N.Y. Comp. Codes R. & Regs. tit. 20 § 526.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 526.5 - Receipt

Tax Law, §§ 1101(b)(3), 1111(h)

(a)Definition.

The word receipt means the amount of the sale price of any property and the charge for any service taxable under articles 28 and 29 of the Tax Law, valued in money, whether received in money or otherwise. The following subdivisions of this section discuss elements of a receipt.

(b)Other taxes.

(1) Inclusions.

(i) Generally, excise taxes which are imposed on manufacturers, importers, producers, distributors or distillers are included in the receipts on which sales tax is computed. Among these taxes, by way of example, and not by way of limitation, are:

(a) The State tax on alcoholic beverages imposed by section 424 of the Tax Law, and the taxes of the City of New York on beer and liquor, authorized by section 445 of the Tax Law, and imposed by subchapter 5 of chapter 20 of title 11 of the Administrative Code of the City of New York.

(b) The State tax imposed on distributors of tobacco products pursuant to article 20 of the Tax Law.

(c) The Federal manufacturers excise taxes imposed pursuant to chapter 32 of title 26 of the U.S. Code, on the sale or lease of, for instance, certain automobiles (gas guzzlers); tires weighing more than 40 pounds; gasoline; coal; sporting goods, such as rods, reels, bows and arrows, etc.; firearms, shells and cartridges; and diesel fuel.

(d) The Federal gallonage taxes on distilled spirits, wines and beer imposed pursuant to chapter 51 of title 26 of the U.S. Code.

(e) The Federal tax on cigars, cigarettes and cigarette papers and tubes, imposed pursuant to chapter 52 of title 26 of the U.S. Code.

Example 1:

Sales tax computation when excise tax is a tax on the manufacturer:

Price of merchandise	$1,040
Federal manufacturer's excise tax	+ 60
Taxable receipt	1,100
Sales tax at 7%	+ 77
Total due	$1,177

(ii) Also included in the receipts on which sales tax is computed are the State excise taxes imposed on consumers of cigarettes pursuant to article 20 of the Tax Law and the cigarette tax imposed by chapter 13 of title 11 of the Administrative Code of the City of New York.

(iii) Excise taxes of the kind described in subparagraphs (i) and (ii) of this paragraph are included in the receipts on which sales tax is computed even though such excise taxes may be separately stated to the purchaser.

(2) Exclusions.

With the exception of the taxes imposed on consumers of cigarettes (see subparagraph [1][ii] of this subdivision), and except as otherwise provided by law, excise taxes that are imposed on the consumer are excluded from the receipts on which sales tax is computed. Among these taxes, by way of example and not by way of limitation, are:

(i) The Federal retail excise taxes imposed pursuant to chapter 31 of title 26 of the U.S. Code on, for instance, special motor fuels such as liquefied petroleum gas, gasoline sold or used in noncommercial aviation, and heavy trucks and trailers sold at retail.

(ii) The Federal taxes imposed pursuant to chapter 33 of title 26 of the U.S. Code on communication services (local telephone service, toll telephone service, teletypewriter exchange service) and taxable transportation.

(iii) The State taxes on gasoline imposed by sections 284, 284-a and 284-c of the Tax Law, the State taxes on diesel fuel imposed by sections 282-a, 282-b and 282-c of the Tax Law, and the tax of the City of New York on leaded motor fuel, authorized by section 284-b of the Tax Law and imposed by subchapter 2 of chapter 20 of title 11 of the Administrative Code of the City of New York.

Example 2:

Sales tax computation when the excise tax is not included in the taxable receipt:

Price of merchandise (including Federal retail excise tax at 12%)	$1,120
Less: Federal retail excise tax at 12%	-120
Taxable receipt	1,000
Sales tax at 7%	+ 70
Total before excise tax	1,070
Excise tax (add back)	+120
Total due	1,190

(c)Coupons.

(1) Where a manufacturer issues a coupon entitling a purchaser to a credit on the item purchased, the tax is due on the full amount of the receipt. The receipt is composed of the amount paid and the amount of the coupon credit. The coupon credit reflects a payment or reimbursement by another party to the vendor.

Example 1:

A manufacturer issues coupons entitling the holder to credit allowances of 12¢ on the purchase of its products from a retailer. The tax is computed as follows by the retailer:

Regular price	63¢
Tax at 7% rate	5¢
68¢
Credit for mfr. coupon	12¢
Amount due from purchaser	56¢

(2) Where a store issues a coupon, entitling a purchaser to a credit on the item purchased, for which it is reimbursed by a manufacturer or distributor, the tax is due on the full amount of the receipt. The receipt is composed of the amount paid and the amount of the coupon credit. The coupon must indicate, by "mfr" or some other code, that reimbursement is made. The reimbursement from the manufacturer or distributor to the store may be made in any form, such as cash or a credit against purchases or in additional merchandise.

