Section 1178. Seller and third party liability

(a) (1) A certified
  service provider is the agent of  a  seller,  with  whom  the  certified
  service  provider  has  contracted, for the collection and remittance of
  sales and use taxes.  As  the  seller's  agent,  the  certified  service
  provider  is  liable  for sales and use tax due each member state on all
  sales transactions it processes for the seller except as set out in this
  section.
    (2) A seller that contracts with a certified service provider  is  not
  liable  to  the state for sales or use tax due on transactions processed
  by the certified service provider unless the seller  misrepresented  the
  type  of  items  it sells or committed fraud. In the absence of probable
  cause to believe that the seller has committed fraud or made a  material
  misrepresentation,   the   seller   is  not  subject  to  audit  on  the
  transactions processed by the certified service provider.  A  seller  is
  subject to audit for transactions not processed by the certified service
  provider. The member states acting jointly may perform a system check of
  the  seller  and  review  the  seller's  procedures  to determine if the
  certified service provider's system  is  functioning  properly  and  the
  extent  to  which  the  seller's transactions are being processed by the
  certified service provider.
    (b) A person that provides a certified automated system is responsible
  for the proper functioning of that system and is liable to the state for
  underpayments of tax attributable to errors in the  functioning  of  the
  certified  automated  system.  A  seller that uses a certified automated
  system remains responsible and is liable to the state for reporting  and
  remitting tax.
    (c)  A seller that has a proprietary system for determining the amount
  of tax due on transactions and has signed an  agreement  establishing  a
  performance  standard  for  that system is liable for the failure of the
  system to meet the performance standard.
    * NB Effective on the later of the date on which the  state  has  been
  approved  for  membership  under  the  streamlined  sales  and  use  tax
  agreement authorized and directed to be entered into pursuant to section
  1173 of the tax law, as added  by  section  1  of  Part  S3  of  chapter
  62/2003,  or the date on which the amended provisions of articles 28 and
  29 of the tax law conforming the sales and compensating use taxes to the
  terms of the agreement shall first be applicable.