As a registered sales tax vendor, you can claim a credit for sales tax you overpaid, paid by mistake, or collected but then repaid to your customers. You may also claim a credit in certain cases if you paid tax on items that you later used in an exempt manner, or on which you were required to charge sales tax.
Some examples of when you may claim a credit are:
- You gave a customer a credit or refund of sales tax collected on an item or service because the customer returned the item or did not use the service, and you remitted the tax to the Tax Department with a prior return.
- You gave a customer a credit or refund for sales tax collected because the customer gave you an exemption certificate after you remitted the tax with your return.
- You purchased some items and paid tax to the seller, and later you sold the items and collected tax on them.
- You are a contractor or repairman and paid sales tax on materials used on a taxable repair and maintenance job.
Once you have determined that you are entitled to claim a credit, you may apply the credit to reduce the tax you owe on your sales tax return.
|You do not need to account for every transaction that your business handles on a daily basis when you complete this portion of your sales tax return. For example, a retailer would not need to document every credit and refund issued to their customers during the normal course of business during the reporting period. These transactions do not need to be separately stated on the sales tax return and these credits may be "netted" out.|
Where to claim the credit
Claim the credit on the line for the jurisdiction where the tax was paid or remitted to the Tax Department.
For example, if you collected and remitted tax on a sale during a previous period, and you refunded the tax to the customer during the current period, you may claim a credit for the amount of tax you refunded to your customer. To claim the credit:
- select the jurisdiction where you are claiming the credit, and
- enter the amount of the receipts on which the tax was paid (not the amount of tax paid) in the "Credits against taxable sales and services" field for that jurisdiction.
Sales Tax Web File will automatically reduce the amount of your taxable receipts by the amount that you entered for the credit and calculate your tax due on the lower amount.
Explain the credit
You will be asked to explain your claim later in the return. Many types of common credits are listed, but the list is not all-inclusive. If you claimed credits based on reasons other than the ones listed, use the "Other" box and explain the basis for the credit. For a description of some types of credits that vendors may claim, see Common types of credits.
Documenting the credit
Depending on the nature of the credits claimed you might need to attach documents needed to prove your claim (for example, invoices, receipts, exemption certificates, or proof of payment of tax.) If there are a lot of documents involved, you can provide a summary. However, we may later ask for copies of the documents to substantiate the summary.
Some examples of these documents include:
- Copies of the receipts or invoices showing the credit issued with the amount of the sales tax that was returned to the customer after you remitted the tax to the Tax Department,
- Copies of exemption certificates received after you already collected and remitted the tax,
- Copies of the original invoices showing the amount of the sales, the sales tax collected, the customer name and address,
- Copies of invoices showing you paid tax to a supplier, if you paid tax on something that is eligible for a credit or exemption.
See Documenting your credits for more information.
If you can't assign credits to a specific jurisdiction, you can't claim the credit on your return. Apply for a refund using Form AU-11, Application for Credit or Refund of Sales or Use Tax and provide substantiating documentation that will allow us to determine the correct jurisdiction.
Taxes paid to another state (reciprocal tax credit)
If you paid tax to another state, you may be entitled to claim a reciprocal credit for tax paid. The reciprocal tax credit isn't automatic. New York State only allows a reciprocal tax credit for specific situations in various states (not every state).
You can't claim a credit for these taxes on your return. You must apply for a refund using Form AU-11. To qualify, the following guidelines must be met:
- the state and/or locality where the purchase was made allows a corresponding credit for sales and use tax paid to New York State
- you were legally liable for the tax and paid it to the other state
- the tax paid to the other state on the purchase is a sales and use tax (for example, not an excise tax)
- you have no right to a refund of the tax paid to the other state, and
- you have proof of payment, such as a receipt showing the amount and rate of tax paid to the other state.
Credit for overpayment of tax being carried forward from a prior period field on the Tax Due Details page
Only use this field if:
- you have an overpayment in a prior period,
- you already filed a credit/refund claim for it (form AU-11 or AU-12), and
- your claim was approved.
Web File will show you the amount of overpayment available from your previous returns. You may claim the entire amount, or a partial amount, but you may not claim more than the amount shown. If you believe you have additional overpayments that are not included in the amount shown, you must file a separate Form AU-11 to substantiate the claim.