So I started an online shop this year on Shopify selling clothes as a hobby and to see if it would work. I have made $1000 Gross in sales and collected about $80 in sales tax for NY as I am in NY.
I thought that I had registered to collect sales tax and make sales in Shopify but now realize I needed a Certificate of Authority to collect sales tax and am freaking out because the penalty is up to $10K. (I now know I missed about 2-3 quarterly deadlines to remit sales tax so I’ll have to pay a fee of about $100-$300 which is okay). I now have the Certificate of Authority as of 2 weeks ago.
A CPA told me that NY is pretty strict, so I will essentially have to pay this huge fine, is there any way I or he can call or something to avoid the $10K fine? Can I ask for a payment plan if there is no other way? Please let me know or if anyone has been in this situation before! I just want to do it right, this is a very tough lesson for me as this will wipe out my savings if there is nothing I can do…
Thank you
100% new CPA … and 100% don’t blow things out of proportion.
$80? You legit believe these guys have the TIME and RESOURCES to come after you to recover $80? There are at least 10k cases with defaults and tax evasions above $10k and yet they cannot go after them as the system is over burdened. Same with courts and judiciary. Heck if you go to a store and steal stuff the police doesn’t care, so how you are making up these doom day scenarios are beyond me. Also read the fine print … upto 10000 means 10000 is he max … so on $80 … add interest etc max will be $100.
New CPA and BREATHE …
I appreciate this and the check back into reality, that my amount is practically nothing compared to what’s out there. Also looking for a different CPA this week to prep for tax season and that knows the business better. Will try to remit the sales tax myself come Dec, thanks!
Who would pay 10,000 fine for $80 in tax?
You’ll have to pay penalties and interest for failure to file and pay sales tax.
These penalties vary by state, but in general you can assume that penalties and interest will roughly total 30% of the amount of sales tax due. For example, if you owe $1,000 in sales tax, on average you will owe around $300 in penalties and interest.
You may be subject to criminal penalties if you showed intent to defraud the state.
This one is pretty rare, and hopefully doesn’t apply to your situation. But if you are involved in a sales tax “cover-up”, the states will not look favorably on your case.
according to this I don’t think you show intent to defraud the state and you don’t have to pay 10k in fines but please do your due diligence
Yes I will definitely be more on the lookout for requirements in New York. Thank you for this information! I think the penalties for not having a Certificate of Authority while making sales are different according to https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/sales_and_use_tax_penalties.htm but I hope they see past my negligence
I think you are probably okay just registering and then remitting that $80 in your next filing. I could chat with my team who are experts in this to make sure and I can check back for you.
Thank you! I called and they said whatever I see on the site, I should do and see. After signing in the Tax NY site, I only see I’m able to remit for this quarter.