Sales Tax on Shipping & Handling in NYS

New York State Sales Tax

From time to time I get asked very specific questions regarding the collection and remittance of sales tax in New York State.  A question that recently came up by my client was one regarding the partial refund of a transaction that involved shipping and handling. 

The client's transaction was as follows:
Sale of $100
Shipping & Handling of $25
Subtotal $125
Sales Tax (NYC) $11.09
Total $136.09

Now what happens if the client refund the sale but retians the shipping and handling as part of their terms and conditions.

Refund of Sale $(100)
Refund of sales tax on Sale $8.84
Total refund $108.84

As you can see, the client retianed the sales tax on the shipping and handling and will be liable to remit that sales tax collected to NYS with their next sales tax return (Either Annualy, Quarterly, or Monthly depending on their sales figures).

Staten Island CPA