Sales Tax Plus - Sales Tax News March 2001

LAW CHANGES OF INTEREST TO SALES & USE TAX ADMINISTRATORS
by Mike Williams

DATE

DESCRIPTION OF LAW CHANGE

SEPTEMBER 1, 1996 DATA ENTRY SERVICES BECAME EXEMPT
Effective September 1, 1996, data entry services, performed by independent contractors and temporary service providers who furnish personnel to perform data entry services, are exempt from state and local sales and compensating use taxes. “Data Entry Service” is the transcribing and entering of data (words or numbers) by a person directly to a magnetic tape, punch card, disc, or computer via an alphanumeric keyboard or other data entry device.

FEBRUARY 1, 1997 INTERNET SERVICE EXEMPT
Effective February 1, 1997 Internet Access Charges are considered unenumerated services and therefore, are not subject to sales and use taxes nor are they subject to the telecommunications excise tax.

MARCH 1, 1997 PROMOTIONAL MATERIALS EXEMPTION
Effective March 1, 1997 the Purchase of Certain Promotional Materials mailed or shipped by common carrier to customers and prospective customers are exempt from sales and use tax.

The purchase of outer envelopes and outer labels in which the Promotional Material is mailed is exempt from sales and use tax.

The purchase or rental of mailing lists used to mail the Promotional Material is also exempt from sales and use tax.

Related services to Exempt Promotional Materials such as merge/purge, label affixing, gluing, imprinting, etc. are exempt from tax.

Storage services provided by the vendor who produced the Exempt Promotional Material are also exempt from sales and use tax.

JUNE 1, 1998 COMPUTER DEVELOPMENT HARDWARE
Effective June 1, 1998, Computer Hardware used to Develop Computer Software for sale is exempted from sales and use tax.

MARCH 1, 2000 TAX ON SERVICE TO MANUFACTURING EQUIPMENT REMOVED
Effective March 1, 2000 the local tax on labor to repair, maintain, and install manufacturing equipment has been repealed or removed.
CLOTHING EXEMPT FROM SALES AND USE TAX
Clothing items costing less than $110 are exempted from New York Sales & Use Tax (that's the 4% NYS tax). Some Counties also exempt clothing. See listing following this section.

JUNE 1, 2000 USE TAX IMPOSED ON THE USE OF ANY GAS OR ELECTRICITY
Effective June 1, 2000 New York Use Tax is imposed upon the use of any gas or electricity. What this imposition of use tax on gas and electricity did was effectively close a loophole in the use tax law. Because there was no use tax imposed on gas or electricity - companies were able to buy gas and electricity without paying tax when title to the gas or electricity and risk of loss transferred to the buyer outside NYS.

SEPTEMBER 1, 2000 TELECOMMUNICATIONS EXEMPTION
Effective September 1, 2000, the purchase of Telecommunication Equipment and Supplies used or consumed Directly and Predominantly in Receiving, Initiating, Amplifying, Processing, Transmitting, Retransmitting, Switching or Monitoring of Telecommunications for sale are exempted from sales and use tax. This exemption provides serious relief for companies erecting cell towers and laying fiber optic cable.

MARCH 1, 2001 CALCULATING USE TAX ON SELF USE OF PRODUCTS
Effective March 1, 2001, use tax on the use of self manufactured product for sale will be calculated on component material cost and not on selling price.
COMPUTER EQUIPMENT FOR DESIGNING WEB SITES
Effective March 1, 2001, the purchase of computer equipment used in providing the service, for sale, of designing and developing Web Sites, is exempt from sales and use tax.
POLLUTION CONTROL EQUIPMENT
Effective March 1, 2001, machinery and equipment used in the control, prevention, or abatement of pollution or contaminants from manufacturing or industrial facilities are exempt from sales and use taxes. This is an extension of the exemption for the purchase of equipment and supplies used to treat bury or store waste from a production process.
EMPIRE ZONES AND EMPIRE ZONE ENTERPRISES
Effective March 1, 2001, New York State's 52 Economic Development Zones are transformed into Empire Zones. Sales and use tax exemptions are provided for virtually all Tangible Personal Property (TPP) and services sold to a Qualified Enterprise Zone Enterprise or Business (QEZE) provided it is used by the QEZE within the Enterprise Zone. These exemptions will apply only to the New York State portion of the sales and use tax, unless the county extends the exemption to the local tax portion of the sales and use tax.

Clothing and Footwear:

Effective March 1, 2000 a permanent exemption from State sales and use taxes was adopted for clothing and footwear costing less than $110. Provisions were made to provide counties and cities with the flexibility to opt into, and out of, this exemption. As of March 1, 2002 local taxes apply in all jurisdictions except those indicated as follows:

Broome County New York City (all burroughs)

Chautauqua County Oswego County (outside Fulton & Oswego cities)

Chenango County Rensselaer County

Columbia County Rockland County

Cortland County Schuyler County

Delaware County Suffolk County

Greene County Sullivan County

Jefferson County Tioga County

Madison County (outside City of Oneida) Tompkins County*

*The city of Ithaca (Tompkins County) exempts its tax on clothing effective June 1, 2002.

