Legal Question in Business Law in New York

Re: Wholesale business

Although I have not done any specific research in this area, I am not aware of any law that prohibits a wholesaler to sell directly to the public.

Our country is based upon capitalism. While the the legislature and other federal agencies have promulgated certain regulations based upon public health & safety concerns (for example, how certain goods like chemicals, fire arms, alcohol, etc., may be sold), the government is reluctant to interefere in our laissez faire economy.

As Mr. Friedman indicated in his response, the collection of taxes could be a factor. However, some vendors are set up so that they may inquire whether a purchase is for retail or wholesale, and tax accordingly at "check out."

Re: Wholesale business

I don't believe there is a specific law to that effect. Rather, the prohibition arises because the "wholesale-only" lacks a NYS sales tax license and, therefore, cannot legally collect sales tax. Buyers from a wholesaler are required to provide the vendor with their (the buyer's) sales tax number, in effect promising the wholesaler that they (the buyer) will collect sales tax from its customers and remit them to the state. (Note that in the US, unlike, say, Europe, sales tax is only levied against and collected from the ultimate (or final) purchaser of an item subject to sales tax; in Europe they use a "value added" tax that levies a portion of the tax against all whom come into commercial contact with a good.)

The reason this is such a touchy subject is that collecting sales tax and not remitting it is a jailable offense and sales taxes collected cannot be remitted in the absence of a sale tax license.

Again, I've done no research as to a specific NYS law in this regard but the narrative regarding sales taxes is correct under NYS law.

I hope this answers your question.