Moderated by Kate, Financial Technology Consultant at Hyperbots
Kate: Hello, everyone! Good morning. My name is Kate, and I’m a financial technology advisor here at Hyperbots. Today, I’m thrilled to have John with me. Hey, John, how are you doing today?
John Silverstein: Great, thanks for having me again.
Kate: Thank you for joining us. So, a little bit about John—he’s the Vice President of Finance Process and Accounting at XR Extreme Reach. Today, John and I will be discussing the nuances of New York State’s sales tax system and how businesses can keep up with the complexities of compliance. Let’s get started. So, coming to the first question, can you provide an overview of New York State sales tax rules, particularly regarding which goods and services are taxable, and which are exempt?
John Silverstein: Yeah, in New York State most things are taxable for personal goods, including electronics, clothing above $110, and home goods. Essential items, however, are not, such as unprepared foods. Prescription medications are exempt. Services are generally exempt, though there are exceptions to that as well. For example, admission to entertainment events and some repair services are taxable. Utilities, like electricity, are taxed differently across jurisdictions.
Kate: Understood. So how does New York State’s sales tax rate vary across different jurisdictions?
John Silverstein: Yeah. New York sales tax has a base tax rate of 4%. However, local jurisdictions add additional rates, which leads to significant variation across the state. For example, New York City has a combined rate of 8.875%, while other areas, such as Nassau County, have rates around 8.625%. These local adjustments mean that companies across the state with a presence need to be especially diligent in tracking local rates and what they would have to charge if they were in multiple jurisdictions.
Kate: I agree. So how frequently do these sales tax rates change in New York State, and what factors contribute to these changes?
John Silverstein: Yeah, so the sales tax rates in New York can change every quarter. That’s often—many other states only make annual adjustments, or it’s not as frequent. However, New York allows for changes every quarter, especially when local governments adjust the rates to meet revenue needs or when special district taxes are implemented. The State Department of Taxation and Finance oversees these updates, but the local jurisdictions have flexibility in setting their own rates, especially in the urban areas where there’s higher demand for public services.
Kate: That does make a lot of sense. Moving on, what are some of the biggest challenges for businesses trying to keep up with these fluctuating sales tax rates?
John Silverstein: The biggest challenge is the complexity created by having over 70 counties, cities, and school districts with all their own tax rates. Companies with multiple New York locations or an e-commerce presence have to continually monitor and apply these changes accurately. This can quickly become a manual and error-prone process, particularly for businesses processing a large number of transactions. And the key point there, too—it’s not just your presence in retail, it’s also e-commerce, where you’re selling in customer locations.
Kate: Wow! That sounds like quite a task. So where do companies find reliable information on New York State sales tax rates and any recent changes?
John Silverstein: Yeah, similar to most states, the New York State Department of Taxation is the primary source for sales tax rates and regular updates. It also has a sales tax web file tool with a downloadable list of the tax rates by jurisdiction.
There are other resources, too, that include tax compliance platforms like Hyperbots and Avalara’s AvaTax. They automate these tax calculations and track the updates across jurisdictions in real-time.
Kate: I understand. Could you maybe give an example of how a business might use these resources to stay compliant?
John Silverstein: Sure. Suppose a retail company operates across New York and sells both online and in-store products. Hyperbots and Avalara can automatically apply the correct sales tax rates for each sale, whether it’s in Manhattan or Buffalo. These tools continuously sync with the state’s databases, so if New York City adjusts its rates, the tools automatically reflect that change, minimizing your risk of under- or over-collecting sales tax.
Kate: That’s insightful. The next question: How can AI help companies stay updated and compliant with sales tax regulations, especially given the variability in New York’s local rates?
John Silverstein: AI can give you some peace of mind in this because it can have a significant role in tracking, updating, and implementing these sales tax rates. With AI-powered tools like Hyperbots, companies can monitor the Department of Taxation and Finance for updates. They can receive alerts when rate changes are detected. The AI system can even apply the correct tax rates based on customer zip codes, which ensures accurate compliance across New York’s many jurisdictions, not just at the state level.
Kate: That makes a lot of sense. So we have reached almost the end of our discussion today. The last question for today: Are there any specific AI tools or features you’d recommend for managing sales tax compliance in New York?
John Silverstein: Yeah. Hyperbots and Avalara’s AvaTax are both excellent choices. There are, of course, other tools out there. Real-time rate calculations and tracking are critical. You need to invest in these so you’re not trying to do it manually, where you run the risk of errors. It’s generally not worth it, particularly if you have any sort of volume in these jurisdictions. These platforms integrate with ERP systems, so it’s automatic. You can file your taxes and reports directly.
So you don’t have to deal with the administrative burden of hiring people to manage it. AI can also track and calculate rates and help companies focus on their operations instead of worrying about which rate should be applied to the invoice.
Kate: I couldn’t agree more with you, John, on this. Thank you so much, John, for sharing these valuable insights into managing New York’s sales tax requirements and how AI is transforming the compliance landscape. Thank you so much for joining us today.
John Silverstein: No problem. Have a great day.
Kate: Have a great day.
