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COMMENTS ON DYI AND LICENSING (FROM JANUARY 12, 2016 ARTICLE)
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Ken,
After reading your article on DYI systems [Jan 12, 2016] and licensing...what happens with an eCommerce storefront who sells the system, but doesn't install them, then later offers the monitoring?
For example, let's say that I have a security alarm website where I sell DYI systems and offer monitoring and I am based out of Massachusetts. If a homeowner in NY (or any other state) buys a system, then self installs the system, can the eCommerce store monitor the system without a NY license? Is a license required only for the installation or for the sale of the system as well?
As a broker, my focus is in the alarm industry, as well as, internet based business and I have been speaking to a few companies that do the above and would like some feedback if you have it. Thanks
Gino A. DiGiallonardo, Jr.
Managing Broker
The Online Group Business Brokers
Cell: 508-922-7036
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Ken,
Over the past year we all know that the DIY dealers crossing state lines have been a big hassle for us in state dealers. It been taking the State Licensing too long to get anything done. I have found the best way to go after them, turn them in to the Sales Tax Division. Most of these companies are NOT collecting NJ sales tax nor are they charging their state tax, which we both know is wrong and this has worked very well....
Just a thought to share...
Regards,
Troy
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RESPONSE
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Selling DIY security equipment and systems is subject to the same sales tax laws as any other interstate commerce item. I'll happily to defer to Mitch Reitman for sales tax issues. Monitoring is a separate category and I am not sure if sales tax is collected in all jurisdictions, but I think the point Tony makes is that a company based in New York who is monitoring an alarm in Ohio is not likely to be collecting sales tax and paying it to Ohio; maybe New York. I may be raising more questions than I am answering.
Generally, no alarm license is required to sell DIY equipment in interstate commerce. But that over simplifies the issue because there are varying degrees of involvement even in a DIY sale. Are you merely advertising the product and then shipping it to the customer? Are you offering any on line or telephone support for aiding installation? Are you providing an option for professional installation, or even suggesting it along with a list of installers? Some states require an alarm license if you sell alarm systems in the jurisdiction; others if you provide installation, service or monitoring.
Monitoring DYI is of course the golden goose for the DIY model, and you're going to need licenses in a number of states, cities and municipalities if you want to contract for monitoring with subscribers in those jurisdictions. Some of those states may require you to be authorized to do business in that state, some also require a sales tax id number. Even if you're not actually providing the monitoring, but relying on a wholesale central station, you're likely required to have an alarm license for monitoring.
When and where you need an alarm license, even for DIY and DIY monitoring, isn't always an easy quick answer. Our Licensing Department is "open for business". Give Nicoletta Lakatos, Esq a call at 516 747 6700 ext 311 or email NLakatos@KirschenbaumEsq.com
And if you think that you can sell DIY without an Agreement, a nationwide agreement, give it more thought. Then call our Contract Administrator Eileen Wagda at 516 747 6700 ext 312. If you can't afford the Nationwide Agreement then you can't afford to enter the DIY market, and you certainly won't be there for long.
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