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Sales and use tax were not applicable to prepaid calling cards sold by telecom providers to various resellers in New York between January 1, 1998 and March 1, 2000. However, after March 1, 2000 resale certificates needed to be obtained. In an Advisory Opinion, the NY Department of Taxation and Finance stated in the case of Crystal Telecom Corporation neither the provider nor the reseller had obtained the proper certificates and neither were paying sales and use tax. Both sides were given an opportunity to prove their nontaxable status on these transactions with the proper documents. A lawsuit could be filed by the telecom provider under the Tax Law for any tax owed and not paid by the reseller if they were unable to provide sufficient evidence of their exempt status. (Crystal Telecom Corp., Department of Taxation and Finance, Advisory Opinion No. TSB-A-02(37)S)


Any contract stating a sale of a taxable item as a finished product should be considered taxable according to the New York Department of Taxation. Although design, engineering and project management services, if connected with a construction project, are not necessarily taxable individually. However, if a contract is agreed upon for selling a finished product, the receipts of the sale will be considered a single transaction, even if some items are separately stated (NY Department of Taxation Advisory Petition No. S001002C, 7/22/02)


The opinion states that a mail-order company in no longer required to be registered or to collect New York sales and use tax if the following guidelines are met. The company must not have any type of offices, employees, or independent contractors working to solicit sales for the company. The only presence the company can have is through catalogs, other promotional materials, and website access. Delivery of items sold must be through common carrier or electronically via the Internet. Mail-order companies that fit the description above are allowed to surrender their Certificate of Authority and file their last sales and use tax return. (New York Commissioner of Taxation And Finance Advisory Opinion, TSB-A-02(19)S, Petition No. S010619A, June 26, 2002)


This was the case, even though the petitioner subsequently relocated to California, because there was no claim or evidence that the tax was erroneously, illegally, or unconstitutionally collected or paid. California imposed California sales tax on the remaining lease payments and, according to the petition, would not honor the tax already prepaid to New York. The amount due under a lease agreement, for the entire period covered under the lease, is immediately subject to New York sales tax. There is no provision allowing a refund of sales tax paid on the lease of a vehicle when the lessee relocates to another state that may also require the lessee to pay tax. (Torquato, New York Division of Tax Appeals, Administrative Law JudgeUnit, DTA No. 816973, March 3, 2000.



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