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The New York Department of Taxation and Finance has issued a reminder that beginning April 1, 2012, items of clothing and footwear sold for less than $110 will be exempt from New York sales and use tax. These items were exempt up to $55 through March 31, 2012. The exemption is per item sold and also applies to most fabric, thread, yarn, buttons, zippers, and similar items used to create or repair the exempt clothing. Jewelry, watches and similar items remain taxable. Additionally, equipment such as tool belts, hard hats, and sport, bicycle, and motorcycle helmets remain taxable. New York City, the city of Norwich and a number of counties will fully exempt eligible sales of less than $110 from local sales and use tax. (Press Release, New York Department of Taxation and Finance, March 28, 2012)


A New York based provider of business communications services was denied its request for a refund of sales tax paid on uncollectible charges and bad debts. The taxpayer did not provide sufficient evidence, such as original bills, invoices, or contracts to supports its claim. Additionally, the taxpayer’s request failed to recognize that some of the customer accounts may not have been subject to tax and that sales tax was not remitted by the taxpayer on those accounts. In regards to accounts claimed as uncollectible, the taxpayer provided no evidence or explanation of the amounts representing nontaxable charges. The request for refund was denied as the taxpayer’s claim was essentially an estimate of the refund amount to which it might be entitled. Without the proper documentation, the refund claim was deemed insufficient. (Broadview Networks, Inc., New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 822673, August 11, 2011)


The New York Department of Taxation and Finance has determined that sales of prewritten computer software are subject to New York sales and use tax even thought the delivery was to the customer in Tennessee. Prewritten software qualifies as tangible personal property regardless of how it was conveyed to the purchaser. The software can be used just as effectively whether delivered on a tangible medium or by download. Although a sale is generally deemed taxable at the point of delivery, with respect to a license to use, a transfer of possession has occurred if there is a transfer of actual or constructive possession, or if there has been a transfer of the “right to use, control or direct the use of tangible personal property”. The use of the software qualifies as transfer of possession because the purchaser has constructive possession of the software and has the “right to use, or control or direct the use of” the software. If software purchased by a customer is used by its employees both in and out of New York, tax should be collected on the portion of the receipt that is attributed to the New York employees. (¶406-884. TSB-A-10(28)S, New York Commissioner of Taxation and Finance, July 2, 2010).


The New York Department of Taxation and Finance has issued an Advisory Opinion concluding that a company’s litigation support service is not subject to New York sales tax imposed on information services. Although it is considered an information service because it includes analyzing, compiling, and organizing customer information, the service does more that merely recast or reformat the customer’s information in that it adds to intelligence contained in the original documents. The company’s litigation support services are considered to be personal and individual in nature, and therefore not subject to New York State and local sales tax on information services. Furthermore, the taxpayer organizes and analyzes the customer’s own documents and does not provide the original documents, or the analysis, compilation, or organization, to any party other than the customer. The fact that the customer, in the context of a litigation discovery process, may provide the original documents to a third party does not change this result, because neither the taxpayer nor the customer is providing the information furnished by the taxpayer to others or incorporating the same into reports furnished to others.

The Advisory Opinion also concluded that the taxpayer’s deliverables (i.e., DVDs, CDs, hard drives, text files and electronic storage) are exempt from sales tax. Although Tax Law section 1105(a) imposes sales tax on the receipts from every retail sale of tangible personal property, nontaxable information services are not subject to tax regardless of the form in which the information is provided to customers. Tangible personal property that is an integral part of the provision of such services is not separately taxable. Accordingly, because the taxpayer’s deliverables are an integral part of the provision of the taxpayer’s nontaxable information services, the deliverables are not considered to be a receipt for tangible personal property. However, the taxpayer’s purchases of tangible media that is uses to deliver its services to its customers are subject to State and local sales and use tax. (TSB-A-10(20)S, New York Commissioner of Taxation and Finance, May 6, 2010)


A New York State advisory opinion concluded that a taxpayer may amend New York sales tax refund claims, by reducing the amounts of the refunds claimed, after the statute of limitations period has expired. The only difference between the original claims and the amended claims is the reduction in the amount of refund claimed. The original claims and amended claims arise from the same transactions but the amended claims would cover a reduced number of these transactions. The advisory opinion also noted that this conclusion should not be construed as necessarily extending to an amended refund claim that is larger than the original refund claim. (TSB-A-10(21)S, New York Commissioner of Taxation and Finance, May 6, 2010)



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