Sales tax in New York City (NYC) is a tax that is levied on the sale of most tangible personal property, as well as certain services. The sales tax rate in NYC varies depending on the location of the transaction and the type of product or service being sold.
In NYC, the sales tax rate is composed of three parts: a state tax, a city tax, and a Metropolitan Commuter Transportation District (MCTD) tax. The current state tax rate is 4%, the city tax rate is 4.5%, and the MCTD tax rate is 0.375%. Therefore, the total sales tax rate in NYC is 8.875%.
When making a purchase in NYC, the sales tax is generally added to the final purchase price at the point of sale. The seller is then responsible for collecting and remitting the sales tax to the state and city authorities.
Businesses that sell goods or services in NYC are required to register for a sales tax certificate with the New York State Department of Taxation and Finance. They must also file periodic sales tax returns and remit the sales tax they have collected from customers to the state and city authorities. Failure to collect and remit sales tax can result in penalties, fines, and legal action.
A sales tax is paid in the jurisdiction where the sale occurred. A use tax occurs when an item is shipped out of NY. For example say you buy an artwork in NYC and have it shipped to your Vail condo. A use tax would be owed to the State of Colorado. In this case the buyer would most likely be responsible for paying the tax.
Since use taxes vary by state it is common for artwork to be shipped out of state to avoid the higher rate. However you should be aware that the seller should arrange the shipping. If the buyer hires an art shipping company then that company is acting as the buyer’s agent and the buyer is taking possession of it in the originating jurisdiction.
Why Delaware? Many collectors send their artwork purchases to Delaware storage facilities. Why? Delaware is known for its favorable tax laws and business-friendly environment, which has made it a popular location for art storage and warehousing. Delaware does not have a sales tax, use tax, or personal property tax, making it an attractive option for collectors and businesses looking to store their artwork in a tax-friendly jurisdiction.
In addition, Delaware has a number of secure and climate-controlled art storage facilities, which can provide the necessary conditions to ensure the preservation of delicate and valuable artwork. Many of these facilities offer specialized services such as custom crating, packing, and installation.
Another reason why people may send artwork to Delaware is for confidentiality purposes. Delaware has strong privacy laws that protect the identity of individuals who own or store artwork in the state. This can be particularly appealing to high-profile collectors who want to keep their art holdings private.
Overall, the combination of favorable tax laws, secure storage facilities, and privacy protection have made Delaware a popular destination for art storage and warehousing.