Example 2:

A store issues a coupon, labeled "mfr" entitling the holder to a credit allowance of 12¢ on the purchase of its products from a retailer. The purchaser is billed as follows by the retailer:

Regular price	63¢
Tax at 7% rate	5¢
68¢
Credit for mfr. coupon	12¢
Amount due from purchaser	56¢

(3) Where a store issues a coupon entitling a purchaser to a discounted price on the item purchased, and receives no reimbursement, the tax is due from the purchaser on only the discounted price, which is the actual receipt.

Example 3:

A Store issues coupons entitling the holder to credit allowance of 12 cents on the purchase of its products from a retailer. The purchaser is billed as follows by the retailer:

Regular price	63¢
Store coupon	12¢
51¢
Tax at 7 percent rate	4¢
Amount due from purchaser	55¢

(4) Where a store issues a coupon involving manufacturer's reimbursement, but does not disclose that fact to the purchaser on the coupon or in the advertisement, the vendor will collect from the purchaser only the tax due on the reduced price, but will be required to pay the tax on the entire receipt-the amount of the price and the reimbursement received from the manufacturer or distributor.

(d) Discounts.

(1) Discounts which are granted by a vendor, for the purpose of encouraging prompt payment on an account, known as "early payment discounts" are not deductible from receipts.

Example 1:

A vendor grants a purchaser a 2 percent discount for paying the price of a $100 camera within 10 days, and expects payment of the full price if paid within 30 days. The sales tax, in a 7 percent area, is $7 on the taxable receipt of $100, whichever method of payment the customer chooses.

DISCOUNT METHOD	FULL PRICE METHOD
$100 Price	$100
7 Tax	7
$107	$107
2 Discount
$105 Due

(2) Discounts which represent a reduction in price, such as a trade discount, volume discount or cash and carry discount are deductible in computing receipts.

Example 2:

A vendor grants a purchaser a 30 percent discount for purchasing 1,000 light bulbs. The taxable receipt will be the discount price. The billing in a 7 percent area, should be similar to:

1,000 Bulbs at 50¢	$500.00
Less 30%	150.00
$350.00
Tax at 7%	24.50
Due	$374.50

Example 3:

A vendor grants a purchaser a 10 percent cash and carry discount. The taxable receipt will be the discounted price. The billing in a 7 percent area should be similar to:

Merchandise	$50.00
Less 10%	5.00
$45.00
Tax at 7%	3.15
Due	$48.15

(e)Expenses.

All expenses, including telephone and telegraph and other service charges, incurred by a vendor in making a sale, regardless of their taxable status and regardless of whether they are billed to a customer are not deductible from the receipts.

Example 1:

A photographer contracts with a customer to furnish photographs at $50 each in addition to expenses.

The customer is billed as follows:
Photographs (2)	$100
Model fees	60
Meals	10
Travel	25
Props (Flowers)	5
Total due	$200
Receipt subject to tax is $200

Example 2:

An appliance repairman charges $10 per hour plus expenses when on a service call. The customer is billed as follows:

3 hrs. at $10	$30
Travel	15
Parts	20
Meals	5
Total due	$70
Receipt subject to tax is $70

(f)Trade-in.

Any allowance or credit for any tangible personal property accepted in part payment by a vendor on the purchase of tangible personal property or services and intended for resale by such vendor shall be excluded when arriving at the receipt subject to tax. Only the net sale price of tangible personal property or the charge for services would be subject to tax.

Example 1:

A motor vehicle dealer allows a customer $850 for a used automobile, accepted in part payment against the sale price of $3,200 for a new automobile. The used automobile is for resale. The customer is billed as follows:

New automobile	$3,200
Trade-in	850
Due	$2,350
Receipt subject to tax is $2,350

Example 2:

A vendor accepts a typewriter in trade from a customer on the purchase of an adding machine. The typewriter is intended for resale. The customer is billed as follows:

Adding machine	$250
Trade-in	80
Due	$170
Receipt subject to tax is $170

(g)Shipping or delivery.

(1) Shipping or delivery charges by a vendor to its customer for the cost of transporting tangible personal property to the customer are part of the vendor's receipt subject to tax where the sale of the property is subject to tax or where taxable services were performed on the property. This is so regardless of whether the vendor separately states such charges in a written contract or on an invoice and regardless of whether the vendor ships or delivers the property itself or hires a third party to ship or deliver the property. Similarly, charges by a vendor to its customer for picking up the customer' s property upon which the vendor is to perform taxable services are part of the vendor' s receipt from the sale of the service subject to tax.

(2) A charge by a vendor to its customer for the cost of transportation of the property from a supplier, manufacturer, warehouse or catalog or other distribution point to the vendor's place of business is also part of the vendor's receipt from the sale of the property to the customer subject to tax, whether the charge is designated as transportation, shipping, handling or in some other manner.

(3) A charge for transporting or delivering property by a transportation or delivery company to the person or business requesting that the property be transported or delivered is not a receipt subject to tax, since transportation and delivery are not themselves services subject to tax.

Example 1:

A vendor charges his or her customer $15 for transportation of the customer's purchases. The purchases are transported from the vendor's place of business to the customer's home in New York. The customer is billed as follows:

Purchases	$100.00
Transportation charges	15.00
Total	$115.00

The vendor's entire receipt of $115 is subject to tax, since it is for the sale of taxable property, including the vendor's separately stated portion of the receipt labelled "transportation."

