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Can I use third-party payment processors on my website in New York? What are the requirements?

Using Third-Party Payment Processors in New York

If you are planning to use third-party payment processors on your website in New York, you may be subject to certain requirements.

According to NYCL TAX § 1703, every payment settlement entity, third party settlement organization, electronic payment facilitator, or other third party acting on behalf of a payment settlement entity is required to file information returns relating to payments made in settlement of payment card and third party network transactions. These entities are required to file information returns with the New York State Department of Taxation and Finance within 30 days of the filing thereof.

To facilitate accurate reporting, the department shall provide a list or database of New York state taxpayers no later than 45 days prior to the information reporting deadline. Any reporting entity failing to file an information return required pursuant to this section within the time prescribed will be subject to a penalty of fifty dollars for each failure, if failure is for not more than one month, with an additional fifty dollars for each month or fraction thereof during which each failure continues.

Therefore, if you plan to use third-party payment processors on your website in New York, you should ensure that the payment processor is compliant with NYCL TAX § 1703 and is able to file the necessary information returns with the New York State Department of Taxation and Finance.

Additionally, if you plan to use a direct payment permit, you must meet certain eligibility requirements as outlined in 20 NYCRR 532.5. These requirements include being registered as a vendor with the Processing Division, Sales Tax Section, and maintaining a place of business in New York State.

If you meet the eligibility requirements, you may apply for a direct payment permit by filing a properly completed application directly with the District Office Audit Bureau of the Division of Taxation. The department has the sole discretion to issue a direct payment permit, and if approved, the permit holder must comply with reporting and payment requirements as outlined in 20 NYCRR 532.5.

If you have any further questions or concerns, you may contact the New York State Department of Financial Services by accessing their web page, calling the toll-free consumer telephone number, or writing to the Department of Financial Services at the address listed for the New York City office, as set forth in 3 NYCRR Supervisory Policies and Procedures, General, Supervisory Policy 1, Section 1.1.

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Source(s):
Jurisdiction

New York