor signing the
return and the individual's title;
(x) the signature and address of a preparer, if other than the vendor; and
(xi) the date prepared.
The quarterly return serves as a monthly return for the last month of a quarter
and a reconciliation for the quarter. A properly completed quarterly return shall be
prepared in accordance with the instructions provided. It shall include completed
schedules, if required. It shall include the same information as in the monthly return,
except that subparagraph (vi) of this paragraph shall include credits claimed, amount
remitted on monthly return for the first two months in a quarter, and prepayment, if
any.
(2) Short-form. Persons who are required to file a monthly return may elect
to use a monthly return, short-form, only if they have filed returns for each of the
four quarters immediately preceding the month covered. The short-form method
requires the taxpayer to file two monthly returns and a quarterly reconciling return.
An amount equal to one third of the total amount of the tax paid in the corresponding
quarter of the previous year, adjusted for rate changes, is to be paid for each of the
first two months of the quarter. For the third and final month of the quarter, a
quarterly return must be filed reporting actual figures for the quarter. On this
quarterly return credit may be taken for amounts paid in the previous two months.
Monthly short-form returns must be filed on or before the 20th day of the month
following the month for which the tax is due. A properly completed monthly shortform return, filed for each of the first two months of the quarter, is to be prepared in
accordance with the instructions available from the Department of Taxation and
Finance and must show:

-6TSB-A-00(45)S
Sales Tax
October 19, 2000

(i) the name, address and identification number of the vendor, recipient of
amusement charges, or operator of a hotel;
(ii) total State and local taxes due in the comparable quarter of the prior year,
adjusted for rate changes;
(iii) tax due, computed as one third of the amount in (ii) of this paragraph;
(iv) credits claimed and prepayments, if any;
(v) sales and use taxes due;
(vi) late filing charge, penalties and interest, if any, and total amount due;
(vii) the signature of the vendor, officer or employee of the vendor signing
the return and the individual's title;
(viii) the signature and address of preparer, if other than the vendor;
(ix) the date prepared; and
(x) the names of the localities for which adjustments were made, and the
amount of each adjustment.
(3) The quarterly return serves as a monthly return for the last month of a
quarter and a reconciliation for the quarter. A properly completed quarterly return
is to be prepared in accordance with the instructions provided by the Department of
Taxation and Finance. It must include completed schedules, if required. The return
must show:
(i) the name, address, identification number and type of business of the
vendor, recipient of amusement charges, or operator of a hotel;
(ii) gross amount, to the nearest whole dollar, of sales of tangible personal
property and services, food and drink, amusement charges and rents;
(iii) amount, to the nearest whole dollar, of taxable sales of tangible personal
property and services, food and drink, amusement charges and rents for each
jurisdiction, and totals of all jurisdictions;
(iv) amount, to the nearest whole dollar, of purchases subject to use tax, for
each jurisdiction, and totals of all jurisdictions;

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Sales Tax
October 19, 2000

(v) amount of sales and use taxes for each jurisdiction, and totals of all
jurisdictions;
(vi) credits claimed, amount remitted on monthly returns for the first two
months in a quarter, and prepayments, if any;
(vii) sales and use taxes due;
(viii) late filing charge, penalties and interest, if any, and total amount due;
(ix) the signature of the vendor, officer or employee of the vendor signing the
return and the individual's title;
(x) the signature and address of a preparer, if other than the vendor; and
(xi) the date prepared.
(c) Quarterly filing. (1) Every person required to register with the Department
of Taxation and Finance, including show vendors, who have taxable receipts,
amusement charges, rents and purchases subject to use tax that total less than
$300,000 in each of the four preceding quarters, must file a quarterly return.
However, such persons may elect to file monthly returns in accordance with
subdivision (b) of this section.
(2) A quarterly return shall be filed as follows:
(i) March 20-for the period December 1 of the prior year to the last day of
February;
(ii) June 20-for the period March 1 through May 31;
(iii) September 20-for the period June 1 through August 31;
(iv) December 20-for the period September 1 through November 30.
(3) A properly completed quarterly return is to be prepared in accordance
with the instructions provided by the Department of Taxation and Finance. It must
include completed schedules, if required. The return must show:
(i) the name, address, identification number and type of business of the
vendor, recipient of amusement charges, or operator of a hotel;