DATE	DESCRIPTION OF LAW CHANGE
SEPTEMBER 1, 1996	DATA ENTRY SERVICES BECAME EXEMPT Effective September 1, 1996, data entry services, performed by independent contractors and temporary service providers who furnish personnel to perform data entry services, are exempt from state and local sales and compensating use taxes. “Data Entry Service” is the transcribing and entering of data (words or numbers) by a person directly to a magnetic tape, punch card, disc, or computer via an alphanumeric keyboard or other data entry device.
FEBRUARY 1, 1997	INTERNET SERVICE EXEMPT Effective February 1, 1997 Internet Access Charges are considered unenumerated services and therefore, are not subject to sales and use taxes nor are they subject to the telecommunications excise tax.
MARCH 1, 1997	PROMOTIONAL MATERIALS EXEMPTION Effective March 1, 1997 the Purchase of Certain Promotional Materials mailed or shipped by common carrier to customers and prospective customers are exempt from sales and use tax. The purchase of outer envelopes and outer labels in which the Promotional Material is mailed is exempt from sales and use tax. The purchase or rental of mailing lists used to mail the Promotional Material is also exempt from sales and use tax. Related services to Exempt Promotional Materials such as merge/purge, label affixing, gluing, imprinting, etc. are exempt from tax. Storage services provided by the vendor who produced the Exempt Promotional Material are also exempt from sales and use tax.
JUNE 1, 1998	COMPUTER DEVELOPMENT HARDWARE Effective June 1, 1998, Computer Hardware used to Develop Computer Software for sale is exempted from sales and use tax.
MARCH 1, 2000	TAX ON SERVICE TO MANUFACTURING EQUIPMENT REMOVED Effective March 1, 2000 the local tax on labor to repair, maintain, and install manufacturing equipment has been repealed or removed. CLOTHING EXEMPT FROM SALES AND USE TAX Clothing items costing less than $110 are exempted from New York Sales & Use Tax (that's the 4% NYS tax). Some Counties also exempt clothing. See listing following this section.
JUNE 1, 2000	USE TAX IMPOSED ON THE USE OF ANY GAS OR ELECTRICITY Effective June 1, 2000 New York Use Tax is imposed upon the use of any gas or electricity. What this imposition of use tax on gas and electricity did was effectively close a loophole in the use tax law. Because there was no use tax imposed on gas or electricity - companies were able to buy gas and electricity without paying tax when title to the gas or electricity and risk of loss transferred to the buyer outside NYS.
SEPTEMBER 1, 2000	TELECOMMUNICATIONS EXEMPTION Effective September 1, 2000, the purchase of Telecommunication Equipment and Supplies used or consumed Directly and Predominantly in Receiving, Initiating, Amplifying, Processing, Transmitting, Retransmitting, Switching or Monitoring of Telecommunications for sale are exempted from sales and use tax. This exemption provides serious relief for companies erecting cell towers and laying fiber optic cable.
MARCH 1, 2001	CALCULATING USE TAX ON SELF USE OF PRODUCTS Effective March 1, 2001, use tax on the use of self manufactured product for sale will be calculated on component material cost and not on selling price. COMPUTER EQUIPMENT FOR DESIGNING WEB SITES Effective March 1, 2001, the purchase of computer equipment used in providing the service, for sale, of designing and developing Web Sites, is exempt from sales and use tax. POLLUTION CONTROL EQUIPMENT Effective March 1, 2001, machinery and equipment used in the control, prevention, or abatement of pollution or contaminants from manufacturing or industrial facilities are exempt from sales and use taxes. This is an extension of the exemption for the purchase of equipment and supplies used to treat bury or store waste from a production process. EMPIRE ZONES AND EMPIRE ZONE ENTERPRISES Effective March 1, 2001, New York State's 52 Economic Development Zones are transformed into Empire Zones. Sales and use tax exemptions are provided for virtually all Tangible Personal Property (TPP) and services sold to a Qualified Enterprise Zone Enterprise or Business (QEZE) provided it is used by the QEZE within the Enterprise Zone. These exemptions will apply only to the New York State portion of the sales and use tax, unless the county extends the exemption to the local tax portion of the sales and use tax.

Broome County	New York City (all burroughs)
Chautauqua County	Oswego County (outside Fulton & Oswego cities)
Chenango County	Rensselaer County
Columbia County	Rockland County
Cortland County	Schuyler County
Delaware County	Suffolk County
Greene County	Sullivan County
Jefferson County	Tioga County
Madison County (outside City of Oneida)	Tompkins County*