But for a few exceptions, purchases in NY State include the payment of sales tax. While NY State charges a 4.00% state sales tax, purchases in Erie County, NY include an Erie County local sales tax of 4.75%. That is the maximum local sales tax allowed under NY State Law. The total sales tax rate in Erie County, NY is 8.75%.
The sales tax is charged to the customer by the merchant, the merchant collects the tax and the merchant is then supposed to prepare a special tax return and remit all the collected tax to NY State on a quarterly basis. Failure to remit the collected tax is one of the most costly mistakes a merchant can make while operating his or her business.
While there are people with bad intent operating businesses, most who fail to remit, see the collected sales tax as an answer to poor cash flow or unpaid bills. "I thought I would borrow the money for (fill in the blank) and pay it back later when business turns around" is an all too common refrain. BAD IDEA! The money is not the property of the merchant, it belongs to NY State and the respective county locality. And choosing to "borrow" (or steal) that money is the most expensive "loan" a business can take. NY State will charge interest, penalties and quite possibly take the business owner's freedom to pay the "loan" back. There are ways to manage these situations, but time waiting for the business to turn around is not one of them.
“Those who disregard their obligation to remit the sales tax they collect violate the trust of their customers, deprive the communities where they operate of revenue needed for vital services, and put similar businesses at a competitive disadvantage,” said New York State Commissioner of Taxation and Finance Michael Schmidt.
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