-8TSB-A-00(45)S
Sales Tax
October 19, 2000

(ii) gross amount, to the nearest whole dollar, of sales of tangible personal
property and services, food and drink, amusement charges and rents;
(iii) amount, to the nearest whole dollar, of taxable sales of tangible personal
property and services, food and drink, amusement charges and rents for each
jurisdiction, and totals of all jurisdictions;
(iv) amount, to the nearest whole dollar, of purchases subject to use tax, for
each jurisdiction, and totals of all jurisdictions;
(v) credits claimed and prepayments, if any;
(vi) sales and use taxes due;
(vii) late filing charge or penalties and interest, if any, and total amount due;
(viii) the signature of the vendor, officer or employee of the vendor signing
the return and the individual's title;
(ix) the signature and address of a preparer, if other than the vendor; and
(x) the date prepared.
(d) Annual return. (1) Every person required to register with the Department
of Taxation and Finance (see section 533.1 of this Part and Parts 539 and 540 of this
Title) only because such person is purchasing or selling tangible personal property
for resale, and who is not required to collect any tax or pay any tax directly to the
Department of Taxation and Finance, must file a return annually in accordance with
the schedule provided in paragraph (4) of this subdivision.
(2) Any person required to file quarterly returns whose total tax due for the
four most recent quarterly periods for which data is available for such person within
the most recent six quarters for which data is available did not exceed $3,000, may
be notified by the department or may elect to file returns annually in lieu of
quarterly.
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(4) An annual return is to be filed in accordance with the following schedule.

-9TSB-A-00(45)S
Sales Tax
October 19, 2000

(i) Annual filers for years commencing on or after June 1, 1998, including
those persons who are not required to collect any tax or pay any tax directly to the
department, shall file their returns:
(a) For the short annual period of nine months beginning June 1, 1998, and
ending on February 28, 1999, on or before March 20, 1999.
(b) For annual periods beginning on or after March 1, 1999, which annual
periods shall begin on March 1st and end with the last day of February in the
subsequent year, on or before March 20th of each such subsequent year.
(ii) Quarterly filers who are notified by the department that they shall file
annually must file annual returns (unless they timely notify the department in
accordance with subparagraph [3][ii] of this subdivision that they wish to continue
filing quarterly returns) as follows:
(a) For the short annual period of nine months beginning June 1, 1998, and
ending on February 28, 1999, on or before March 20, 1999.
(b) For annual periods beginning on or after March 1, 1999, the annual period
shall begin on March 1st and end with the last day of February in the subsequent year,
with the annual return being due on or before March 20th of each such subsequent
year.
(c) Quarterly filers who become annual filers shall file their last quarterly
return for the quarterly period which ends immediately prior to the date on which the
annual period begins and in accordance with instructions provided in the notification
issued pursuant to paragraph (3) of this subdivision and in accordance with such
other applicable instructions. Annual returns must then be filed for subsequent
annual periods succeeding this last quarterly period.
(5) A properly completed annual return is to be prepared in accordance with
the instructions provided by the Department of Taxation and Finance. It must
include completed schedules, if required, and must show:
(i) the name, address and identification number of the vendor, recipient of
amusement charges, or operator of a hotel;
(ii) gross amount, to the nearest whole dollar, of sales of tangible personal
property and services, food and drink, amusement charges, and rents;

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Sales Tax
October 19, 2000

(iii) amount, to the nearest whole dollar, of taxable sales of tangible personal
property and services, food and drink, amusement charges and rents for each
jurisdiction, and totals of all jurisdictions;
(iv) amount, to the nearest whole dollar, of purchases subject to use tax, for
each jurisdiction, and totals of all jurisdictions;
(v) amount of sales and use taxes for each jurisdiction, and totals of all
jurisdictions;
(vi) credits claimed and prepayments, if any;
(vii) sales and use taxes due;
(viii) late filing charge, penalties and interest, if any, and total amount due;
(ix) the signature of the vendor, officer or employee of the vendor signing the
return and the individual's title;
(x) the signature and address of a preparer, if other than the vendor; and
(xi) the date prepared.
(6) If, at any time during the course of the annual periods described in
paragraph (4) of this subdivision, the total tax due from a person required to file
returns is in excess of $3,000, such person must commence filing a quarterly or
monthly return as required by section 1136 of the Tax Law and the preceding
provisions of this section. On the first quarterly return so required, such person must
report and pay any tax due for the period commencing with the beginning of the
abridged annual period. Failure to do so may result in penalty and interest being
charged from the date a quarterly or monthly return should have been filed.
Opinion
Petitioner has two employees who solicit business in New York State as sales
representatives. Due to the activities of the two sales representatives in New York State, Petitioner
has a connection with New York State which satisfies the nexus requirement of the United States
Constitution consistent with the meaning and intent of Section 526.10(a)(4) of the Sales and Use Tax
Regulations. Therefore, Petitioner is required to register with New York State as provided in Section
1134(a)(1) of the Tax Law.

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Sales Tax
October 19, 2000

In addition, in accordance with Section 1136(a)(3) of the Tax Law, Petitioner, as a person
making sales to persons within New York State for resale, is required to file an annual sales tax
return. Also, Petitioner may have to file monthly or quarterly returns based on its purchases of
tangible personal property subject to use tax. If the use tax due from Petitioner during an annual
reporting period exceeds $3,000, Petitioner will have to begin filing returns on a quarterly basis.
See Section 533.3(d)(6) of the Sales and Use Tax Regulations. If Petitioner’s purchases subject to
use tax are $300,000 or more in any quarter of the preceding four quarterly reporting periods,
Petitioner will have to file monthly returns. See Section 533.3(b) of the Sales and Use Tax
Regulations.

DATED: October 19, 2000

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.