New York Appeals Court ruling on sales tax refund for concrete offers reminder of the critical role invoicing plays in sales tax

A July 2022 slip opinion ruling by New York Appellate Division’s Third Department against a company claiming eligibility for sales tax refunds on several purchases of concrete is a reminder that companies can save vendors money simply by the way they package goods for sale.

The petitioner, M & Y Developers Inc., argued that its purchases of concrete were for a nontaxable service provided by the seller that would also provide “the installation of capital improvements to real property, rather than a taxable delivery of concrete.” The appeals court agreed with an earlier ruling by an administrative law judge and upheld the denial and affirmed that the transactions were retail sales of personal property.

The appeals court said that if the concrete had been purchased in conjunction with the installation, instead of individually, it would have been exempt from sales tax.

Invoicing plays a critical role in sales tax. In this case, the invoices reflected purchases of concrete rather than installation services. Having documentation properly prepared at the time of transaction will provide a clearer picture of intention and a much more robust defense if questioned in audit.

Detailing the items being purchased and itemizing invoices, if applicable, can offer significant benefits to both the taxpayer and seller when it comes to sales taxation or audit controversy as states look at invoices as the proof of the transaction.
(Matter of M&Y Devs. Inc. v Tax Appeals Trib. of the State of N.Y., 2022 NY Slip Op 04600, July 14, 2022)

Posted on July 26, 2022