The holiday season is upon us once more and people across New York State are busy shopping for presents, parties and other seasonal preparations. Everyone looks forward to this time of year, especially the folks at the New York State Department of Taxation and Finance, who count on the surge in spending for a much needed boost in sales tax revenue.
As you go about preparing for the coming holidays, consider the following sales and use tax facts before you purchase:
New Yorkers always enjoy a Sales Tax Holiday on clothing and footwear, as items sold for less than $110 are exempt from the State’s 4% sales tax. Several counties, including Chautauqua, Chenango, Columbia, Delaware, Greene, Hamilton, Tioga, and Wayne, as well as New York City, also exempt clothing and footwear sold for less than $110 from their local sales taxes.
Sales of tangible personal property are subject to tax, so unfortunately most of the presents you’re shopping for are taxable. However, New York is one of the few states that does not tax sales of digital products. Instead of purchasing a movie, album, book or video game at the store and paying sales tax on it, purchase the digital version online and download your way to sales tax savings. Gift cards, which are also exempt from tax, can be used for purchasing or streaming nontaxable digital products online as well.
Think digital when taking your kids to meet Santa Claus as well. Instead of purchasing a printed photo of your little ones sitting on Santa’s lap, purchase a digital file that can be emailed to you, if offered. Photographs transferred in tangible form are subject to sales tax, while the same photo transferred electronically, is exempt from tax.
Food is always a big part of the holiday season; and everyone enjoys their traditional holiday meals, as well as all the seasonal baked goods and candy. Generally, food and food products are exempt from sales tax; however, New York is the state that taxes bagels differently, depending on whether they are sliced or not, so you know there are bound to be some special rules here. The following categories of food are taxable:
- Food that is sold in a heated state;
- Food that has been prepared by the seller and is ready to be eaten;
- Candy and confectionary products.
Essentially, if you go to the supermarket and purchase all the ingredients and fixings for your holiday dinner and prepare it yourself at home, you will likely pay little to no sales tax on your food purchases. However, if you decide to have your holiday dinner catered and you purchase trays of heated chicken or pasta or a sandwich platter or relish tray, then you will need to pay sales tax on these purchases. Food that is prepared and arranged on platter by the seller and that is ready to be eaten is taxable. It doesn't matter whether the food is sold to be eaten on location or another place, or whether it's served hot or cold. Even cookies aren’t exempt from sales tax. If you purchase a cookie platter prepared by a bakery, it is subject to tax.
Let’s not forgot about fruit baskets or cheese boards either. Any time exempt food is sold in combination with a taxable item (i.e., basket, cutting board, etc.) for a single charge, the entire charge is taxable.
New Yorkers should not worry about all the sales-tax-free online shopping they did on Cyber Monday or during the holiday season. There is a calculation method and line for reporting use tax on your IT-201 Resident Income Tax Return, as well annual and periodic forms (ST-140/141) an individual can use to report sales and use tax on purchases when it was not charged by the seller.
I hope these New York sales and use tax tips help save you some money this holiday season. Thank you for all your great questions and comments this past year. I look forward to writing more posts in 2018, so please feel free to email me ideas or issues you would like more information on.
Other recent “New York (NY)” posts by Tom Mazurek, CPA:
- The Holidays - A Taxing Time for New Yorkers
- New York Manufacturers: Remember Sales Tax Break for Utilities!
- New York: Celebrate Manufacturing Day with Sales Tax Exemptions!
- New York Nexus: For Out-of-State Sellers, No News is Good News
- New York: New Law to Close Loopholes for Related Parties