A Brief Explanation of Sales Tax in Saratoga County:
New York State has had a tax on most retail sales since 1965; that tax, which was 4¼% from June 1, 2003 to June 1, 2005,has otherwise been 4% since 1971. State law also permits cities and counties to enact local sales tax, collected and administered by the New York State Department of Taxation & Finance, of up to 3%. (Some counties may levy a higher rate by special State legislation.) When a county and a city within that county both choose to impose a sales tax, they have to share that 3% maximum.
In 1982, Saratoga County enacted a 3% sales tax, one of the last counties in the State to do so. At that time, Saratoga Springs had a 3% city sales tax and Mechanicville had a 2½% tax and all three taxes coexisted through mid 1985, at which time the cities repealed their sales taxes in favor of preferential treatment under a formula for the distribution of the County sales tax to cities, towns, and villages within the County. With minor adjustments, that formula continued for seventeen years, distributing sales tax based on a combination of population and assessment with special treatment for the two cities. In 2001, the last full year under that arrangement, the County received $70,525,518 in county sales tax from the New York State Department of Taxation & Finance and forwarded $37,968,148 of that to its cities, towns, and villages, under that formula.
In June of 2001, the City of Saratoga Springs decided that it would be to its advantage to re-impose its own sales tax, effective June 1st, 2002, as is its right under State Tax Law. The City’s sales tax will be 1½% and it will automatically reduce the County’s tax to 1½% within the City limits, keeping the total local tax at 3%. The County’s tax outside the City continues to be 3%. This action brought the distribution formula to an end.
State Tax Law requires, as a matter of equity, that the extra County tax raised outside the City, inure to the benefit of property taxpayers outside the city. Thus that extra sales tax must be and is distributed to the City of Mechanicville and the County’s nineteen towns and nine villages – none goes to Saratoga Springs and none is kept by the County.
The rest of the County sales tax – that portion which is collected uniformly throughout the County – is generally retained by the County except that $542,000 is distributed to Mechanicville, $60,000 is distributed to the Town of Milton, and $3 million is distributed to all municipalities, including Saratoga Springs. The specific distribution to Milton is recognition of its extraordinarily high percentage of exempt property and the specific distribution to Mechanicville is to protect it from the consequences of the termination of the 17 year old formula.
Explanation of What Sales are Taxable Where
Generally sales are taxable by the jurisdiction in which the product is delivered to the customer or in which the service is rendered. (In some situations, a tax may not be collected at the time of sale but the buyer is, nevertheless, subject to a “Use Tax” in the jurisdiction in which the item is used.) Most retail sales are taxed at the store, where the customer takes possession of the product or receives the service. If, however, the product is delivered to the customer’s home or place of business, or the service is rendered “on site”, the sale is taxable by the customer’s jurisdiction. Automobiles, a special case, are taxed by the jurisdiction of the address at which they’re registered.
Wherever the sale occurs, it is up to the vendor to identify his sales by taxing jurisdiction each time he files a sales tax return. This has always presented a challenge to those mail-order and Internet vendors who have an obligation to collect and remit New York State sales tax. They must ascertain the correct jurisdiction for their customer’s address and most of them rely on zip codes to do so. But a zip code is an unreliable indicator of taxing jurisdiction and the Saratoga Springs situation illustrates the point perfectly: 60% of the area served by the Saratoga Springs Post Office is outside the City. We have analogous situations in areas of Saratoga County served by the Scotia, Fort Edward, and Broadalbin post offices.
Know Your Own Jurisdiction
We have made available, via a link to the NYS Tax & Finance web site, the Sales Tax Jurisdiction and Rate Lookup for any specific address to identify the actual taxing jurisdiction.
We have listed some questions that have arisen in the course of our surveying local vendors. If the answer to your question isn’t shown, e-mail me.
Vendors’ Frequently Asked Questions
Q. How much is the total sales tax in Saratoga Springs and Saratoga County?
A. Effective June 1, 2005, the State returned its 4¼% sales tax to 4%, making the combined sales tax in Saratoga County, both inside and outside Saratoga Springs to 7%.
Q. How do I determine if my sales are subject to the Saratoga Springs tax?
A. The applicability of the Saratoga Springs tax is identical to that of the Saratoga County tax. Both, with a few exceptions, are identical to the State tax. For definitive answers on sales tax law and regulations, including what sales and/or purchases are taxable, visit http://www.tax.state.ny.us/nyshome/stidx.htm
Q. I have sales taxable at my customers’ addresses. How do I know if a particular address is inside or outside the City?
A. Click on the NYS link to Sales Tax Jurisdiction and Rate Lookup for any specific address.
Q. Where and how will I pay the Saratoga Springs sales tax?
A. Taxable sales within Saratoga Springs will be reported on a separate line on the sales tax form you already file and will be remitted to the Sales Tax Bureau along with your State sales tax.
Q. My mailing address is Saratoga Springs but I’m located outside the City. How will the Sales Tax Bureau know that my sales aren’t Saratoga Springs sales?
A. You will continue to report your sales on the Saratoga County line on your sales tax return.