By: Regina Amolsch, Partner at Plave Koch PLC
Franchisors that have franchisees doing business in New York State should be aware of an annual filing requirement that is easy to overlook: the Information Returns for Franchisors. If you have at least one franchisee doing business in New York, this report may apply to you even if no sales occurred during the reporting period.
The filing deadline is June 20 each year. Below is a summary of what you need to know to stay compliant.
Who Must File
This requirement applies to any franchisor that has at least one franchisee operating in New York State that is required to register as a sales tax vendor in New York.
It is important to realize that franchisors must file even if their franchisees had no sales activity in New York during the reporting period. In that case, franchisors still submit the report and indicate zero reportable transactions through New York’s online system.
Reporting Period and Due Date
The due date is June 20 each year for the reporting period of March 1 through February 28 (or February 29 in leap years).
Note that this is an annual filing requirement, not a monthly or quarterly submission.
What the Report Requires
New York requires franchisors to complete a state-mandated Excel spreadsheet that includes detailed information for each franchisee doing business in New York. This reporting is intended to provide visibility into franchise system activity in New York.
Specifically, franchisors must report data including:
- Franchisee name
- FEIN (Federal Employer Identification Number)
- New York sales tax ID number
- Gross sales reported to the franchisor
- Sales tax collected by the franchisee
- Royalty payments received by the franchisor
- Royalty rate
- Amount of any sales made by the franchisor (or affiliates) to the franchisee
How to Submit the Report
The report must be filed electronically through the New York Online Tax Center.
Franchisors that have never filed through the system before will need to create a business Online Services account before submitting their report.
Franchisee Notification Requirement
In addition to filing with the state, franchisors must also provide each franchisee with a statement reflecting the information reported about their business.
Additional Guidance and Resources
New York provides the official Excel template and additional instructions through the Franchisor Information Returns Guidance.
Final Reminder
This filing requirement is easy to miss but carries real compliance implications for franchisors with New York franchisees if not completed. Even when there is no activity to report, the filing obligation applies.
If you have questions about whether your organization is required to file or need assistance, it is best to review the requirements with your franchise attorney well ahead of the June 20 deadline to avoid last-minute issues. Plave Koch’s attorneys are prepared to assist franchisors in understanding and complying with this requirement.