Example 2:

A vendor charges his or her customer $15 for shipping of the customer's purchases. The purchases are drop-shipped from the manufacturer to the purchaser in New York. The customer is billed as follows:

Purchases	$100.00
Shipping	15.00
Total	$115.00

The entire $115 is subject to tax, for the same reason as in Example 1.

Example 3:

A contractor purchases lumber from a broker. The contract provides that the lumber will be drop-shipped from a producer' s mill in Washington to the job site in New York and prepaid transportation charges will be included. The contractor is billed as follows:

1000 board feet of 2 × 4's	$500
(including $100 prepaid freight)
The entire $500 is subject to tax.

Example 4:

A building contractor purchases six cubic yards of ready-mix concrete. The producer charges $56 per cubic yard for the concrete and $7.50 per cubic yard for delivery. The building contractor is billed as follows:

6 cubic yards mix @ $56	$336
$7.50 delivery fee per cubic yard	45
Total	$381
The entire $381 is subject to tax.

Example 5:

X Company operates a retail sales business and its mail order division sells merchandise at retail by mail order. X Company ships its merchandise to its customers through a parcel delivery service or by United States mail. Charges to X Company by the delivery service are determined by the distance the package is shipped and the weight and size of the package. The amount that X Company charges its customer for postage and handling might be more or less than the amount that the delivery service charges X Company for shipping the merchandise to X Company's customer. X Company separately states a charge for postage and handling to its customer when it bills the customer for the merchandise delivered. This charge by X Company to its customer for postage and handling is part of X Company's receipt from the sale of the merchandise and is subject to sales tax, regardless of its being separately stated on the invoice.

Example 6:

A delivery service company makes available to the general public an area in its warehouse where customers may drop off packages to be delivered to persons or businesses in the United States for a fee. The customer dropping off a package for delivery is required to complete an invoice stating his or her name and address, the name and address where such package is to be delivered, and the contents and value of the package. The delivery service company charges a fee to the customer for delivering the package. This fee is based on the weight and value of the package and the distance it is to be delivered. The company's charge to the customer for shipping the package is not subject to sales tax. This is purely a transportation service, which is not a taxable service.

Example 7:

The ABC Moving Company transports household goods for homeowners from one place to another, as well as business property owned by businesses moving from one place to another. ABC's charges to its household or business customers to move their property are not subject to tax, since transportation of goods, as such, is not itself a taxable service.

Example 8:

A record store sells records, cassettes and compact discs at retail through mail-order promotions. The mail-order customer is required to complete an order form. The order form has spaces for items to be ordered, a preprinted charge for postage and handling of $2.95, plus spaces for sales tax and the total. The charge for the postage and handling is subject to tax as it is part of the record store's receipt for the retail sale of tangible personal property.

(h)Interest.

(1) Any charge for credit imposed by a vendor and paid by a purchaser in addition to the purchase price under a designation such as interest, service charge or finance charge is not deemed to be part of the sale price of tangible personal property or charge for services rendered. Such charges are consideration for the extension of credit and shall not be included in the receipt subject to sales tax.

Example 1:

A vendor sells furniture for $1,000 and charges 11/2 percent interest per month on the outstanding balance. Only the $1,000 is a receipt subject to tax.

(2) The imposition of charges by a credit card company, deducted from a participating vendor's account, are charges for financial services rendered. Such charges have no bearing on the computation of receipts subject to tax.

Example 2:

A vendor sells furniture for $1,000. The purchaser uses a bank credit card. The bank, when remitting to the vendor, deducts a five percent service charge ($50). The vendor is required to charge and remit tax on $1,000.

(3) Interest paid by a lessor on the purchase of tangible personal property intended to be leased to a customer is an expenditure of the lessor and is to be included in the receipt subject to tax. (See subdivision [e] of this section.)

Example 3:

A lessor, on credit, purchases equipment for a lessee. The agreement provides that the lessee is to pay $100 per month for equipment rented and $7 per month to reimburse the lessor for interest paid. The tax is to be collected on $107.

(i)Demurrage.

(1) A charge by a vendor to a customer for the retention of tangible personal property beyond a stipulated time is deemed to be a taxable receipt from the rental or lease of tangible personal property retained. The designation of such charge as a penalty, late fee or demurrage in no way affects its taxable status.

(2) A charge by a vendor to a customer for a delay by the customer in removing tangible personal property from the vendor's premises is a charge for the storage of such tangible personal property. (See section 527.6 of this Subchapter.)

(3) A charge to a shipper or consignee for the retention of a railroad car, trailer, semitrailer, vessel or marine-cargo container is considered part of the transportation charge and not subject to the sales or compensating use tax, although such charge may be designated as demurrage. (See subdivision [g] of this section.)

(j)Deposits.

A charge made by a vendor to a customer as a deposit on tangible personal property rented, leased or loaned is not deemed to be a taxable receipt, but is collateral security for return of the property. Upon the return of the rented, leased or borrowed tangible personal property, any amount not refunded by the vendor constitutes a taxable receipt.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 526.5