Last month, the New York State legislature passed 2015-16 budget legislation (A.3009-B/S.2009-B) that was promptly signed into law by Governor Andrew Cuomo. This year’s budget was not nearly the blockbuster the 2014-15 budget turned out to be, with its significant corporate income tax reform measures that garnered Gov. Cuomo an award from the Tax Foundation for 2014 Outstanding Achievement in State Tax Reform (yes this is a real award).
From a tax perspective, this year’s budget was mostly about making “technical corrections” to measures enacted in last year’s budget, however there were a number of sales and use tax provisions passed, which are largely favorable to businesses and consumers:
- A sales tax exemption for wine or wine product used at wine tastings has been expanded to include the bottles, corks, caps and labels used to package such wine or wine product effective June 1, 2015. This exemption has also been extended to licensed breweries, cider producers and distilleries in accordance with the alcoholic beverage control act;
- Amendments to the definition of prepaid telephone calling services to include “prepaid mobile calling service” as well as changes to sourcing rules that will allow vendors of prepaid telephone calling services to source sales to an address that reasonably reflects the customer’s location at the time of the sale, if the address associated with the customer’s mobile telephone number cannot be determined;
- A sales tax exemption effective December 1, 2015 for receipts from the sale of electricity by a person primarily engaged in the sale of solar energy system equipment and/or electricity generated by such equipment pursuant to a written agreement;
- Sales of vessels (boats) including yachts will be subject to sales and use tax on only the first $230,000 of the sales price effective June 1, 2015. Additionally, use tax will not be due on vessels brought into New York State unless the (1) the vessel is used in the State for a period in excess of ninety consecutive days or (2) the vessel is registered or required to be registered pursuant to the State’s vehicle and traffic laws;
- Sales of “general aviation aircraft” and machinery and equipment to be installed on such aircraft will not be subject to sales and use tax effective September 1, 2015. “General aviation aircraft” means an aircraft that is used in civil aviation that is not a commercial aircraft, military aircraft, unmanned aerial vehicle or drone, and
- A sales tax exemption for sales of tangible personal property and services sold to a related person, when the vendor and purchaser are referenced as either a “covered company” or “material entity” in a resolution plan implemented pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the vendor and purchaser are separate legal entities pursuant to a divestiture required by said Act or successor law, and such sales between related parties would not have occurred if not for such resolution plan or divestiture.
The sales tax cap for expensive yachts and the exemption for general aviation aircraft were not included in the governor’s original budget proposal; however these items were added during budget negotiations with the state legislature. Many legislators see these measures as a way to create jobs and new investments by enticing businesses and individuals to dock their yachts or hangar their private aircraft in New York State, as opposed to neighboring states who previously had lower tax rates or no tax on these large-dollar purchases.
The Department of Taxation and Finance just released their Summary of Tax Provisions in SFY 2015-16 Budget, which provides a brief overview of all the tax provisions enacted in this year’s budget. The Department will likely issue additional guidance on certain topics discussed in this summary in the coming months.
Other recent “New York (NY)” posts by Tom Mazurek, CPA:
- New York Sales Tax: Drop Shipments & Resale Certificates
- New York: Taxing Computer Software
- Sales Tax Free Zone in Buffalo
- Sales Tax Provisions Included in 2015-16 New York Budget
- New York: Capital Improvements v. Repairs to Real Property